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Alcohol Law Advisor

Regulatory and Distribution Law Updates for the Alcohol Industry

Join Marc Sorini and Art DeCelle at the Wine, Beer & Spirits Law Conference – September 18-19, 2014

Posted in Advertising and Marketing, Alcohol Excise Taxes, Distribution, Food Safety and FDA, Import/Export, Non-Beverage Alcohol, Trade Practices, TTB COLAs and Formulas

Wine, Beer & Spirits Law 19th Annual National Conference
The Mayflower Renaissance Hotel
Washington, D.C.
September 18-19, 2014
Click here to register.
View the conference brochure.

McDermott Speakers
Marc E. Sorini, Partner, Program Co-chair
Arthur J. DeCelle, Counsel

Please join McDermott partner and program co-chair, Marc Sorini, at the Wine, Beer & Spirits Law 19th Annual National Conference on September 18-19, 2014.  This year’s program will bring direct access to experts in the alcohol beverage industry, including speakers from the Alcohol and Tobacco Tax and Trade Bureau, Beam Suntory, BLDS, the California Department of Alcohol Beverage Control, Diago North America, Dogfish Head Craft Brewery, E&J Gallo Winery, the Federal Trade Commission, Ippolito Christon & Co., New Belgium Brewing Company, New Jersey Office of the Attorney General, Department of Law and Public, Safety, Division of Alcoholic Beverage Control, Precision Economics, Virginia Department of Alcoholic Beverage Control, Washington State Liquor Control Board, and the Wine Institute, as well as speakers from many of the nation’s leading law firms.

Of particular note, Marc Sorini will make a  presentation titled, Federal Excise Tax Strategies and Tactics.  McDermott counsel Art DeCelle will be moderating a panel of representatives from the industry’s leading national trade associations to discuss “The Future of Federal Regulation of Alcohol.”

To view the full conference brochure, click here.  For more information and to register, please visit: http://cle.com/WashingtonDC.

Hard Cider for Brewers

Posted in Advertising and Marketing, Distribution, Food Safety and FDA, TTB COLAs and Formulas

Hard cider has shown phenomenal growth in the past several years.  With rising consumer demand, more and more craft brewers are entering this rapidly expanding market. Although hard cider is typically distributed and mar­keted like a beer product, the federal gov­ernment and most states actually tax and regulate cider as a type of wine.  Brewers contemplating the production of cider ac­cordingly must carefully consider the legal issues surrounding cider production and distribution that distinguish cider from beer.  This article outlines some of the most important (though certainly not all) of these issues.

This article was originally published in the May/June 2014 issue of The New Brewer.

Distilling 101 for Brewers

Posted in Advertising and Marketing, Alcohol Excise Taxes, Distribution, TTB COLAs and Formulas

The craft distilling movement is growing rapidly. Indeed, the tor­rid pace of new distillery openings and the boundless enthusiasm of new entrants seem strangely reminiscent of craft brewing (then “microbrewing”) in the late 1980s and early 1990s.  Craft dis­tillers even have a simmering product in­tegrity issue (the use of purchased neutral spirits) that splits the new industry like contract brewing divided craft brewers 20 years ago.  There are, no doubt, signifi­cant differences, but craft distilling today seems poised for a period of growth like the one craft brewers have been (mostly) enjoying for the past 25 years.  Not surprisingly, then, a growing num­ber of craft brewers have followed the path of Anchor Brewing (or should I say Anchor Distilling) and expanded their offerings to include distilled spirits.  But as brewers quickly discover, there are numerous legal, regulatory, and tax differences between these related, but distinct, businesses.  While a full exploration of those differences could fill a rather thick book, this article briefly highlights the most important.

This article was originally published in the March/April 2014 issue of The New Brewer.

New TTB FAQs on Sugar Claims

Posted in Advertising and Marketing, TTB COLAs and Formulas

On Tuesday, July 1, 2014, the Alcohol and Tobacco Tax and Trade Bureau (TTB) released new Frequently Asked Questions (FAQs) concerning sugar claims made on labels and in advertising.  The FAQs articulate, for the first time, a clear TTB policy on the subject and apply to all malt beverages (e.g., beer), wines and distilled spirits subject to TTB’s Federal Alcohol Administration Act jurisdiction.

The FAQs are notable in three primary respects:

  1. TTB will permit truthful and non-misleading sugar claims, provided that they are adequately supported by testing.
  2. TTB will consider a sugar claim the same as a carbohydrate claim and, thus, labels and advertisements making such claims must include a statement of average analysis in accordance with TTB Rulings 2004-1 and 2013-2.
  3. TTB will permit products containing less than 0.5 grams of sugar per serving to make the claims “zero sugar,” “no sugar” or “sugar free.”

The new policy does not apply to certain terms applied to wines and related to sugar content (e.g., “late harvest”) that were subject to prior rulings on such terms.

Legal Considerations of Warehousing Spirits

Posted in Alcohol Excise Taxes, Distribution, Import/Export

Warehouses aren’t exciting or sexy.  In fact, they are usually boring to look at and think about.  But a surprising amount of specialized alcohol beverage law surrounds the use of warehouses for the storage of distilled spirits.

This article, originally published in the Spring 2014 issue of Artisan Spirit, will briefly explore some of the basics.

Regulation of Social Media by TTB

Posted in Advertising and Marketing, TTB COLAs and Formulas

Facebook and similar types of social media have become increasingly popular as a promotional tool for craft brewers.  Ease of setup, simplified maintenance, the lure of almost immediate ex­posure to the general public and the ability to reach targeted audiences all make social media extremely attractive. Craft brewers use social media to introduce new products, generate interest or attendance at an event or solicit feedback on proposed new beers, among many other uses.  Brewers should bear in mind, however, that social media is not without regulation.

This article was originally published in the January/February 2014 issue of The New Brewer.

Franchise Law for the Craft Distiller

Posted in Distribution

Mastering distribution is as important to a successful distiller as mastering distilling, packaging or advertising.  In a heavily-regulated industry, this requires knowledge of the applicable laws and regulations.

This article, originally published in the Winter 2013 issue of Artisan Spirit, explores, albeit at a very general level, how to manage one important category of those laws; so-called “franchise” laws.

TTB Issues Ruling on Formulas for Beer

Posted in Food Safety and FDA, TTB COLAs and Formulas

On June 5, 2014 the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued TTB Ruling 2014-4, exempting from TTB’s formula  and pre-import approval (PIA) submission requirements beer made with dozens ingredients as well as beer subjected to wood aging processes.  TTB now finds these ingredients and processes to be traditionally used in the production of beer.  The Ruling stems from a Brewer’s Association Petition filed with TTB in 2006 with the assistance of McDermott Will & Emery.  As the Ruling explains, TTB initially rejected the petition, but with continued industry interest and additional fact-finding the TTB has reversed its position.  The Ruling includes an attached list of exempted ingredients and processes, as well as examples of acceptable label designations.

Materials that brewers (including for imported or PIA beer) can now use without the need for a formula include:

  • Fruits:  Apples, apricots, blackberries, blueberries, cherries, cranberries, juniper berries, lemons, oranges, peaches, pumpkins, raspberries and strawberries.
  • Spices:  Allspice, anise, pepper/peppercorns, cardamom, cinnamon, clove, cocoa (powder or nibs), coriander, ginger, nutmeg, orange or lemon peel or zest, star anise and vanilla (whole bean).
  • Other Ingredients:  Brown Sugar, candy (candi sugar), chili peppers, chocolate, coffee (beans or grounds), honey, maple sugar/syrup, molasses/blackstrap molasses and lactose.
  • Wood Aging:  Allows aging beer with plain barrels, woodchips, spirals or staves, as well as those previously used in the production or storage of wine or distilled spirits.

Ingredients

TTB determined that ingredients including honey, certain fruits, certain spices and certain food ingredients are part of the traditional beer making process.  Industry members remain responsible for ensuring that all ingredients are suitable for food consumption in compliance with applicable Food and Drug Administration regulations and standards.  TTB notes that when using brown sugar, candy (candi) sugar, maple sugar/syrup or molasses/blackstrap molasses in the fermentation of a beer, the beer label is not required to refer to these ingredients.  Instead, the label may identify it as a “beer,” “ale” and so forth.

Wood Aging

The Ruling finds that the process of aging beers in barrels (or with woodchips, staves or spirals from those barrels) that were used previously in the production or storage of wine or distilled spirits is a traditional process.  This finding does not apply to the use of woodchips soaked or infused with wine or spirits for the sole purpose of making beer.  Moreover, brewers must ensure that the use of previously-used barrels or chips will not add any “discernible quantityof wine or distilled spirits to the beer.  Labels do not need to state that the beer was aged in these types of containers.

Labeling

TTB determined that the use of the ingredients listed in the Ruling will no longer require a statement of composition on the label that distinguishes between the exempt ingredients added before or during fermentation and those added after.  A brewer or importer now has the flexibility to label the products in accordance with the trade understanding, and the precise wording is left up to the brewer.  The designation must include the base product (beer, ale, etc.) and enough information to make it clear the product contains at least one of the exempted ingredients.  A label can accomplish this by naming the ingredient that best identifies the product or the category (for example, “blackberry ale” or “fruit ale”).  Previously allowed statements such as “ale with natural flavors” remain in compliance, as does the continued use of fanciful names.  The TTB Ruling includes a list of adequate and inadequate designations.

Existing COLAs 

The Ruling does not affect the validity of previously issued COLAs bearing statements of composition and a fanciful name according to TTB’s prior policy.  To avoid processing delays, TTB has asked applicants to note in their application that they are requesting approval of a product made with an ingredient or label that is now exempted under the new Ruling.

Existing Formulas

Previously approved formulas remain valid.  TTB will no longer accept or review formulas or PIA for products that no longer require a formula or PIA under the new Ruling.

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This action by TTB is a positive step to reduce the burden on brewers and beer importers.  McDermott is proud of its role in achieving this result.

Five Common Franchise Law Myths

Posted in Distribution

Most people working for a U.S. packaging brewery are aware of so-called beer “franchise” laws.  Such legislation—enacted in some form in most U.S. states—limits or restricts the abil­ity of a brewer to change distributors.  The author leaves for another article any discussion of the fairness and logic of such enactments.  For now, this article explores some impor­tant basics about these laws and how they impact the brewer-distributor relationship.

This article was originally published in the November/December 2013 issue of The New Brewer.

The Legal Aspects of Barrel Aging Distilled Spirits

Posted in Advertising and Marketing, TTB COLAs and Formulas

Distillers have used barrels to age whiskies, brandies and other distilled spirits for centuries.  Today, American craft distillers increasingly seek to innovate and extend their product offerings by barrel aging spirits, both traditional (e.g., whiskies) and non-traditional (e.g., barrel-rested cocktails).  Not surprisingly, the thicket of alcohol beverage laws and regulations impose certain requirements and place certain limits on the use of barrels.

This article, originally published in the Fall 2013 issue of Artisan Spirit, briefly outlines some of the most important considerations.