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Help TTB Break the Logjam (Free the Labels)

In this blog, every now and then, we talk about how the label and formula system at TTB can be quite slow, despite various TTB efforts to streamline things. Some top examples are here:  101 Days (to get a spirits label approved); Streamlining; Sen. Schumer Says Labels Take Too Long; more streamlining. It is not a pleasure to observe that it can take more than five months to get an ordinary French Vodka approved (30 or so days at the TTB Lab, then 60 or so days to write up the formula approval, then 60 or so days for label approval — to say nothing about potholes and glitches along the way). Add a few weeks if you’d like to add a flavor.

For a change, today let’s give TTB a break and talk about what the submitters can do, to help speed things up. We will also cover what applicants should not do. Many of the same principles apply to both labels and formulas.

Applicants should:

  1. Start early. TTB and others do a pretty good job of showing the updated average processing times (APTs), for labels and formulas, so it should come as a surprise to nobody that both processes can take a very long time. Why not start early? This can help the system because it leads to fewer panicked status checks. It also should mean fewer expedite requests. Such requests can put a lot of stress on the system, tie up a lot of resources, and they can also mean other applications are jumping in front of and slowing down yours.
  2. Put in solid applications. It’s not so hard to put in a good application, especially if you are only handling one commodity (such as only domestic wine or only imported beer). An example would be knowing what kinds of products need formula approval prior to label approval, then attaching the formula approval to the label. TTB calls such applications, without errors or omissions, “perfected applications.” More than 43% of all label applications go back to the applicant as “needs correction” (see page 3 of the PowerPoint here). When all such labels are counted — submissions and resubmissions — TTB gets about 250,000 label submissions per year. TTB only has about one beer reviewer and 1-2 spirits reviewers — so this can sometimes be a very heavy load. If you think it’s easy, you are not paying attention; you can submit any old thing but the government has the burden to give a thumbs up or a thumbs down (and not just a maybe) to every one, under hundreds of pages of rules.
  3. Read the rules. In the days before the internet maybe you had a good excuse not to skim the rules. But with the rules essentially at your fingertips, free, you should probably do your part to peruse the rules before complaining that TTB is too slow. If you don’t want to read the rules you should probably hire a lawyer or consultant.
  4. Get familiar with ARTAL. This is the Allowable Revisions to Approved Labels. It can save you and TTB a lot of time. There is no reason to wait 6 weeks for a label approval, and inflict the extra work on TTB, when all you are doing is changing the alcohol content. On the formula side, when you have small changes that don’t impact labeling, you can save yourself and TTB a lot of time if you supersede rather than start anew. Otherwise, submitting a new formula usually, in turn, would trigger a new label approval.

Applicants should not:

  1. Submit for products they have no real intention of selling. Only a small percentage of all the products that go through TTB ever end up on store shelves. TTB has said it’s research tends to show that the number is as low as 10%, which would mean that the label and formula division is using more than 80% of its bandwidth on things that never go to market. In many ways the online systems have made it too easy and too inexpensive for applicants to dump work on TTB. In the olden days, the applicant at least had to pay for a stamp or FedEx, and now the system is free (if you ignore the time it takes to load the data and wait).
  2. Cry wolf. If you want to use up TTB’s time telling them it’s urgent, you should have a very good reason, and it should be a whole lot better than:
    1. we can’t sell without the approvals (too obvious, and applies to everyone in front of you in line as well)
    2. we can’t pay tax until we get the approvals (I am pretty sure TTB is not excited about the prospect of collecting a few hundred dollars in tax from you, especially when the same tax dollars are otherwise likely to get put in the till by another guy who planned ahead a bit more)
    3. an exaggeration
  3. Jam up the system with status checks or vague inquiries. There is rarely any advantage in contacting TTB about the status of a pending item, unless it’s well past the published norms. To the contrary, such requests (even when clear, polite, and when they include the ID numbers) mostly tie up the phone lines and scarce TTB resources. An especially detrimental variation is the vague status request. A good status request would be a few days after the APT, with the ID number, such as “Why is label ID 14018001000065 taking so long?” A bad status request would be, “We put in a chardonnay label a few days ago, can you check on it, it should be easy because only a few words changed, and you can find it under Jones Winery, in Napa. No I don’t have the ID number or permit number handy.” With the old, paper-based system there was at least a small chance your paperwork was stuck at the bottom of a forlorn tower of paper; in the current age there is almost no chance that the computer lost track of your application.

With this as a starting point I hope others (Ann, Deb, Marc, Teresa, Fred?) will jump in with ideas about what the industry can do to help push the wait times lower, for the benefit of all.

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101 Days

101

A short while ago I went to see why “that easy label” is still pending, after filing it while snow was still on the ground and waiting well past spring, into summer. I was shocked* and horrified to see the above. The average processing time for spirits labels is now, as of today, way past a month or two. I am startled to see it’s past 100 days. I don’t recall it ever getting past 45 days or so, back in the days of shutdowns, Rep. Gingrich fighting with President Clinton, Tea Partiers fighting President Obama, and so forth. I find myself talking about the same pending labels, over and over again, week after week and month after month.

It is starting to feel like a crisis for many spirits companies, so far as I can tell. Maybe the big ones can plan around this and tolerate this, but waits of this magnitude are devastating for most companies, from what I can see. Why all of a sudden? Wasn’t the power of the internet and computers, and streamlining, supposed to do approximately the opposite? For those highly interested, we have an internally prepared chart showing how this has gradually or not so gradually gotten worse over the past 7 years. It is available upon request.

May 30, 2014 Updatethis now says 69 days, rather than 101, and though painful, that makes a lot more sense.
June 1, 2014 Updateonly 62 days!

My main purpose in grabbing the above screenshot is to hold out the vague, possibly naive, hope that this will mark the low point, and things somehow will get better from here. I look forward to the day when it will be hard to believe it ever took more than three months to get an “easy” whiskey label approved. Just like it is now hard to believe it ever took less than a few days (way back, decades ago). On a brighter note, it is currently taking less than a month to get a wine label approved.

* Even though the number above clearly says 101 days, and the labeling division’s phone message says the same as of today, it seems this can not possibly be correct based on the date to the right of the total. In any event, something is clearly wrong, in a protracted way. Though all this is fairly hard to believe, it is clearly true that TTB approved 667 DSP labels in the 4/26 to 5/26 period of 2013 — and only 41% as many in the same time period of 2014 (272 labels). In the same month of 2012, TTB approved 731 spirits labels. This spirits label, by way of example, took nearly six months.

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Your New Friend, ARTAL

In early July TTB announced a massive and important change to the COLA system. TTB greatly expanded the “Allowable Revisions to Approved Labels” (hereinafter “ARTAL,” as on page 3 of the new 4-page COLA form).

TTB began laying the groundwork for big “streamlining” changes in early 2012, as summarized here. Although some of the ideas seemed very modest as of then, the streamlining train clearly picked up momentum in the next few months. It seems entirely possible that some of the new changes could or should cut a very large percentage of the more than 10,000 labels submitted to TTB every month. Compared to a few years ago, it is quite amazing that the lighthouse label on the left (above) could change to something as different-looking as the striped label on the right — without any need for a new COLA.

The TTB ID number on this label, for example, shows that TTB received at least 671 label applications on just one day in April 2012 — to say nothing about the labels submitted via paper. That should not happen anymore. Instead, applicants should get familiar with ARTAL. It can eliminate lots of waiting, expense, frustration, inconsistent determinations, TTB work and applicant work.

In my view, the biggest changes to ARTAL are these. Now, it’s ok to:

  1. move things, as at 2.
  2. change typesizes and fonts, as at 3.
  3. change colors and spelling, as at 3.
  4. shift amongst paper v. painted v. etched, as at 3.
  5. make one COLA cover all sizes, as at 10. (Previously, the table said “separate applications must be submitted for containers of 237 ml or less, containers over 237 ml to 3 liters, and containers over 3 liters.”)
  6. add/delete/change awards and medals, as at 27.

ARTAL is much more powerful now. Like other powerful things, such as a chainsaw, it can do great things when used carefully — and make big problems when used improperly.

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Streamlining at TTB

In recent months TTB has been busy tinkering with the label approval process. TTB announced the culmination of its streamlining efforts here. This is important for all regulated entities because, despite all these streamlining initiatives (plus the advent of computers and online filing), the average processing time for spirits has moved from a few hours to well over a month, during the past 20 years. Most spirits labels are currently taking well over 30 days, and TTB often says you should allow up to about 90 days. Since last summer, things seem a lot better with wine labels (moving from over a month to about half that). Beer has stayed relatively and consistently quick during the past several years, with an average turnaround of about a week.

In the late 1990s, if I recall correctly, it was possible to receive a label by fax, Scotch tape it to a form, Xerox it, walk it across the street to ATF, not go through a metal detector, wander around the government building until you found the label reviewer, wait your turn — and voila — walk out 45 minutes later with approval in hand. It was even possible to sit face-to-face with the reviewer and revise the application on the fly (with other quaint relics like a pen and Wite-Out). Well, clearly a lot has changed.

TTB is clearly enamored of the term “streamlining” and seems to believe a thorough application of this word is an important step toward making things better. The term is used at least 10 times in the press release touting the various streamlining accomplishments. Many of the accomplishments seem rather modest (compared to, for example, showing that the average processing time is going down). It looks like somebody got carried away in brainstorming the list of accomplishments. One such accomplishment was:  “created a new email address” about streamlining. Another example is cutting out informal label reviews. This may be a sensible or necessary step, but it’s not clear why cutting out services should be presented as a significant accomplishment.

Despite some of the overheated verbiage in the announcement, there are several serious and important points that seem worthy of emphasis.

  1. TTB received over 146,000 labels last year, and the numbers continue to grow every year. I suspect a large number of the applications are in bad shape, and that many of the labels raise difficult issues. It would be hard to be consistent and fast with so many labels, especially since so many of the necessary judgments are inherently subjective.
  2. TTB explained why they don’t accept pdf labels. Because pdfs “will not display as part of the printable version of the approved COLA, which utilizes HTML formatting.”
  3. Formulas Online makes it easier to attach a formula approval. This is true.
  4. More time to make corrections. Under the current system, if you wait five weeks for review of your imported liqueur label, and then you are told the formula approval is too old, you would only have 15 days to fix it — or go to the back of the line. With this change, expected in a few months, you would actually have ample time to get a new formula approval and attach it without losing your place near the front of the line.
  5. Updating the form and instructions to allow more changes without extra applications.

Among all these changes, one of the most important is not set forth in TTB’s streamlining announcement. After an unusually long period of the same people staying in the same jobs, there is much rotation. The person newly in charge of spirits labeling (the slowest category for many years) seems to take streamlining very seriously to the point where I could see her fitting right in at FedEx or Amazon.com. Perhaps things really will improve soon.

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Personalized Labels

 

TTB has recently liberalized the treatment of personalized labels, such as a wine label with “Happy Birthday Bob.” No longer will it be necessary to burden your company, or the government, with paperwork to cover “Happy Birthday Steve” or Judy, Tom, etc.

TTB announced this change on September 21, 2011 in TTB Guidance 2011-5. The document supersedes a policy from about a year and a half earlier; the 2010 policy required a new approval for just about every variation (such as each wedding, retirement, Bar Mitzvah, graduation, anniversary, etc.). In liberalizing the policy, TTB said:

Our 2010-1 guidance did not allow certificate holders to change the artwork or graphics on personalized labels without resubmission of the labels for approval. We have reconsidered this requirement and now permit certificate holders to make changes to the graphics or artwork on a previously approved personalized label without having to apply for a new certificate of label approval.

The above label, from Llano Estacado Winery, is an early approval under the new policy. The new policy seems due at least in part to pressure from Sen. Schumer. He mounted a vigorous campaign, on this topic, over the past summer. His August 9, 2011 press release, noting the progress, said:

In the case of … personalized labels the TTB agreed with Schumer’s request to streamline the process saying, “Effective immediately, TTB will not require resubmission of labels due to changes in graphics or artwork.”  In the past, TTB permitted wineries to simply apply once for approval of a custom label template to ensure it contained the required regulatory and safety warnings, after which the winery could customize and personalize the artwork … to suit the specific event.  TTB then changed course to require individual approval of labels when changes were made to graphics and label components apart of the regulatory and safety warnings.  By working with industry stakeholders to find ways to streamline approval of these custom labels TTB could, in turn, help ease the current backlog of COLA applications.

The press release also noted:

New York wineries have recently reported that it can take at least one month to receive approval of an electronically-filed COLA application and two to three months for a paper application. Often, when wineries finally do receive feedback, it is with a rejected label and the necessary corrections, and at that point labels must be resubmitted and the COLA process must begin again. The TTB told Schumer itself that they have noticed a significant increase in the typical amount of time it takes for them to respond to requests for label approvals.

So far, it does not seem that the current personalization policy would extend all the way to other masses of labels, such as Molson and Twisted Tea (large numbers of labels with other sorts of small variations).

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