17
MAY
2017

The 9.09% Canadian Whisky Blending Rule: Legal and Practical Elements

comment : Off

The 9.09% blending rule in Canadian law is frequently the subject of discussion by consumer beverage alcohol writers and online by all types of whisky enthusiasts. One still reads different ideas and theories about the rule, and often the information conveyed is not correct or incomplete.

In this paper, we will consider how the current rule works and give examples of its application. The full title of the current rule, herein called the “Regulation”, is Certificates of Age and Origin for Distilled Spirits Produced or Packaged in Canada Order, SI/2009-61. The Regulation can be viewed here. 

The Regulation was enacted pursuant to the Department of Agriculture and Agri-Food Act (Canada) and has been in effect since July 1, 2009. It replaced a similar but not identical rule whose antecedents stretch back at least to the 1950s. A 1957 report of the United States Tariff Commission examining the whisky industry referred to the rule at p. 77,  here.

Our purpose in this discussion is not to consider the full legislative history or rationale of the Regulation. Rather, let’s start with the following extract from the compositional standard for Canadian whisky contained in the Canadian Food and Drug Regulations. See the bolded words in particular:

“B.02.020 [S]. (1) Canadian Whisky, Canadian Rye Whisky or Rye Whisky

  • (a) shall
    • (i) be a potable alcoholic distillate, or a mixture of potable alcoholic distillates, obtained from a mash of cereal grain or cereal grain products saccharified by the diastase of malt or by other enzymes and fermented by the action of yeast or a mixture of yeast and other micro-organisms,
    • (ii) be aged in small wood for not less than three years,
    • (iii) possess the aroma, taste and character generally attributed to Canadian whisky,
    • (iv) be manufactured in accordance with the requirements of the Excise Act and the regulations made thereunder,
    • (v) be mashed, distilled and aged in Canada, and
    • (vi) contain not less than 40 per cent alcohol by volume; and
  • (b) may contain caramel and flavouring.”

Flavouring is further defined in the regulations as “… any spirit or wine, domestic or imported…”. Thus, subject to the Regulation and the compositional standard for Canadian whisky (for example, it must contain at least 40% alcohol by volume), any amount of such flavouring can be added, as no limit is set by the Food and Drug Regulations. This means, say, cognac from France can be added, or Niagara riesling wine, or port from Portugal, or U.S. bourbon, or any other spirit or wine, and the Canadian whisky to which it is added can still be sold and labelled as Canadian whisky. One limitation is that any spirit added as flavouring must be at least two years old. Grain neutral spirits, or vodka in effect, cannot therefore be used, whereas in the U.S., say, it can be for its blended whisky.

There is a further and ostensibly important limitation on adding such flavouring, which is that Canadian whisky must have the “aroma, taste and character generally attributed to Canadian whisky”. This somewhat self-referential criterion is surely difficult to apply in practice. It implies an organoleptic assessment, thus something subjective, and furthermore, reasonable people, even experts, may disagree on what the generally attributed Canadian whisky character is. But anyway, say you devise a blend in which half is rum and half is (typically) light-bodied Canadian whisky. Arguably the blend does not qualify as Canadian whisky because it will taste too much of rum.

There is a real question who might be interested to object even to any such product, but still one can see the general intent of the law.

The further background to this picture is that for a long time in Canada, and at least since the later 1800s, the bulk of Canadian whisky production is a light-bodied, highly-refined cereal alcohol. True, it must be aged for at least three years in small wood containers, which is another of the compositional requirements. But at bottom, Canadian whisky has no very assertive character until something is added to give it a defining taste. Often, a rye whisky of pronounced character is added hence the term “rye whisky” as a synonym for Canadian whisky. Indeed legally that is sanctioned, and Canadian whisky can also be called “Canadian rye whisky”, i.e., even if no rye grain entered the cereal mash.

Bourbon whiskey, a distinctive, corn-based distillate of the United States, also frequently has been used by some Canadian distillers to flavour their base whisky. Various kinds of barley whiskies, Scotch and Irish-type, have been used as well. These are either made in-house for blending or imported for the purpose, and ditto various kinds of sherry and other wines.

It makes sense that imported spirits and wines are included as potential flavourings as their use would enlarge the possibility for Canadian distillers to make their rather neutral-tasting base products distinctive. Canadian whisky to be sure must be mashed, distilled and aged in Canada, but the Canadian element traditionally, or rather the indispensable one, is the base whisky which is the great majority of the bottle, not the part that gives it a fillip, and therefore, there is no bar to permitting a foreign-made spirit or wine to provide the (variable) character of the product.

At the same time, a blended whisky with a dash of bourbon, rum, or straight rye flavour is not a full-blooded bourbon, rum, or straight rye – hence the blended product we are discussing remains Canadian in nature.

While there may have been a further rationale for allowing a foreign spirit to be added to Canadian whisky – preferential U.S. tax status on imported whisky which contains an American-origin component has been suggested – the evolution of Canadian whisky since the later 1800s supports in our view the Regulation as it currently reads.

Canadian whisky can be all-flavouring type too – say, a 100% straight rye (or similar) whiskey mashed, distilled and aged in Canada. A number of these have been marketed in recent years, or blends with a higher than usual proportion of same, but they are atypical of the Canadian norm, at least to date. Our compositional and blending laws were not framed with that kind of product in mind, to the contrary.

For clarity, the rye and bourbon-type “flavouring” whiskeys typically used are made from a cereal grain mash just as the light-bodied, base whiskies they are added to are. But they are distilled in a particular way to retain much more flavour from the grain mashes than the typical Canadian base whisky. They are in fact the original forms of the various spirits, devised when technology did not permit production right off the still of almost neutral whisky, a technology which became common only after about 1860.

It may be of interest that blended Scotch whisky, Johnnie Walker Black label, say, reflects the same approach in its make-up as Canadian whisky except that only barley malt whiskies distilled and aged in Scotland are used for the flavouring spirit. In Canada, there is greater flexibility to source the flavouring element, it can be any spirit or wine, made in Canada, or imported from anywhere.

With this preface, the first thing to note is from July 1, 2009, the 9.09% blending rule does not apply to Canadian whisky sold in Canada. This means “flavouring” – any domestic or imported spirit or wine – can be added to Canadian whisky sold in Canada beyond that percentage. To be sure Canadian whisky sold domestically need not contain any flavouring, but it may and without reference to the 9.09% threshold.

Thus, only if Canadian whisky is exported does consideration need to be given to the Regulation. A review of the Regulation also makes clear that it need be factored only if the Canadian government is asked to issue a Certificate of Age and Origin. Typically this is requested by the foreign buyer or on its behalf by the exporter. If the customer is happy to buy the product without the benefit of the Certificate, the 9.09% rule under the Regulation has no application and the situation is as if the product was marketed in Canada.

But let’s assume a foreign purchaser wants the Certificate, then what?

The Regulation has two branches, one deals with origin – its Canadian bona fides so to speak – and the other with age of the whisky.

For the origin aspect, if not more than 9.09% imported spirits – not wine here – is added, on a volume basis in our opinion, not the ethyl alcohol itself – the Certificate may state that the product is Canadian whisky, otherwise the respective percentages must be stated and the Certificate cannot describe the product as Canadian whisky, rye whisky, or Canadian rye whisky. In the result one may add up to one part imported spirits to 10 of Canadian whisky – 1/11th, which is 9.09% – and the Certificate may still term the product Canadian whisky.

For the age aspect, if not more than 9.09% of the ethyl alcohol in the bottle results from any domestic or imported spirit or wine added, the Certificate can state the age as that of the Canadian whisky being flavoured, but otherwise the age of the youngest component in the blend must be stated.

For example, say 24 oz. of whisky in a 26 oz bottle is six year old Canadian whisky at 50% abv (all mashed and distilled in Canada) and two oz. is three year old Spanish sherry at 20% abv. The total ethanol by volume in the bottle is 12.4 oz (12.0 oz. + .4 oz, respectively). .4 divided by 12.4 means 3.2% of the alcohol is from the wine added. As that is less than 9.09%, the product can be described as six years old including for the Certificate of Age and Origin and Age.

It may be that Canadian distillers with a heavy export business which relies on issuance of Certificates will make the same product formulation regardless of where the product is destined, perhaps for consistency purposes (market image of the product), perhaps for other reasons. But if it wants to sell a Canadian whisky only in Canada composed, say, of 25% American bourbon and 75% base Canadian whisky, we consider that is permissible even though one part out of four is American. Once again it’s really the base whisky in the bottle that is important for the determination under our law of Canadian character, not the foreign top-up to the flavour.

Here follows the citation for the Canadian whisky compositional definition: http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._870/section-B.02.020.html

 

About the Author
Gary Gillman holds undergraduate law degrees in Civil Law and Common Law from McGill University in Montreal, Quebec. He is a member of the Quebec Bar and has been a member of the Ontario Bar since 1983. He was trained and practiced for many years in nationally-known law firms in Montreal and Toronto, principally in numerous areas of corporate and commercial law. In 1995, he obtained a Master’s Degree (LL.M) with Distinction in European Management and Employment law from the University of Leicester in England. His training in the law of European economic and political integration allows him to help clients understand international business and legal trends, the North American Free Trade Agreement and economic globality. Gary regularly attends and speaks at professional conferences and keeps current on all the legal areas he covers. Gary has authored during his career numerous legal articles and papers for professional or trade journals. Gary co-authors the quarterly Gillman Financial Regulatory Report, a business law and financial law newsletter of our firm.