Making attractive alcoholic beverage labels that check regulatory boxes and minimize the risk of litigation isn’t as simple as deciding between shaken or stirred (hint: stirred, hands down). Our Food & Beverage team synthesizes the regulatory and litigation landscape for alcoholic beverages into information on best practices.
- Regulatory landscape: TTB c. FDA
- Litigation: the boiling landscape of consumer class actions
- Best practices
Beverage companies have launched new products in the market to meet consumer demand for new alcoholic beverage products, such as sodas, flavored distilled spirits and ready-to-drink beverages, along with countless other products. in development. Determining how these beverages are regulated and the role of the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) and Food and Drug Administration (FDA) is the first step in ensuring regulatory compliance.
The TTB is responsible for overseeing the labeling and advertising of distilled spirits, certain wines and malt beverages, which are terms defined by the Federal Alcohol Administration (FAA) Act and TTB labeling regulations, covering many alcoholic beverages, but not all. The few categories of alcoholic beverages that do not fall under TTB’s authority under the FAA are subject to FDA labeling requirements under the Federal Food, Drug, and Cosmetics Act. The types of alcoholic beverages subject to FDA labeling requirements include, for example, those that do not meet the definitions of “wine” (for example, diluted wines and cider with less than 7% alcohol) or of “malt drink” (for example, one that is not made with the two malted barley and hops).
The jurisdictional division over alcoholic beverage regulation is defined in a memorandum of understanding between TTB and the FDA. For example, the TTB defers to the FDA on matters of ingredient safety, food contact material safety, and adulteration under the Federal Food, Drug and Cosmetic Act. In addition, the TTB will consult with the FDA before taking any action to recall a product. The MoU makes it clear that there are areas of the regulatory landscape that involve both TTB and FDA.
A significant difference between a TTB regulated beverage and an FDA regulated beverage is pre-market approval. Beverages subject to TTB labeling and advertising regulations must obtain Label / Bottle Approval Certification / Exemption (COLA) before they can be placed on the market. The COLA process requires alcoholic beverage merchants to submit their label proposal along with the necessary forms to the TTB for approval. Although TTB requires label approval before marketing, TTB’s labeling requirements are generally less stringent than those of the FDA. For example, TTB does not require labels to include nutritional information, but the FDA does. Ensuring compliance with applicable labeling requirements is particularly important, as statements made on product labels can be a source of liability for beverage producers.
As alcohol producers continue to diversify their portfolios, they venture into an uncertain and complicated litigation environment. Not only must producers comply with applicable TTB and FDA regulations, but they must also assess their exposure to disputes with consumers. A label that is fully compliant from a regulatory standpoint can still expose producers to legal action disputing that the label is misleading for a reasonable consumer. Even an accurate beverage label cannot offer a quintessential defense if a claimant disputes other elements of the packaging or marketing – the “general appearance” – as potentially misleading to consumers.
The last few years have seen a sharp increase in the number of food and beverage labeling lawsuits, and an enterprising plaintiff bar has started targeting alcoholic products and beverages. These lawsuits often challenge product labels, claiming that they contain false or misleading representations about the ingredients, qualities or characteristics of the product. For example, a recent consumer to beat a motion to dismiss its putative class action challenging the defendant’s Rita product, alcoholic alcoholic beverages that feature familiar cocktail nicknames such as “Margarita”, “Mojito” and “Sangria”. Browning v. Anheuser-Busch LLC, n ° 4: 20-cv-00889 (WD Mo. May 13, 2021). The district court upheld the consumer’s claims that these labels were misleading and deceptive because they falsely imply that Rita drinks contained distilled spirits or wine (when in reality they are malt drinks).
Another putative class action lawsuit challenges Flying Embers’ seltzer and kombucha products, alleging double harm with vitamin C, the antioxidant, or herbal fortified alcoholic beverages. Kuciver v. Fermented Sciences Inc., n ° 1: 21-cv-05668 (ND Ill. 24 October 2021). The consumer alleges that the beverage labels – which promote ingredients like “antioxidant vitamin C,” “live probiotics” or “adaptogens” or indicate that the beverages are “infused with benefits” –the two violate FDA regulations (which prohibit fortifying alcoholic beverages with nutrients) and falsely imply that alcoholic beverages provide health benefits. A third alleged class action lawsuit alleges that really tough seltzers claim they contain appreciable amounts of fruit to achieve their fruity flavor, when instead they contain undefined “natural flavors”. Galvez c. The Boston Beer Company, n ° 3: 21-cv-01508 (SD Cal. 25 August 2021).
These combinations are a sampling of the types of labeling challenges producers are likely to face. As producers continue to market and distinguish their products, we expect the rate of lawsuits challenging the labeling of alcoholic beverages to increase.
So what can alcohol producers do in a legal landscape that has more moving parts than a Long Island iced tea? To get started, growers should consider:
- Formalize their label review and approval process so that marketing and legal teams work collaboratively (rather than against each other). Compliant, low litigation risk, and marketing friendly labeling exists, and producers are more likely to tick all the boxes with an engaged and collaborative team.
- Pay particular attention to flavor, cocktail, origin and nutrient claims to ensure that they do not increase exposure to litigation, especially when new alcoholic beverages are the subject of a more in-depth review of litigation.
- Make greater use of disclaimers and qualifying terms on the consumer packaging. A disclosure at the bottom of the package will only impact the most discerning consumers, but clear and unambiguous disclosure on the front package can discourage potential litigants from filing a complaint and strengthen a producer’s claim. to dismiss the defenses even if a lawsuit is filed.
- Make full use of available regulatory approvals, including COLAs issued by TTB. Some state consumer protection laws provide safe havens for behavior deemed lawful. While inconclusive, the citation of a COLA can deter litigation and provide the producer with another motion to dismiss the defense in litigation.
Beverage producers are responsible for making tough decisions when creating their labels, and knowledge of the current regulatory and litigation landscape can help accomplish this task.View source.]