FTC Decision Could Lead To Changes In The Alcoholic Beverage Labeling Requirements

On February 12, 2013 the Federal Trade Commission(“FTC”) issued a final order (the “Order”) requiring Phusion Projects LLC (“Phusion”), the owner of the flavored malt beverage Four Loko, to seek approval from the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) to display an “Alcohol Facts” panel on its cans. Although the FTC’s ruling is limited to Four Loko it could reignite an industry wide debate regarding the inclusion of an “Alcohol Facts” panel on labels and pressure the TTB to act on the issue.

The FTC, which regulates unfair and deceptive practices in advertising, alleged that advertisements for Four Loko falsely claimed that a 23.5-ouce can of the product contained the alcohol equivalent of one to two cans of beer and that a consumer could drink one can safely in a single sitting. However, according to the FTC, a can of Four Loko contains as much alcohol as four to five 12-ounce cans of regular beer and is not safe to drink in a single sitting. Phusion disagreed with the allegations, but agreed to settle the FTC’s claims.

Under the Order Phusion is required to seek approval from the TTB to place an “Alcohol Facts” panel on containers of Four Loko or any other flavored malt beverage containing two or more servings of alcohol. The panel will include information on the size of the container, percentage of alcohol by volume, number of servings per container, the serving size per ounce and the statement, “According to the U.S. Dietary Guidelines, a serving contains 0.6 ounces of pure alcohol.” Below is a sample of an Alcohol Facts panel from the Order.

alcohol-facts

The Order also requires Phusion to include a resealable closure on all cans which contain more than two and half servings of alcohol.

The Order is likely to re-fuel a debate within the alcoholic beverage industry regarding alcohol facts panels on labels. Many major manufacturers of distilled spirits have long supported the inclusion of serving size and/or nutritional information panels on alcoholic beverage labels. Distilled spirits manufactures believe such information would support their “equalization” argument that 12 ounces of regular beer, 5 ounces of wine and 1.5 ounces of 80 proof distilled spirits all contain the same amount of alcohol and represent one serving. Permitting an Alcohol Facts panel on labels would help illustrate that a single serving of a distilled spirits generally has fewer calories than the same serving of beer and wine and help support an argument that beer, wine and distilled spirits should all be taxed at the same rate.

In 2007, the TTB, in response to a petition filed by a number of consumer advocacy groups, issued a proposed regulation requiring Alcohol Facts panels on labels for alcoholic beverages. The TTB received thousands of comments, but never issued a final regulation. Will the Order pressure the TTB to act? We are monitoring the issue.

 

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