GRAY MARKET (PARALLEL) IMPORTS
Proprietors of Distilled Spirits Plants, Importers and
PURPOSE: Numerous inquiries from trade associations
and industry members alike point out that some confusion
may exist as to the legal role of this Bureau in the "gray
market" imports controversy. This circular will serve to
clarify our position in this matter.
BACKGROUND: Over the past several years, the alcohol
beverage industry has witnessed the emergence of the
"gray market" or "parallel" importer. A "gray market"
importation occurs when an importer imports authentic
premium foreign wines or distilled spirits despite the
existence of an exclusive distribution agreement between
the foreign trademark owner (producer) and its authorized
U.S. importer (distributor). Many such products are
packaged and labeled for the European or other foreign
markets and do not conform with U.S. regulatory
requirements. The labeling of such products has been
brought into conformity with U.S. regulatory requirements
by affixing a strip label containing the mandatory
Gray market imports should not be confused with
counterfeit imports which enter the U.S. under fraudulent
pretenses, i.e. where the bottle labels do not accurately
describe the contents of the bottle. Law and regulations
are specific as to the Bureau's treatment of this type of
DISCUSSION: ATF involvement in the "gray market"
controversy is restricted since federal regulations under
the Federal Alcohol Administration Act make no distinction
between the activities of the gray market importer and the
authorized importer (distributor). ATF's involvement in
this controversy has been limited for the most part to
investigating complaints by industry regarding mis-labeled
gray market imports.
The Federal Alcohol Administration Act prohibits the
removal from Customs custody for consumption in the U.S.
any alcohol beverages unless such products are bottled,
packaged,and labeled in conformity with U.S. regulations.
In addition, the Act vests in the Bureau the authority to
prohibit from appearing on any label any statement that is
false or untrue in any particular, or that irrespective of
falsity, directly, or by ambiguity, omission, or inference
tends to create a misleading impression regarding the
product. The Bureau is specifically charged with the
responsibility of ensuring that the label not only
prevents consumer deception, but also provides the
consumer with adequate information as to the identity and
quality of the product. The Act also requires that as a
condition to the release of such products from Customs
custody, there shall be furnished certificates, where
applicable, issued by foreign governments which certify as
to the products' origin and authenticity.
In response to Industry concerns, the Bureau has
intensified its efforts in the area of label approval to
ensure product integrity for all imported products.
Utilizing ATF's various inspection programs, imports will
be closely scrutinized for mandatory label information and
for prohibited information in accordance with 27 CFR Parts
4, 5, and 7.
It should be stressed that the issuance of a
certificate of label approval by ATF in no way constitutes
trademark protection for that label. For regulations
covering the restrictions placed on the importation of
articles bearing recorded trademarks and trade names, the
permittee is directed to 19 CFR § 133.21 of the US Customs
ATF is also currently reviewing all country of origin
certification requirements for imported wines and
distilled spirits. ATF will be working closely with
Customs to establish new procedures, if needed, or
re-enforcing existing requirements to ensure that all
imports are properly certified as to their origin and
authenticity, if applicable, i.e. country of origin issues
such a certificate of origin and authenticity.
SUMMARY: In Compliance with the mandates of the FAA
Act and to insure product integrity and authenticity, the
Bureau of Alcohol, Tobacco and Firearms reemphasizes that
it will hold all importers of alcohol beverages to the
same standard of compliance with all U.S. laws and
INQUIRIES: Inquiries concerning this circular should
be referred to its number and be addressed to the
Associate Director (Compliance Operations), ATTN: Chief,
Alcohol Import-Export Branch, Bureau of Alcohol, Tobacco
and Firearms, 1200 Pennsylvania Avenue, NW., Washington,