Proposed rule would modernize alcohol labeling regs

Date: Tuesday, November 27th, 2018
Source: American Shipper

The Alcohol and Tobacco Tax and Trade Bureau released a 132-page proposed rule on Monday that would affect several aspects of U.S. alcohol trade with foreign countries.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) published a proposed rule on Monday that would modernize the labeling and advertising regulations for wine, distilled spirits and malt beverages.
The agency will collect comments through March 26 on the proposed rule, which would have bearing on certain alcohol imports and exports.

The proposed rule would clarify recordkeeping requirements for importers to retain certificates of labeling approval (COLAs).
When dictated by circumstances, importers and bottlers would have to be able to identify the COLA covering the product upon request by the appropriate TTB officer for a period of five years after the date the products covered by the COLAs were removed from the bottler’s premises or customs custody, as applicable.

The proposed rule provides that, upon request by the appropriate TTB officer, bottlers and importers must provide evidence of label approval for a label that is used on an alcohol beverage container and subject to COLA requirements of the applicable part.
“Where labels on containers reflect revisions to the approved label that have been made in compliance with allowable revisions authorized to be made on the COLA form or otherwise authorized by TTB, the bottler or importer must be able to identify the COLA covering the product, upon request by the appropriate TTB officer,” TTB said.
The agency noted that the proposed rule doesn’t require industry members to retain paper copies of each certificate, but that industry members should be able to track “a particular removal to a particular certificate” and may rely on electronic copies of certificates, including copies contained in the TTB Public COLA Registry.
Additionally, TTB is proposing several liberalizing changes to wine labeling regulations to conform to international commitments, which should increase flexibility in labeling for importers and make it easier for wine producers to export to certain countries, TTB said.
TTB is proposing to issue several new regulations in line with the World Wine Trade Group Labeling Protocol, which entered into force on Nov. 1, 2013.

The Labeling Protocol reflects labeling requirements concerning tolerances in alcohol content statements, vintage wine, grape variety designation, and wine regions “that are consistent with U.S. efforts to remove trade barriers,” TTB said.
The proposed rule would clarify that, under 27 CFR part 4, products defined as wine generally contain at least 7 percent and not more than 24 percent alcohol by volume and that products that would otherwise meet the definition of wine except that they contain more than 24 percent alcohol by volume are classified as distilled spirits and must be labeled in accordance with 27 CFR part 5.
The proposed rule also would liberalize current regulations to allow the use of vineyard, orchard, farm or ranch names as part of trade names or brand names on labels when the name is shown in the mandatory name and address statement on the label.
Current regulations allow the use of such names only if 95 percent of the wine is produced from primary winemaking material grown on the named vineyard, orchard, farm or ranch, TTB said.
“TTB believes that consumers do not see the use of a vineyard, orchard, farm or ranch name as part of a trade name as making a claim as to the source of the grapes, fruit or other agricultural products used to make the wine,” the agency said.

The proposed rule would amend the standards of identity for wine to incorporate “all of the ways in which an industry member may designate wine” according to TTB’s regulations (i.e., amelioration, cellar treatment, added brandy or alcohol).
In addition to proposing clarified recordkeeping requirements and alignments with international protocol, TTB also is proposing stricter regulatory language for exported distilled spirits to be exempt from labeling requirements, clarifying that only distilled spirits exported in bond may be subject to such an exemption.
The proposed rule clarifies that exportation in bond doesn’t include exportation after wine, distilled spirits or malt beverages have been removed for consumption or sale in the U.S.
“Products that are removed subject to tax may subsequently be exported or may end up in the domestic market and therefore are not exempted from the labeling requirements of the [Federal Alcohol Administration] Act,” TTB said.

Alcohol Beverage Formulas. Current TTB regulations and industry practice involve the submission of alcohol beverage formulas in varying formats depending on the type of beverage and whether the product is domestically produced or imported, TTB said.
As TTB believes “this multiplicity of procedures” is unnecessarily cumbersome for regulated industries and for TTB, the agency is proposing to amend regulations to provide for a formula to be filed electronically by using Formulas Online or to be submitted on paper on TTB Form 5100.51.

Formulas Online is TTB’s system for drafting, submitting and tracking formula and sample submissions for domestic and imported alcohol beverages and non-beverage products.

Relabeling. The proposed rule also provides that, under the supervision of U.S. customs officers, imported wine, distilled spirits and malt beverages in containers in customs custody may be relabeled without getting separate permission from TTB for the relabeling.
TTB said such containers must bear labels covered by a COLA if and when removed from customs custody for consumption.
The proposed regulations provide that persons not eligible to obtain a COLA, such as retailers or permittees other than the bottler, may obtain written authorization for relabeling if facts show that the relabeling is for the purpose of compliance with the requirements of the 132-page proposed rule or state law.

Legibility Requirements. TTB also is proposing to amend legibility requirements for mandatory information required to be placed on labels, including by setting forth the requirement that mandatory information be “separate and apart” from descriptive or explanatory information, referred to in the proposed rule as “additional information,” with a few exceptions.
Brand names would be exempt from the requirement, and the provision wouldn’t preclude the addition of brief optional phrases as part of the class and type designation, such as “premium malt beverage,” company phrases associated with the company name and address “or other information required by the regulations, as long as the additional information does not detract from the prominence of the mandatory information,” TTB said.
But the mandatory statements related to disclosure of certain specified ingredients, including FD&C Yellow No. 5, cochineal extract or carmine, sulfites and aspartame, may not include additional information under the proposed rule.

Mandatory information includes the brand name, class and type designation, alcohol content, net contents, name and address of the responsible party (such as the producer, bottler or importer) and disclosure of certain ingredients and processes, according to TTB.

Elimination of “Brand Label.” Current regulations require some mandatory information to appear on the brand label. TTB is proposing to make regulations more flexible by eliminating the concept of a defined “brand label.”
“Where placement requirements exist, the proposed rule provides more specific terminology,” the agency said. “Instead of requiring mandatory information to be in ‘direct conjunction’ with other mandatory information, the proposed regulations clarify when such information must be immediately adjacent to other information and when it may be in the same field of vision as other information.”
Further, proposed provisions address labeling of products bottled after import. If the product is bottled after bulk importation, by or for the importer thereof, the proposed rule would require an “imported and bottled by” or “imported by and bottled for” statement, as appropriate, according to TTB.

Style Requirements. The proposed rule also sets forth requirements for label and font coloring, uppercase and lowercase lettering, type formatting and maximum type size.
Among other things, TTB is seeking comments on whether the proposed changes to placement and legibility requirements for mandatory information, which are intended to provide additional flexibility to industry members, adequately protect the consumer by ensuring that mandatory information on containers is readily apparent to consumers.
TTB also seeks comments on whether proposed rules will require significant changes to labels, containers, or packaging materials.

Examples of False or Misleading Statements. The proposed rule would specifically prohibit the use of false or misleading statements that “explicitly or implicitly” disparage a competitor’s product and includes examples of such statements.

“A statement of opinion such as, ‘We think our [product] tastes better than any other [product] on the market,’ is not prohibited,” TTB said. “However, a statement such as, ‘We do not add arsenic to our [product],’ although truthful, would be considered to be disparaging because it falsely implies that other producers do add arsenic to their products.”

Use of Country Flags in Labeling. Regarding the use of U.S. and foreign flags in labeling, TTB is proposing to remove the statutory prohibition of the use of representations of, or relating to, the American flag, U.S. armed forces or other symbols associated with the flag or armed forces.
Current TTB policy is to enforce the regulatory prohibition only where such representations might tend to mislead consumers. The proposed rule would retain the ban against the use of such symbols or images where they create the impression that there was some sort of endorsement by or affiliation with the government entity represented, TTB said.

Products Bottled to Be Sold in Puerto Rico. The agency also is proposing to amend language requirements to allow all mandatory information to appear in Spanish when products are bottled for sale in Puerto Rico.
“Consistent with the current regulations, the proposed regulations generally require mandatory information, other than the brand name, to appear in the English language,” the proposed rule states. “The proposed regulations also allow for additional statements in a foreign language, including translations of mandatory information that appears elsewhere in English on the label, to appear on labels and containers, as long as those statements do not conflict with, or contradict, the requirements of [27 CFR] parts 4, 5, and 7.”

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