Global Supply Chain

Case Study: 5 Challenges Wine & Spirits Importers Face...(And Solutions)

Ned Blinick

Co-Founder, 3rdwave


From an industry perspective, Wine & Spirits (W&S) Importers operate in a highly complex trade environment. They are required to comply with the standard import regulatory regime that all importers are faced with, but they have additional requirements such as dealing with the Alcohol and Tobacco Tax and Trade Bureau (TTB) for label registration, the Food and Drug Administration (FDA) for manufacturer registrations, and Customs and Border Protection (CBP) for duties and excise taxes.Operationally, things are not much better. They work in an environment that often deals with the consolidation and de-consolidation of shipments, an activity that is outsourced, provides poor visibility and is quite difficult to manage. Add to that the fact that many importers operate with multiple Importers of Records (IORs) on a single shipments and the complexity of managing these activities starts escalating quite dramatically - and the escalation of complexity is exponential in nature, not linear.These regulatory and operational challenges are not unique to W&S industry. Other industries share similar multi-government agency regulatory hurdles such as the pharmaceutical, automotive, consumer packaged goods, textile/clothing, and food importers. The common theme with all of them is that their regulatory and operational environment is more complex than an average importer, and their import process has more elements that need to be managed.Importers and trade compliance professionals live in a world of complexity and stress. The environment is often under-resourced and over-worked. In this instance there are three basic ways that companies address the issues:

  1. Ignore it. A lack of compliance isn't a huge deal, especially if you never get audited. However, ignoring it exposes your company to a higher level of risk, both financial (penalties and fines) and operational (you might not be allowed to import - remember importing is a privilege not a right), but you might see that as a risk your company is willing to take.
  2. Throw people at it. Being compliant isn't easy if you are manual - but nobody said life was easy. Everyone is paid to do a job, and this is just one more place where people can manage the data and its associated complexity. The challenge here is that, if or when your company grows, it will take more people to manage the ever increasing complexity. And, complexity isn't linear it tends to be exponential. The alternative is to let the Reasonable Care level slip, which is not so different than 1, above.
  3. Automate it. The interesting thing about both the complexity and the work that it creates is that virtually all of the work can be automated and managed by a system so that people don't need to do it. It is exactly this kind of mechanical work that computers are exceptionally good at, and humans less so. Because trade compliance is very data intensive and generates its own level of complexity it is reasonably simple to automate.


A reasonably large W&S company has been expanding rather quickly and currently operates in 18 states. They import wines from virtually every region of the world as well as source domestically. Because they are expanding through acquisition, their import environment is complicated by having several separate importers of record (IOR) registered at customs. Their import process were well managed and they had implemented semi-automated processes. But, they had reached the point where the volume required that they throw more people at it or further automate their processes. Their top 5 challenges included:

  1. Managing multiple IORs on a single shipmentNot only does this importer consolidate shipments, they also have several IORs under which they import. Each IOR requires its own customs entry. Not only does this create incremental work and complexity, it also creates opportunity for data to be erroneous and the container to be held at Customs. Automation allows for the effective management and filing of the ISFs, Prior Notices and entries under the different IORs with their customs broker or filed directly through their ABI filer. (They have a hybrid environment).
  2. Managing consolidated and de-consolidated shipmentsOur client is constantly consolidating shipments from multiple vendors through specialized freight forwarders. Consolidating shipments greatly reduces the shipping expense, but it increases the complexity and management. It happens that dozens of orders from many suppliers and/or multiple countries are on the same shipment under multiple bills of lading. Upon arrival, these shipments might need to be de-consolidated and delivered to different final destinations. Having access to the information to support a quick release from CBP and the PGAs was very labor and time intensive and required a lot of coordination with their freight forwarders. Automation resolved the problem by allowing information to flow directly from their freight forwarders into their Trade Management solution and provide the visibility they needed to insure the product moved quickly through customs and off the pier upon arrival .
  3. Managing TTB label registrations (COLAs)Because alcohol is a controlled substance one way that the government controls it is by ensuring that labels are vetted to ensure they meet the government's standards. Prior to importing alcohol, the label of each bottle must be registered with and approved by TTB. A failure to comply can result in containers being held at the border. Insuring COLA compliance was manual, tedious, and time consuming. Automating the validation process ensures that this step is executed and it eliminates a potential problem at the point of entry.
  4. Managing FDA registrationsSimilar to TTB label registrations, anything entering the food supply chain must have the appropriate approval from the FDA. This is done through FDA registrations, and it is imperative that each wine (or spirits) manufacturer is registered. Every 2 years, the FDA registration must be renewed and the solicitation process to each manufacturer is a tedious one. Automating the FDA registration process was easy and it eliminated time consuming work when implemented.
  5. Managing the Customs and Government Agency environmentAbout 30 percent of this company's imports were being self-filed through an ABI package while 70% we filed through traditional customs brokers. As a self-filer the company saved a significant amount of money on their entries but it was very time consuming - even though its was semi-automated. They wanted to take advantage of the benefits of self-filing and move to self-file 100% of the entries. To take advantage of the benefits of self-filing they needed to centralize any and all information related to the import process, validate it, without increasing the headcount of its trade compliance team. Fully automating their security, CBP and PGA entry preparation allows them to self-file all their shipments without increasing their overhead. In fact, they not only are able to increase their self-filing through-put but they are able to insure better control and accuracy of the filing process and increase their trade compliance profile and logistics execution.


By automating and proceduralizing their work and processes they increase visibility and responsiveness with CBP and the government agencies which in turn increased their level of awareness, proactivity, responsiveness and management of the import process. Their systems are able to give warnings when things are askew, able to identify places where time and money can be saved, easily aggregates information in real time to get a current and comprehensive view of their world, and allows them to systematically change and constantly improve their process.In a future post, I will talk about the benefits that have accrued to this company. In addition to the Trade Compliance gains that this company has achieved, it has also achieved gains in their logistics group. Stay tuned for more...and in the meantime, if you are interested in hearing about this firsthand, and how the same benefits can be achieved at your organization, give us a shout!