Understanding US custom bonds for alcoholic beverage imports

Every year, around 446 billion liters of wine, beer and spirits are consumed globally. For the alcoholic beverage industry, this represents a great opportunity, especially when we focus on the  leading importer of wine, beer and spirits: the United States.  In 2022, the US imported $26.6 billion worth of alcoholic beverages, accounting for 14% of the country’s agricultural imports.

Managing the import of alcoholic beverages requires compliance with customs regulations, including customs bonds. Specific to the US, customs bonds are an essential part of the import process and act as a financial guarantee that importers will meet regulatory requirements and comply with their obligations.

What are customs bonds and how do they work in the US?

A customs bond, also known as an import bond, is a financial guarantee required by U.S. Customs and Border Protection ( CBP) for importers of goods, like wine, beer and spirits into the United States. The bond ensures that any duties, taxes and fees associated with importing alcoholic beverages are paid in full. It also guarantees compliance with all laws and regulations governing the entry of goods into the country.

Types of customs bonds

Importers can opt for one of the two main types of custom bonds, these are: 

• Single entry bond: it is issued for a single shipment and only covers the specific entry or transaction for which it was purchased. Additional shipments require separate bonds.
• Continuous bond: it is recommended for importers who regularly move shipments through multiple ports throughout the year. This bond remains in effect for one year from the date of purchase. It can be automatically renewed unless terminated by the principal or surety. 

These bonds provide the U.S. government with financial security in case the importer fails to meet their obligations. Failing to comply with this regulation could lead to delays or even the detention of your shipment.

Who pays for custom bonds?

There are three key players involved in dealing with a custom bond:

• The principal: the party seeking to do business with the US Customs and Border Protection (CBP). It could be an importer, broker, carrier, bonded warehouse proprietor, or foreign trade zone operator. 
• The surety: an insurance company authorized by the US. Department of Treasury to issue these bonds, providing financial backing.
• The beneficiary: the CBP itself. The CBP can make a claim against both the principal and the surety if the principal fails to meet the obligations under the customs bonds, such as paying duties, taxes, or other fees.

Why you need a custom bond for importing

Customs bonds are required for any commercial import valued over US$2,500. They are also necessary for any commodity that is subject to federal agency regulations, such as food and alcoholic beverages overseen by the Food and Drug Administration ( FDA).

You can either pay taxes and duties in cash upfront if your imported goods meet this threshold. Alternatively, you can postpone a bond, which provides a guarantee up to a certain number of days to settle these fees (e.g. in the US, 10 days). 

Why are customs bonds important?

Customs bonds play a crucial role in protecting the government. They ensure that duties and taxes are paid even if an importer fails to make these payments directly.

Customs agencies can impose fines and penalties if they find issues or non-compliance during their checks. The customs authority can claim the amount from the bond if an importer does not pay these fines. The surety company covering the bond will then recover the funds from the importer.

Customs bonds also offer several benefits to importers:

• Deferred payments: they eliminate upfront fees, easing your cash flow. 
• Faster clearance: they speed up the customs clearance process, so shipments can be moved quickly and meet expected delivery times. 
• Proof of compliance: they serve as proof to customs authorities that you have previously met your financial and legal obligations.
• Risk mitigation: they protect you from fines, delays or even shipment confiscation. This is especially important for wine and beer, where delays can affect product quality due to their special handling and storage requirements.

How to purchase customs bonds?

Importing alcoholic beverages can be a complex process. It is essential to ensure that all regulatory requirements are met. For this reason, seeking assistance from experts can help streamline the process. 

At Hillebrand Gori, we are specialized in the transportation of alcoholic beverages and customs clearance. We can help you to transport your shipments and handle the customs process on your behalf. 

A benefit of having your bond through Hillebrand Gori is that we monitor its saturation level. When it is time to consider increasing the bond, we’ll advise you before the CBP renders it insufficient, to avoid any delays.

To apply for a bond, you need to provide the following information:

• The bond applicant, such as the full legal name of the business, its address, state of incorporation, contact information and business type (e.g., individual, partnership, corporation, LLC).
• Importers’ identification details like their EIN, CBP Assigned Number or SSN, along with any participation in CBP programs or specific customs conditions.
• Information about the merchandise being imported. This includes details about the commodity, its origin and the estimated value of the goods.
• Specification of whether the imports fall under general merchandise or are subject to FDA regulations, as all food and beverage products must comply with FDA requirements.
• Historical data on duties, taxes and fees paid in the prior year, as well as estimates for the current year.
• Identification of the responsible party that will make sure the imported goods comply with all legal and customs requirements. This is typically the product owners, a designated individual, or a customs broker.

If you need to arrange custom bonds, you can look up bond applications and other onboarding forms on our website. For other resources on wine transportation, visit our knowledge center or reach out to us if you would like to learn more about what we can do for you.

Reviewed by Hillebrand Gori