Archive for the ‘alcohol beverages generally’ Category
Label Flexibility
TTB has been working on a new COLA form, with new and more flexible rules about what may change without seeking a new label approval. TTB announced this in the January 13, 2012 Newsletter and the Federal Register two weeks prior.
The new rules, if/when implemented, could allow a huge variety of big and small changes — without the need to submit, wait, haggle.
Here is the draft form. For example, the new rules (at page 3) would allow you to:
- Move mandatory around. This is at category 2. This would allow you to move VODKA from the bottom of the front label to the top of the front label, for example. It would not allow you to move VODKA from the front to the back. (The draft form does not seem to make it clear, about whether it’s also okay to reposition non-mandatory. It would be very strange if okay to move the important stuff but not the less important stuff.)
- Change colors. This is at category 3.
- Add/delete/change a QR code. This is at category 22.
- Add/delete/change social media icons. This is at category 25.
- Add/delete/change information about awards. This is at category 26. It remains a bad idea to announce “Award for most antioxidants in a Cabernet.”
- Add/delete/change holiday/seasonal graphics/salutations. This is at category 27.
- Cover all sizes with one approval. This is at category 9. This could avoid the need for three separate COLAs — above 3 liters, below 237 ml., and in the middle (as on the current form at category 4).
All of this is in addition to the many other changes that have been allowed for years. For the sake of comparison, the 2011 form is here. Some of these are big changes and should help a lot. TTB’s comment period ended on February 27, 2012, but if you missed the boat or have an opinion, please set it forth below.
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The Five Year Rule
Be careful about the five year rule as above and here. The rule says TTB formulas expire five years after approval. Not all formulas. Just the ones for imported products such as vodka, sake, and liqueur for example. This is in substantial contrast with TTB label approvals, permits, and domestic formulas. Generally speaking, they don’t expire unless the applicant changes something.
In our experience, TTB tends to explain the expiration date on the relevant formula approvals, but not in the regulations or widely elsewhere. An example is here. It can come as an unpleasant surprise, if you are seeking a new label approval more than five years after issuance of the formula approval, as in the case above. In the time period about 5-8 years ago, TTB would frequently allow a use-up in some cases where the formulas was expired. But, as suggested above, use-ups are much harder to get, in more recent years.
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formulas, policy, procedure, use-ups
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Streamlining at TTB
In recent months TTB has been busy tinkering with the label approval process. TTB announced the culmination of its streamlining efforts here. This is important for all regulated entities because, despite all these streamlining initiatives (plus the advent of computers and online filing), the average processing time for spirits has moved from a few hours to well over a month, during the past 20 years. Most spirits labels are currently taking well over 30 days, and TTB often says you should allow up to about 90 days. Since last summer, things seem a lot better with wine labels (moving from over a month to about half that). Beer has stayed relatively and consistently quick during the past several years, with an average turnaround of about a week.
In the late 1990s, if I recall correctly, it was possible to receive a label by fax, Scotch tape it to a form, Xerox it, walk it across the street to ATF, not go through a metal detector, wander around the government building until you found the label reviewer, wait your turn — and voila — walk out 45 minutes later with approval in hand. It was even possible to sit face-to-face with the reviewer and revise the application on the fly (with other quaint relics like a pen and Wite-Out). Well, clearly a lot has changed.
TTB is clearly enamored of the term “streamlining” and seems to believe a thorough application of this word is an important step toward making things better. The term is used at least 10 times in the press release touting the various streamlining accomplishments. Many of the accomplishments seem rather modest (compared to, for example, showing that the average processing time is going down). It looks like somebody got carried away in brainstorming the list of accomplishments. One such accomplishment was: “created a new email address” about streamlining. Another example is cutting out informal label reviews. This may be a sensible or necessary step, but it’s not clear why cutting out services should be presented as a significant accomplishment.
Despite some of the overheated verbiage in the announcement, there are several serious and important points that seem worthy of emphasis.
- TTB received over 146,000 labels last year, and the numbers continue to grow every year. I suspect a large number of the applications are in bad shape, and that many of the labels raise difficult issues. It would be hard to be consistent and fast with so many labels, especially since so many of the necessary judgments are inherently subjective.
- TTB explained why they don’t accept pdf labels. Because pdfs “will not display as part of the printable version of the approved COLA, which utilizes HTML formatting.”
- Formulas Online makes it easier to attach a formula approval. This is true.
- More time to make corrections. Under the current system, if you wait five weeks for review of your imported liqueur label, and then you are told the formula approval is too old, you would only have 15 days to fix it — or go to the back of the line. With this change, expected in a few months, you would actually have ample time to get a new formula approval and attach it without losing your place near the front of the line.
- Updating the form and instructions to allow more changes without extra applications.
Among all these changes, one of the most important is not set forth in TTB’s streamlining announcement. After an unusually long period of the same people staying in the same jobs, there is much rotation. The person newly in charge of spirits labeling (the slowest category for many years) seems to take streamlining very seriously to the point where I could see her fitting right in at FedEx or Amazon.com. Perhaps things really will improve soon.
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From IRS to ATF to TTB to What?
We are starting to get a lot of questions about TTB’s future. Over the years I have marveled and wondered if Bill Clinton or George W. Bush spent much time pondering the fate of ATF or TTB (and, for example, the intricacies of the label approval process). Well, the Obama Administration clearly thinks about it a lot. Late last year, Wine & Spirits Daily wrote:
Obama’s Office of Management & Budget (OMB) is considering “the impact of folding TTB’s tax enforcement and collection functions into IRS, to be proposed in the Budget and implemented in FY 2013,” reports Kane’s Beverage News Daily. The TTB has until Dec 28 to submit a proposal to the OMB “analyzing the feasibility and appropriateness of this proposal, including a discussion of how the missions and goals of these two agencies could be combined.” Furthermore, TTB is to review whether its “regulatory and health-safety functions” can be transferred to the IRS or even the FDA.
Since then, there has been almost nothing in the press about this important story. As recently as today, Google News has not much of any consequence on this issue. I don’t see much on TTB’s website or newsletters. A few days ago, however, The Gray Report set forth some new information on this topic, and it provoked a lively discussion in the comments. W. Blake Gray wrote:
The politics of this potential elimination of the TTB are fascinating, and ultimately why I don’t think it will happen even if Obama wants it. … In this climate where government austerity is seen by many as a good thing, Obama could gain some chips by trying to eliminate a federal agency. … However, the Republicans in the House seem dead-set on preventing him from achieving anything at all, and that will only intensify leading up to November. I think they’ll reflexively oppose it. … But what a conflict it poses philosophically for Republicans. Deregulation is a party tenet — but how would social conservatives react to restrictions being taken off of Demon Rum?
The 2013 Federal Budget is set to be released in a week. According to The Washington Post, “The budget is traditionally released on the first Monday in February — which is Feb. 6 — but the administration has pushed the release to Feb. 13.” Last month, Wine & Spirits Daily wrote:
The TTB has since submitted a plan analyzing the proposal to the Office of Management & Budget, but nothing is public or final at this point. … There are two current speculations as to how the reorganization would go down. One, the organization and all of its functions would be taken in one lump sum and deposited into a corner of the IRS. Two, the TTB’s tax enforcement and collection function could go to the IRS, while its regulatory and health-safety functions could go to the FDA. This is the most extreme scenario. One thing that almost everyone agreed one, however, is that an united alcohol beverage industry has enough power to squash any such proposal if it indeed made its way to Congress.
At least with the TTB the industry is the priority. With the FDA you’re with 25 or 30 other industries.” Even more problematic is that the FDA may have some anti-alcohol types, whereas the TTB is a neutral force.
One of the biggest complaints last year was the TTB’s slow response time when it came to approving labels – a result of less funding by Obama and inevitable lay-offs. As a remedy, the TTB proposed shifting its duties more towards enforcement rather than label pre-approvals, but the industry fought it. Instead, it seems the industry would rather the TTB speed up the COLA process than do away with it.
[I]t doesn’t seem likely that disbanding the TTB would save much money because theoretically it would require the same amount of people to complete the same functions now performed by the TTB, which “is pretty bare bones as it is.” Furthermore, the “TTB is one of the few revenue generating agencies in the federal government. They make a lot of money. It would be hard to split it up effectively.”
Three years ago, as part of the 2010 Budget, the Obama Administration flirted with the idea of imposing user fees for various TTB activities, and not much came of it. In our opinion, to the extent this is some kind of business school-type exercise, or thought experiment (as in, show cause why there should not be a shakeup), it could be useful. But, if any reorganization would take several hundred people from one entity and replace them with a similar number at one or more other entities, it is hard to imagine that the costs would not outweigh the benefits.
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AJ Report on Health Claims, Part 2
AJ’s next target is MGD beer. “Probably the most blatantly illegal advertisement came in early 2009, when a new beer called MGD 64 (boasting just 64 calories) sponsored an online fitness program…” With a claim like that it would be nice to know what makes it “illegal,” if not the imagery of “a thin, toned brunette in a party dress, smiling brightly as she showed off the beer-sponsored body that users could obtain if they joined.” With little analysis or evidence, AJ summarily concludes that the marketing is “patently false and misleading.” By contrast, in my opinion, if you are going to strip most of the calories and body away from a beer, down to a puny 64 calories, you darned well have the right to market it as only 64 calories (especially when the same amount of milk, apple juice or regular beer would have 2-3 times as many calories).
The “Industry Watchdog” lays much of the blame for this sorry state of affairs at the feet of the industry’s failure to properly regulate itself: “Finally, the most important reason for the breakdown in regulatory oversight is the continuing charade of voluntary self-regulation.” AJ says the industry has “created a system of codes, largely designed to convince policymakers they do not need to intervene, and that the industry can monitor itself” and the system is not working. But AJ would be no happier to have TTB calling the shots. AJ claims that “The government officials at TTB have little to no expertise in health. A better choice might be the Food and Drug Administration (FDA).” AJ provides not a scintilla of evidence that FDA would or could do any kind of a better job with a single one of the issues noted above. FDA might be far more likely to allow vitamins in vodka and on the label. FDA does not police the term natural more strictly compared to TTB. FDA would not be likely to restrict the use of organic claims or disallow MGD from marketing itself as low in calories.
In view of the weak examples set out by the report, and with few if any meaningful health claims getting past TTB, it is a wonder to behold what more rigorous enforcement would look like. Should the government ban imagery associated with sound, ripe fruits (because they are “wholesome” and booze is not)? Should Baileys be stripped of all rights to mention dairy cream (because it’s commonly associated with healthfulness)?
Last but not least, AJ sets its sights on the First Amendment. AJ claims:
Another charade in which the industry engages to keep regulators at bay is to argue that the free speech clause under the First Amendment protects companies from any government regulation of advertising. This makes for good political posturing, but from a legal standpoint, it’s simply not true. The First Amendment does not protect deceptive advertising. The government can and should stop such practices.
This would be damnable if it were true. Is anyone arguing the First Amendment protects companies from all advertising regulations? The part that’s simply not true is to suggest that a meaningful number of alcohol beverage companies make this claim. I am not aware of any alcohol beverage company above a handful of employees that has or would make an extravagant claim of this sort. Most of them favor and support a wide variety of sensible controls on labeling and advertising. To put things in perspective, Dr. David J. Hanson has a detailed overview of AJ and Marin (and its funding, methods and history) here. He explains that it’s nothing new for the group to “[crusade] against First Amendment constitutional free speech rights” in pursuit of its prohibitionist agenda.
It’s not like I left out the better examples, or the better arguments. With even the protein-infused vodka (Devotion), where is the actual, documented harm, as opposed to some vague possibility? I would have liked to find more in this report with which I could agree. I do agree with the premise that alcohol beverages still, after all these years, can raise difficult societal and public health issues, and need to be regulated with seriousness and care. But because the AJ report relies so much on exaggeration, distortion and weak examples, for me the report succeeds mostly in showing there is not a substantial problem related to health claims by alcohol beverage companies.
AJ Report on Health Claims
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