Raise a Glass: TTB Attempts to Bring Its Alcohol Labeling and Advertising Regulations Into the 21st Century

By:  T. Daniel Logan

On November 26, 2018, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a proposed rule, “Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages,” aiming to streamline its regulations pertaining to the labeling and advertising of wine, distilled spirits, and malt beverages. Although the document clocks in at more than 100 pages, the changes proposed are substantively minor, and largely reflect TTB’s current regulatory approach as announced through previous regulations, rulings, and guidance.

The most significant change is one of organization – the proposed regulations would reorganize the regulations at 27 C.F.R. parts 4, 5, and 7 (relating to wine, distilled spirits, and malt beverages, respectively) such that subparts, numbering, and regulatory text are parallel to the extent possible. Thus, a provision pertaining to, for example, what constitutes a label, would be found at the same numbered provision across all parts (e.g., 27 C.F.R. §§ 4.61, 5.61, 7.61) and each provision would have similar text across parts. Further, TTB is proposing to remove and consolidate provisions related to advertising in a separate section, 27 C.F.R. part 14, which would apply to wine, distilled spirits, and malt beverages. In so doing, TTB proposes to draw a bright line for all products (consistent with current policy) between labeling and advertising, where the labeling would be any material affixed to the container (including information stamped, printed, or etched on the container) and material not firmly affixed but accompanying the article would be advertising.[1] Additionally, TTB has incorporated the policy announced in many of its industry circulars, guidance documents, and rulings into the codified text; if finalized, the incorporated documents would be superseded.

TTB has proposed more minor changes and clarifications than can be addressed here.  Below we have identified changes that we believe may be of particular interest, first looking at elements of the proposed rules that, if implemented, would affect all product areas, and second, looking at proposed changes that would pertain specifically to wine, distilled spirits, and malt liquor. The following list is not comprehensive and does not include changes that would merely codify a published TTB ruling or Industry Circular.

Changes that would affect all or multiple products:

  • Prohibits the whole or partial obscuring of mandatory label information; such information must be “separate and apart” from descriptive or explanatory information.
  • Loosens COLA restrictions to allow relabeling more broadly, particularly in cases of damaged or missing labels.
  • Eliminates the “brand label” on containers and provides for greater flexibility regarding where mandatory information, such as brand name, class and type designation, alcohol content, net contents, name and address, and ingredient or process disclosures, may appear.
  • Requires manufacturers and importers to provide information sufficient to substantiate claims made in labeling or advertising upon request by TTB. Claims that cannot be adequately substantiated will be considered misleading.
  • Removes the prohibition on use of representations of the American flag and armed forces of the United States in labeling.
  • Restricts the use of statements or representations that would mislead consumers into believing that the product is, or contains, another commodity (such as “bourbon-flavored beer”). The rule does not prohibit the use of brand names of a different commodity, cocktail name as a brand name, fanciful name, or truthful statements about the production of the product (such as “aged in whisky barrels”).
  • Requires applicants for certificate of exemption from label approval, issued prior to bottling, to include the statement “For sale in [name of State] only” on product labeling. TTB currently requires such labeling as a condition of issuance of a certificate of exemption. [Wine and Distilled Spirits]
  • Mandates that upon request by a TTB officer, bottlers and importers must provide evidence of label approval, including where permitted revisions have been made to the label. Such information must be available for five years from the date the products covered by COLAs were removed from the bottler’s premises or Customs custody.

Wine-Specific Changes (27 C.F.R. Part 4):

  • Aligns labeling regulations with World Wine Trade Group (WWTG) Labeling Protocol, which would loosen the requirements for use of multi-county or multi-state appellations of origin for domestic and imported wines (such as by permitting such appellation where 85 percent of the wine is derived from grapes, fruit, agricultural products, or rice are grown within the areas named in the appellation).
  • Separates the requirements to make an “estate grown” as opposed to an “estate-bottled” claim.
  • Removes restrictions on the use of vintage dates on wine imported in bulk and bottled in the United States provided the bottler has documentation substantiating the vintage date.
  • Designates a novel wine class, “rice wine,” that would describe the standard for rice wines such as Sake and Gyeongju Beopju.
  • Replaces the requirement that approved grape variety names shall be published annually in the Federal Register and instead requires that they be published on TTB’s website.

Distilled Spirit-Specific Changes (27 C.F.R. Part 5):

  • Requires that the state of original distillation must be shown on the labeling of certain whiskies, in addition to or instead of the bottling address.
  • Adds “agave spirits” and “diluted spirits” classes and modifies the standard of identity for whisky to allow for unaged, or “white,” whisky.
  • Allows for age statements on any spirit type (except neutral, non-grain spirits) aged in or with oak.
  • Expands the allowable alcohol content tolerance to plus or minus 0.3 percentage points above or below the labeled alcohol content (from 0.15 percentage points).
  • Specifies that a product’s statement of identity must be based on the finished product, without regard to whether an intermediate product is used in the manufacturing process.

Malt Beverage-Specific Changes (27 C.F.R. Part 7):

  • Permits certain mandatory label information to be included on a keg collar or tap cover that is not firmly affixed to a malt beverage keg where such keg has a capacity of 10 gallons or more and has the name of the brewer permanently or semi-permanently stated on the keg.

TTB is seeking comments on this proposed rulemaking through March 26, 2019. If finalized, regulated industry will have plenty of time to adjust – TTB has indicated that that it intends to give regulated entities three years to come into compliance.

[1] This differs from the definition of labeling in the Federal Food, Drug, and Cosmetic Act, which includes both labels affixed to an article and written, printed, or graphic matter accompanying an article. 21 U.S.C. § 321(m).