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Jan 29

Exporting Craft Beer: The Pleasures & the Pitfalls

BeerA couple of decades ago, who would have imagined that American craft beer would be shaping the taste of beer in places like Belgium and Germany? Welcome to 2015: American craft beer exports are on the rise and to a surprising array of countries around the world. This is a welcome development in the craft beer industry and in the American economy, without question. But exporting craft beer does carry some risks that brewers need to know about.

Look Before You Leap

In such a highly competitive and fast growing industry, enthusiastic brewers who are considering the export market should first understand that exporting beer brings about additional liability.

Just like here at home, the laws of the importing country will hold you responsible for any losses, damages or injuries caused by your product. And the product liability laws in importing countries are becoming stricter all the time. Product liability suits can be brought against exporters for three reasons:

(1) Negligence;
(2) Strict Liability; and
(3) Breach of Warranty.

Beyond the possibility of simple product defects, exported beer is especially vulnerable to liability issues inherent in long haul shipping, transportation, handling, and storage requirements.

Warning: There’s Legal Liability In that Bottle of Beer

When a product liability suit is filed against an American company in a foreign state, that company is required to pay legal fees, court costs, and any awards the judgment entails. Without an International Liability insurance policy, the costs are not covered and can destroy a small business.

The cost of fighting a lawsuit – warranted or unwarranted – represents a big financial hit to your bottom-line and has lead some companies to bankruptcy. Foreign jurisdictions can also seize any and all assets including inventories, deposits, and even receivable payments.

Covering Your Ass-ets

Without giving it a second thought, companies obtain insurance to protect themselves domestically. But brewers who enter an overseas market need to protect their businesses with additional international product liability coverage.
An International Product Liability policy only costs about $2,500 annually, depending on the volume of beer exported and the countries in question. This is a modest cost compared to the devastating impact you find on the other end of a lawsuit without proper coverage.

Simply put, international product liability insurance helps minimize the risk of doing business abroad. Policies are designed to cover any medical costs, court fees, lawyers’ fees, compensatory damages, economic damages, and punitive damages accrued if a claim is made against you.

There is good reason for American craft brewers to get into the exporting business. And there is good reason to protect yourself against undue risks.