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TTB Issues Final Rule Modernizing Labeling and Advertising Regulations for Alcoholic Beverages

The Alcohol and Tobacco Tax and Trade Bureau of the US Treasury Department published a final rule on April 2, 2020, modernizing labeling and advertising regulations for alcoholic beverages. The rule is intended to give more flexibility to industry members and help industry members understand existing requirements. It does not require any current labels or advertisements to be changed.

A link to the Final Rule is here.

Adopted Proposals

The changes announced on April 2 were first proposed by the TTB on November 26, 2018 (the “2018 Proposal”). After reviewing comments from industry members and the public, the TTB decided to adopt the following proposals:

Distilled Spirits Mandatory Label Information. The final rule gives brands greater flexibility on the placement of mandatory information on distilled spirits labels. Current TTB regulations require that the following appear on the “brand label”: the brand name, the class and type of the distilled spirits, the alcohol content, and, on containers that do not meet a standard of fill, net contents. The term “brand label” is defined as the principal display panel that is most likely to be displayed, presented, shown, or examined under normal retail display conditions, as well as any other label appearing on the same side of the bottle as the principal display panel. Further, the definition states that “[t]he principal display panel appearing on a cylindrical surface is that 40 percent of the circumference which is most likely to be displayed, presented, shown, or examined under normal and customary conditions of display for retail sale.”

The final rule allows this mandatory information to appear anywhere on the distilled spirits labels, as long as it is within the same field of vision, which means a single side of a container (which for a cylindrical container is 40 percent of the circumference) where all pieces of information can be viewed simultaneously without the need to turn the container. TTB believes that requiring this information to appear in the same field of vision, rather than on the display panel “most likely to be displayed, presented, shown, or examined” at retail, is a more objective and understandable standard, particularly as applied to cylindrical bottles. This means that the brand label may be on any side of distilled spirits bottles, but must show the brand name, class and type designation, and alcohol content within the same field of vision.

Standard of Identity for Vodka. Previously, in order to be classified as a “vodka,” TTB regulations required the product to be “without distinctive character, aroma, taste, or color.” The final rule removes this requirement for vodka, acknowledging that such a restricted definition is no longer appropriate given the variety in base ingredients, flavors, and flavor profiles found in the vodka category.

Class of Agave Spirits. The final rule creates within the standards of identity, a new class called “Agave Spirits,” containing two types within the class: “Tequila” and “Mezcal.” Previously, the standards included a class for Tequila but generally did not address Mezcal or the broader category of agave spirits. The new agave spirits class will include any spirits distilled from a fermented mash, of which at least 51 percent is derived from plant species in the genus Agave and up to 49 percent is derived from sugar. Agave spirits must be distilled at less than 95 percent alcohol by volume and bottled at or above 40 percent alcohol by volume. Industry members who have approved labels for “spirits distilled from agave” may choose to change their labels to designate their products as “agave spirits,” but will not be required to do so.

Personalized Labels. The final rule sets out an approval process for custom bottle labels to commemorate events such as weddings or grand openings. Under the approval process, applicants can submit a template as part of the application for label approval, with a description of the specific personalized information that may change. If the application complies with the regulations, TTB will issue the Certificate of Label Approval (“COLA”) with a qualification that will allow the certificate holder to add or change items on the personalized label such as salutations, names, graphics, artwork, congratulatory dates, and names, or event dates, without applying for a new COLA. Industry members may also offer personalized labels without going through this process by obtaining individual COLAs for each personalized label.

Country of Origin Labelling. The final rule clarifies that all imported alcoholic beverages must display a country of origin statement if the beverage is the product of a country other than the U.S., as required under U.S. Customs and Border Protection (“CBP”) regulations. Previously, TTB regulations required a country of origin statement on labels of imported distilled spirits but included no such requirement for imported malt beverages or wine.

Beverages Not Subject to the Federal Alcohol Administration (“FAA”) Act. The final rule clarifies which alcoholic beverage products meet the statutory definition of a wine or malt beverage under the FAA Act, and which do not. Products not meeting these definitions are not subject to the TTB labeling regulations and, instead, are subject to FDA labeling regulations. For example, wine that is under 7 percent alcohol by volume does not fall under the jurisdiction of the FAA Act. Unlike wine and malt beverages, all distilled spirits are subject to the FAA Act and TTB regulations.

Contact Information for Advertisements. Current TTB regulations require advertisements to include the name and address (city and state) of the industry member responsible for the advertisement. The final rule allows industry members to include other contact information, namely the advertiser’s phone number, website, or email address, rather than city and state.

Other liberalizing measures adopted by the TTB include:

  • An increase (to plus or minus 0.3 percentage points) in the tolerance applicable to the alcohol content statements on distilled spirits labels.
     
  • Amending the existing definition of “distilled spirits” to reflect TTB’s longstanding policy that products containing less than 0.5 percent alcohol by volume are not regulated as “distilled spirits” under the FAA Act.
     
  • Removing the current prohibition against age statements on several classes and types of distilled spirits.
     
  • Streamlining the wine classifications by deleting the separate class for “citrus wine” and consolidating all citrus wines under the class for “fruit wine.”
     
  • Removing a prohibition that restricts the use of vintage dates on imported wine, provided the bottlers have the appropriate documentation substantiating that the wine is entitled to be labeled with a vintage date.
     
  • Removing outdated prohibitions against the use of the term “strong” and other indications of alcohol strength on malt beverage labels.
     
  • Removing a limitation on the way distilled spirits producers may count the distillations when making optional “multiple distillation” claims on their labels.
     

    Proposals Not Adopted

    After reviewing comments from industry members and the public, the TTB decided not to adopt the following proposals:

    Definition of “Oak Barrel.” In the 2018 Proposal, the TTB proposed to incorporate a definition of an “oak barrel” as a “cylindrical oak drum of approximately 50 gallons capacity used to age bulk spirits,” and specifically sought comments “on whether smaller barrels or non-cylindrical shaped barrels should be acceptable for storing distilled spirits where the standard of identity requires storage in oak barrels.” TTB received almost 700 comments in opposition to the proposed definition, with many arguing that the definition conflicted with innovative industry practices where oak containers of various sizes and/or shapes are used to develop and age bulk spirits, and the TTB, therefore, decided not to move forward.

    Whisky Labeling. In the 2018 Proposal, TTB proposed to require that, where a whisky meets the standard for one of the types of whiskies (e.g., bourbon), it must be designated with that type name, with an exception provided for Tennessee Whisky. Commenters opposed the change, noting that it would require a large number of revisions to labels for products already on the market. Instead, the TTB will maintain its policy that distillers have the option of using the general class “whisky” as the designation or one of the type designations that applies.

    Interaction with FDA Regulations. The TTB decided not to adopt a proposal that would have codified TTB’s long-held position that alcoholic beverages that are “adulterated,” as determined under US Food and Drug Administration regulations, are also “mislabeled” under the FAA Act. This proposal caused significant confusion and opposition from commenters who feared attempts by the TTB to encroach on FDA jurisdiction.

    Other measures the TTB decided not to adopt include:

  • A proposed restriction on the use of certain types of cross-commodity terms (for example, imposing restrictions on the use of various types of distilled spirits terms, including homophones of distilled spirits classes, on wine or malt beverage labels).
  • Proposed changes to statements of composition for distilled spirits labels, including changes that would have required disclosure of components of intermediate products, required distilled spirits and wines used in a finished product to be listed in order of predominance and removed the flexibility to use an abbreviated statement of composition for cocktails.
  • A policy that would have limited “age” statements on distilled spirits labels to include only the time the product is aged in the first barrel, and not aging that occurs in subsequent barrels.

Looking Ahead

The TTB is considering additional regulatory changes that are likely to be addressed and incorporated at a later date. These include, among other things, TTB’s proposal to establish a new section of the alcohol beverage regulations to address advertising issues.

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