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Non-Alcoholic Beer Regulation 101

As part of the general move to better-for-you beverages, non-alcoholic (NA) options have been and will likely continue to be on the rise. However, how NA is treated, or not treated, as “beer” has significant impact on its potential route to market. The below summarizes the overall treatment of NA beer under US federal law, as well as examples of restrictions on direct-to-consumer (DTC) shipments imposed by certain states.

FEDERAL TREATMENT OF NA BEER

  • Tax Treatment: The Alcohol and Tobacco Tax and Trade Bureau’s (TTB) regulations define “beer” as a fermented beverage containing 0.5% or more alcohol by volume (ABV) and brewed or produced from malt, wholly or in part, or from any substitute for malt. (See: 27 C.F.R. § 25.11.) The regulations refer to a malt beverage containing less than 0.5% ABV as a “cereal beverage.” (See: 25.11.) Because NA beer contains less than 0.5% ABV, TTB will not treat it as a “beer” under the Internal Revenue Code (IRC), and accordingly it will not be subject to federal alcohol excise taxes in the United States.
  • Formula Requirements: Once a process is developed for an NA malt beverage and prior to production, a formula must be submitted and approved by TTB. If an NA malt beverage is “alcohol-free,” TTB policy is to require submission of laboratory testing results.
  • Labeling: The Federal Alcohol Administration Act (FAA Act) regulates malt beverages, regardless of their alcohol content, if they meet the Act’s requirements of containing some malted barley, some hops (or hop parts or products) and having been subject to fermentation. An anomaly exists because the FAA Act’s definition of “malt beverage” does not include any minimum or maximum threshold of alcohol content. Because nonalcoholic and alcohol-free beers are produced like conventional beer and then de-alcoholized, they fall under TTB’s labeling and advertising jurisdiction. Several regulations specifically address such products. (See: 27 CFR § 7.71.)
  • FDA Requirements: The Food and Drug Administration (FDA) requires NA beverages that are not malt beverages under the FAA Act (beverage without malt and hops or an unfermented beverage) to be labeled in accordance with the Food, Drug, and Cosmetic Act (FD&C Act), Fair Packaging and Labeling Act (FPLA) 15 U.S.C. §§ 1451-1461, and the Nutrition Education and Labeling Act 21 U.S.C. §§ 343-350. (Click here for more information.) These statutes and the FDA regulations require a full ingredient list and nutritional facts label. If an NA beverage without malt or hops or an unfermented beverage is being considered, a full explanation of the FDA requirements will be needed to develop a compliant production, labeling and marketing plan. The FDA has industry guidance on labeling and formulation of “dealcoholized beer.” (See: FDA CPG Sec. 510.400, updated Nov. 2005.)
  • Production Process Issue: If the production process for an NA beverage includes removal of alcohol from beer through reverse osmosis or other processes that separate alcohol from the other components of a beverage, the process may be considered distilling operations, which will require a federal basic permit for a distilled spirits plant. (SeeATF Ruling 85-6.)
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Proposed FDA Labeling Revisions Would Impact Wines Below 7 Percent ABV and Certain Non-Malt Beers

On March 3, 2014, the Food & Drug Administration (FDA) published a Notice of Proposed Rulemaking (NPRM) that, if and when finalized, would make important changes to the labeling of all foods subject to FDA’s primary labeling jurisdiction.  While most alcohol beverages fall under the primary labeling authority of the Alcohol and Tobacco Tax and Trade Bureau (TTB), wines below 7 percent alcohol by volume (ABV) and beers containing no malted barley or no hops fall within the scope of FDA’s primary labeling authority.

The NPRM seeks to adjust FDA’s labeling and related rules to address certain concerns about the American diet, particularly the so-called obesity epidemic.  As such, it aims to increase and improve the amount of labeling information about critical attributes like calories and the addition of sugars to food.  FDA’s proposed regulations would:

  • Put a greater emphasis—with larger and bolder type—on calories.  FDA believes the number of calories is especially important to maintaining a healthy weight.
  • Place greater emphasis on the number of servings per package and amount per serving.
  • Delete the requirement to list calories from fat; however the quantity (in grams) of total, saturated and trans fat will still be required.  FDA has shifted its focus to the type of fat rather than the total amount of fat.
  • Require the amounts of potassium and Vitamin D on the label, but not the amounts Vitamins A and C.
  • Update certain serving size requirements. These updates would reflect the reality of what people actually eat, according to recent food consumption data.
  • Update Daily Values for various nutrients.  In addition, the Percent Daily Value (%DV) would shift to the left of the Nutrition Facts label.  FDA says it wants to help consumers visually and quickly put nutrient information in context.

Significantly, the NPRM expressly addresses the subject of wines below 7 percent ABV and beer falling within FDA labeling jurisdiction in its proposed rules for added sugar labeling.  As noted above, a proposed regulation would require the mandatory declaration of added sugars as a line item in the familiar Nutrition Facts label required by current regulations.  That declaration would include any brown sugar, corn sweetener, corn syrup, dextrose, fructose, fruit juice concentrates, glucose, high-fructose corn syrup, honey, invert sugar, lactose, maltose, malt sugar, molasses, raw sugar, turbinado, sugar, trehalose and sucrose.  And because (according to FDA) no scientific means permits the measurement of added sugars (as distinguished from sugar intrinsic to the food), the NPRM proposes a new record-keeping requirement to document the addition of sugars to foods subject to the labeling rule.

Fermentation, of course, consumes sugar as yeast converts that sugar into alcohol (and other byproducts like CO2).  The NPRM acknowledges this fact, but indicates that FDA does not possess adequate information to assess the degradation of added sugars during the fermentation of wine and beer.  FDA asks commenters to provide information on this issue.

Notwithstanding FDA’s apparent lack of information on the subject, it proposes a specific regulation for beer and wine (plus [...]

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