Alcohol regulators rain on "good for you" labeling claims

Sometimes, less is more. Consumption of low- and no-alcohol beer, wine, spirits, and ready-to-drink (RTD) products is up in at least 10 key markets, including the United States, and shows no signs of slowing. In fact, IWSR Drinks Market Analysis predicts global sales of low/no alcohol beverages will grow more than 31% by 2024 — a significant jump. These products made up just 3% of the market in 2020.

This “better for you” trend may inspire some producers to stretch the benefits of their products on labels or in advertisements, kind of like claiming a low-fat cookie is good for you. But you can’t do that: The Federal Alcohol Administration Act (FAA Act) prohibits businesses from making false or misleading statements on labels or in ads.

Labeling practices are just one of the items addressed in a report issued earlier this year by the Treasury Department, which regulates sales activity, labeling, and advertising under the FAA trade practices provisions. The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for administering regulations related to labeling requirements for beverage alcohol products that fall under the scope of the FAA. Some alcoholic beverages, such as low-alcohol wines, are regulated by the U.S. Food and Drug Administration (FDA).

In the report, Competition in the Markets for Beer, Wine, and Spirits, the Treasury Department said labeling requirements should prioritize consumer protection but not overburden small and emerging businesses. It then called on TTB to “reexamine its labeling and other practices.”

Finding the right balance between those potentially opposing asks could be challenging, but TTB is on the job. It’s currently reviewing its labeling guidance and has released several advisories regarding labeling requirements in recent months. Some of these are addressed below.

Be real

In December 2021, TTB issued a notice of proposed rulemaking in which it reiterated that the Federal Alcohol Administration (FAA) Act prohibits false and misleading statements on alcohol beverage labels. “TTB will not approve an application for label approval proposing to use a trade name on a label that gives a misleading impression as to the age, origin, or identity of the product.”

Higher penalties for labeling violations

TTB also instituted a new maximum civil penalty for violations of the Alcoholic Beverage Labeling Act (ABLA). Effective February 17, 2022, the maximum penalty for any person who violates the provisions of the ABLA increased from $21,633 to $22,979.

All containers of alcoholic beverages manufactured, imported, or bottled for sale or distribution in the U.S., or shipped to members of the U.S. armed forces stationed outside the U.S, should contain the following health warning statement:

GOVERNMENT WARNING: (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems.

Best practice is to copy and paste that warning, as any deviation could lead to a penalty.

Keep it clean

On April 8, 2022, TTB addressed the use of the word “clean” in labeling as follows: “TTB regulations do not define the word ‘clean,’ and we do not have standards for the use of the term on labels or in advertisements. Thus, consumers should not interpret the term as meaning that the beverage is organic or has met other production standards set by TTB.”

It notes that “clean” may be used to describe a beverage, as in “a clean, crisp wine.” Yet in other cases, the word may suggest there’s a health benefit to the product (e.g., a clean and healthy malt beverage). TTB would consider the second example to be a misleading health statement and would act accordingly. This sort of an announcement from TTB typically predates enforcement actions.

Suppliers have had fair warning. In 2003, TTB issued a rule prohibiting health-related statements, including a specific health claim, on labels or in advertising — unless the claim is truthful and adequately substantiated by scientific evidence; is properly detailed and qualified; and adequately discloses the health risks associated with moderate and heavy alcohol consumption, or, for certain individuals, any alcohol consumption.

Despite this rule, misleading health claims persist. A 2020 TTB newsletter noted, “We have found an increasing number of alcohol beverage advertisements, including company websites and social media accounts, depicting health-related statements that suggest a relationship between the consumption of an alcohol beverage and its purported health benefits or effects.” It underscored that untrue or misleading health-related statements are prohibited. 

It will be interesting to see what real change emerges from the multiple TTB notices. Today, labels must be truthful and contain sufficient information about the product for the consumer to make an informed choice. Whether that will eventually include the calorie count of a pint of beer or exactly what’s in a glass of wine remains to be seen. 

While the labeling regulations described above could be detrimental to “better for you” products, allergen, ingredient, and serving-size labeling regulations may benefit “better for you” products.

The Treasury Department has considered requiring producers to include ingredients on labels for decades. Since 1972, in fact, different requirements have been adopted, rescinded, adopted, and rescinded again.

Currently, beverage alcohol producers are only required to disclose a handful of ingredients:

• Aspartame
• Color additives
• Carmine
• Cochineal extract
• FD&C Yellow No. 5
• Sulfites at 10 or more parts per million

Wine producers don’t need to list flavors, grape juice concentrate, non-vegan materials (e.g., fish bladders), or sugar. Liquid smoke doesn’t need to be listed as an ingredient in beer or spirits.

With the exception of the ingredients listed above, which could trigger a reaction in consumers, beverage alcohol suppliers aren’t required to include potential allergens on their labels.

Proposed mandatory labeling requirements

TTB has published a notice of proposed rulemaking regarding the mandatory labeling of major food allergens (i.e., those subject to the labeling requirements of the FAA Act) used in the production of distilled spirits, malt beverages, and wines.

The proposed rule was never finalized.

Voluntary labeling allowed

However, producers, bottlers, and importers of alcohol beverages may voluntarily list major food allergens on the labels of distilled spirits, malt beverages, and wines. Major allergens include crustacean shellfish, eggs, fish, milk, peanuts, soybeans, tree nuts, and wheat, as well as proteins derived from these foods.

There are interim regulations that set certain requirements for such labeling, should producers voluntarily opt to provide it.

As with allergens, alcohol beverage producers aren’t required to label their products with serving facts.

TTB proposed serving-facts labeling mandates in 2007 but hasn’t yet finalized them. In 2013, it said producers could voluntarily include serving-facts statements on labels, such as:

• Number and size of servings
• Number of calories per serving
• Number of grams of carbohydrates per serving
• Fat per serving
• Protein per serving

Providing such information could “be an effective means of conveying information relevant to health concerns,” notes the report. However, the Treasury Department recognizes that identifying serving facts could be burdensome for small businesses and new entrants to the market due to “the potential need for product testing.”

It’s likely the Treasury Department will continue to evaluate the need for serving-facts labels, especially since “FTC has seen the need to police deceptive practices in alcohol labeling.”

With change on the horizon, producers are right to wonder how long it will take to get new labels approved. In 2016, it took an average of 27 days for labels to be approved, but TTB has been working to reduce wait times. As of 2021, the average approval time is six days.

Furthermore, minor changes to labels may be made without resubmission for approval.

Getting labels right is one of the challenges alcohol beverage suppliers need to navigate. Understanding state-specific direct-to-consumer wine shipping regulations is another. Avalara for Beverage Alcohol can help.