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Our Craft Boom Echoes all the way to France and Sweden

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padI have been hearing about Our Vodka for quite some time but have not had much chance to scope it out. Now that I found time, I thought there would be a lot more there there. I only see US approvals for two in this series so far, to cover Detroit, and Seattle, as above.

I start this post with a skeptical but open mind, willing to be persuaded that it’s a good idea. My skepticism flows from how local can it be, with a company in France and another in Sweden, running the show? It also flows from, if this is really supposed to have some local pizzazz, could there be a worse way to capture its spirit, than from something boiled to and past the point of neutrality — as a matter of law, fact, and science?

The first article I happened upon seems to have readily concluded that it’s a bad idea. The Stranger doth proclaim:

Pernod Ricard is the corporation that owns Absolut, as well as Chivas Regal, Jameson, Glenlivet, Malibu, Kahlua, Beefeater, and on and on and on. Its Our/[Insert City Here] local-lookalike marketing scheme was first rolled out in Berlin last year; it’s now been installed in, or is imminent in, 11 cities around the world. … Holly Robinson, one of the co-founders of actually local Captive Spirits Distilling in Ballard, says:  “I do believe they will ABSOLUTLY be eaten alive by the community. Seeing they are opening a few blocks away, we are hoping to use some of their dollars to lure more customers to the neighborhood to see our awesome Ballard breweries, distilleries, & such… this is their way to get their foot in the door to a [local] scene that they’ve [otherwise] dominated for decades.”

There’s already an Our/Detroit Vodka. Over at Deadline Detroit, Jeff Wattrick has done a fine job of documenting Pernod Ricard’s especially disingenuous, icky marketing in Detroit, which manipulates that city’s situation in especially disingenuous, icky ways…

Wattrick says:

Craft spirits are a welcome trend. As with craft beer and local wineries, there is something fun about being able to get a well-made drink and then talking with the people who made it about why it’s so good. … Unfortunately, as with all things interesting and local, craft spirits have been co-opted. Consider “Our/Detroit” vodka. It’s locally produced! It cares about the community! It’s a project of the French distillery giant Pernod Ricard Group…wait what? Pernod Ricard, whose brands include Absolut, Jameson, and Seagram and whose annual revenues top $7 billion, is behind this faux-local vodka.

By this point, I am struggling to support this enterprise, or find somebody other than Our that has something nice to say. Let’s see, I do give the companies credit for trying do something hard, new, different. It looks like Our has dialed things down a bit, because the first Detroit approval, in June 2014, had a big reference to “Local Vodka” on the front label. But by the time October and Seattle rolled around, this had morphed to “Our Vodka.” At least Drink Spirits is sympathetic, saying:

There’s no ignoring that Pernod Ricard has a problem on their hands with their major vodka product: Absolut Vodka went from being THE import vodka in the 1980s to being only one of a dizzying number of contenders in the vodka space in the 2000s. The result has been a single digit decline in sales for the past couple of years for a brand that once seemed unstoppable (and given the volume that Absolut has, just a couple of percentage points is a massive shift).

The Absolut Company is set to work with local distilleries around the world, using the same vodka formula, to create vodka using locally sourced ingredients. The theory is that even though the fundamental core of Our/Vodka is the same throughout, the flavor and character of each city’s release will be unique because of the variance in flavor and character of local grain (or “locally purchased alcohol of regional descent”) and water.

We have no illusions that Our Vodka will move the needle dramatically in either direction for Absolut and Pernod Ricard, but that doesn’t seem to be the goal of it. Our/Vodka is the kind of cool and innovative thing you simply wouldn’t expect to come out of a giant corporation, and it shows that even the giants understand just how important craft spirits have become. …[W]e expect there to be quite an uproar in the craft space from distillers and their faithful denouncing Our/Vodka as “anti-craft” which completely misses the point. If their aim was to simply have a hand in craft, they could just snap up the often rumored for sale Titos Vodka, which is as good a craft image as money can buy. Instead, they are working with small distilleries, local entrepreneurs (in Detroit, it’s three women entrepreneurs. …

The vodka seems to raise some good and important business issues, and I am sure it makes a fine cocktail.

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In Defense of Fireball, PG and Good Journalism

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The Daily Beast published a highly relevant story a few days ago, slamming Fireball and propylene glycol. Fireball is a hugely popular “Cinnamon Whisky,” and a recent label approval is here. The story explains that Fireball contains propylene glycol, commonly known as PG, and in the most alarming way that could probably be set forth without a big lawsuit, the article heaps scorn upon PG and Fireball. As of today, Google has more than 81,000 stories about fireball propylene glycol, but the Beast story was one of the first.

The article trots out alarming buzzwords such as: recall, antifreeze, swill, Prestone, Low-Tox, disease, health risks. It says:

One key ingredient of the stuff: Propylene glycol, a synthetic liquid that absorbs water. The Centers for Disease Control note that it is used to ‘make polyester compounds, and as a base for deicing solutions.’ In food production, the CDC adds, the syrupy stuff also can be used to “maintain moisture… It is a solvent for food colors and flavors.”

I called on a few experts in writing this blog post because I think Tim Mak’s article may be unfair to Fireball, its producer (Sazerac) and the important food chemical known as propylene glycol. Kevin at Nutrevolve sums it up pithily: “Anyone who has compared propylene glycol to anti freeze to inspire fear has done nothing but demonstrate a lack of chemistry knowledge. … Notorious for regular application of the Precautionary Principle, even CSPI gives the propylene glycol derivative, propylene glycol alginate a green light – see here.”

I talked it over with Kate Ratliff. Kate is the Technical Director at Flavorman, a leading flavor and beverage company headquartered in Louisville. By the way I think Tim is a great writer, and he picks great topics, such as this gem about beer labels. But the Beast article seems like a prime example of junk science; it is sensationalist and it actually makes readers and consumers dumber. It does no favors for the Beast’s readers, or for anyone who cares about science, or high quality foods. The tenor of the article is inconsistent with the fact that propylene glycol has been widely and safely used in a large percentage of foods and beverages, over more than 50 years, around the world. Many food products would not be as good without this key building block. Even if you are looking at an ingredient list on a food label, and PG is not noted, it may well be in the package and probably is. This is because PG is used in thousands of flavors, and there is no requirement to show a flavor’s ingredients on any food label. Moreover, most alcohol beverage labels do not show any ingredient list at all, and ShipCompliant’s amazing LabelVision system shows not even one label that mentions PG (among over 1.5 million indexed labels, and hundreds of thousands of alcohol beverages that probably contain this substance).*

When I talked it over with Kate, she said “Robert, don’t be silly. Everything has established toxicity levels, even things like water and vitamins. Yet, we are encouraged to drink lots of water and supplement our diets with multivitamins. PG is fine.” I happened to be down the street from Sazerac’s plant yesterday, at Kate’s office, whereupon she offered me a shot of propylene glycol, straight up. With assurances from her colleagues (and FDA) that it’s safe for human consumption, I sipped the PG. It seemed oily and bitter, and wholly without any smell. The bitter aftertaste lingered for a few minutes and later I tasted a small amount of sweetness. I am pleased to report that I woke up just fine this morning without any apparent effects. For the record I note that the city and her plant are full to brimming over with some of the finest beverages in the world, but Kate only offered me the PG and a bottle of water.

We thought it was important to respond to Tim’s article because it seems clear that it is aimed at low-information consumers such as your typical frat boy. The article is replete with references to “Bummer, Dude” and Total Frat Moves, not exactly paragons of nuance or subtlety (and yes, the Food Babe also has it wrong). We think they are likely to take away precisely the wrong message — for example the entirely incorrect idea that PG is worse than too much alcohol, or too much sugar, or too much junk food. Or, the entirely wrong idea that Fireball is somehow worse than any of the next 10 cinnamon whiskeys, which probably contain PG as well. The Beast story also tends to suggest that US regulators such as FDA and TTB are asleep at the switch here, and once again this is highly misleading or wrong.

Flavor expert Vince Ficca explained that it is important to use PG as a solvent where alcohol is not a good choice; for example, to bring down the flashpoint, or for countries (such as Muslim countries) where alcohol is not legal. Vince also pointed out that nobody should confuse PG with its toxic cousin, ethylene glycol. Good old Wikipedia explains:

Propylene glycol … is considerably less toxic than ethylene glycol and may be labeled as “non-toxic antifreeze”. It is used as antifreeze where ethylene glycol would be inappropriate, such as in food-processing systems or in water pipes in homes where incidental ingestion may be possible. As confirmation of its relative non-toxicity, the FDA allows propylene glycol to be added to a large number of processed foods, including ice cream, frozen custard, salad dressings and baked goods.

Fireball does a nice job of injecting some reason into this discussion here:

Fireball does not contain any antifreeze at all and the suggestion is ridiculous. Sadly, this is the media’s way of crafting attention grabbing headlines, but it simply is not true. We would not dream of putting antifreeze in our product. … PG is a clear, colorless liquid with the consistency of syrup. It is practically odorless and tasteless. It is the ideal stabilizer and clarifier for a large variety of flavors that give most of today’s food and beverages their distinctive taste. … Flavor companies use it to carry flavor ingredients through to the final product, to preserve the integrity of the flavor and to ensure it is shelf stable. We understand that very few flavors can be made without it.

Food scientists tell me it would take many ounces of PG at a sitting to induce a harmful effect in an average person. A bottle of Fireball has less than an eyedropper full of PG. Please don’t take any of this as medical advice. But, now that the Ice Bucket Challenge is passe, I want to publicly call out Tim for the PG challenge. He should put up some examples of ill effects from PG, or drink a shot of PG forthwith.

* Stop the press. LabelVision did find one lonely label unabashedly declaring the presence of PG, and it’s here.

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The Label from Hell

Meet the label from hell, as above. Just about every element raises another legal issue. I had the opportunity to discuss this hypothetical label at ShipCompliant’s Wholesale Gathering, in White Plains, last week, on a panel with Susan from TTB, Deb from Diageo and Jeannie from Brown-Forman. The label raises at least 30 legal issues that could trap the unwary, and it would not be difficult to add a few dozen more. One of the points is to show that, if a food or beverage label looks easy, you are probably not paying attention. How many issues can you spot, without prompting?

The title for the presentation is “The Spirits Label from Hell,” and a copy is here. The subtitle is “This label should be easy” and this relates to the well-established corollary that the easier the proponent claims a label to be, the harder it will end up being. Among the highlights of the presentation was when the lady from Jack Daniel’s “hit” me with a cease and desist letter, around slide 10. It did not hurt because, thankfully, it was one of the “exceedingly polite” cease and desist letters made famous by the company.

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Your New Friend, ARTAL, Part 2

Wow! TTB’s list of Allowable Revisions to Approved Labels (ARTAL) is getting powerful. It is getting long and complicated — but it also provides a lot of good opportunities to avoid or cause a problem.

artal-on-formOn September 29, 2014 TTB announced about six new changes to the ARTAL list. They are:

  1. Change promotional sponsorship-themed material (festivals and sports references)
  2. Change ratings (#1 vodka according to Vodka Quarterly)
  3. Delete organic references
  4. Change the spelling on sulfites
  5. Change information about the amount produced
  6. Add serving suggestions (shake well)

Also, TTB provided a reminder that it’s ok to make certain small changes to labels for Argentinian wine as here. The first part of “Your New Friend, ARTAL, Part 1” is below. The rest of Part 1 is here. And here is the whole list (less Argentina) in one place.

Maybe it will help if TTB makes the ARTAL list much more visible, for example, like the words in red, on this hypothetical form.

In early July TTB announced a massive and important change to the COLA system. TTB greatly expanded the “Allowable Revisions to Approved Labels” (hereinafter “ARTAL,” as on page 3 of the new 4-page COLA form).

TTB began laying the groundwork for big “streamlining” changes in early 2012, as summarized here. Although some of the ideas seemed very modest as of then, the streamlining train clearly picked up momentum in the next few months. It seems entirely possible that some of the new changes could or should cut a very large percentage of the more than 10,000 labels submitted to TTB every month. Compared to a few years ago, it is quite amazing that the lighthouse label on the left (above) could change to something as different-looking as the striped label on the right — without any need for a new COLA.

The TTB ID number on this label, for example, shows that TTB received at least 671 label applications on just one day in April 2012 — to say nothing about the labels submitted via paper. That should not happen anymore. Instead, applicants should get familiar with ARTAL. It can eliminate lots of waiting, expense, frustration, inconsistent determinations, TTB work and applicant work.

 

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The Tito’s Lawsuit: When Approval is Not Approval

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Tito’s vodka was doing great for the past 15 years, then hit a gigantic speedbump this week in the form of a class action lawsuit.

Tito’s therefore provides a good example of when an approval is not really an approval. Tito Beveridge has more than 30 TTB label approvals for his vodka from 1997 to 2013 (as in the above image, from LabelVision). They may not do him much good in this lawsuit, even though, in years past, most would assume the federal approval would be dispositive. It’s a good thing most TTB approvals are not paper anymore because these would “not be worth the paper they are printed on.”

summonsSummary:  in Hoffman v. Fifth Dimension, Inc., Gary Hoffman (a consumer) sued Tito’s vodka on behalf of all Tito’s customers in California, claiming that the company misleads people about whether the product is “handmade.” The lawsuit was filed September 15, 2014 in San Diego county court. The federal government reviewed and approved the Tito’s labels, but has no definition for the term at issue.

The classic case of an approval that is not really an approval would be your garden variety Napa Valley Chardonnay, Vintage 2010. TTB will take almost every one of those italicized words at face value. To the extent any one of those words is not true, your approval is not going to help you too much, in the event of an inquiry. Like an IRS tax return, the COLA (and any formula approval) is, to a surprisingly large degree, something of an honor system, stapled together with the penalty of perjury on every such document.

Updates:
9/16/2014: Judge Eddie C. Sturgeon is assigned to handle the case.
9/23/2014
: Tito’s apparently put out a press release, sketching out a defense. I sure hope they have more. They took a jab at the plaintiff for botching the defendant’s proper name, Fifth Generation, Inc. Shanken points out that the brand is at 1.3 million cases per year (that’s a lot of hands!). Tito says “he will vigorously contest the lawsuit.” Tito largely hangs his hat on the fact that TTB approved the labels.
9/25/2014:  the plaintiff amended the defendant’s name, from Fifth Dimension, Inc. to Fifth Generation, Inc. In so doing the plaintiff declared being ignorant of the company’s true name, when filing the complaint on 9/15/2024. This is odd because the plaintiff used the correct name on the Affidavit of Venue filed the same day. Plaintiff did a good job covering this point, though, in the original complaint, by saying:  “Plaintiff is ignorant of the true names and capacities of the defendants sued herein as DOES 1-100, inclusive; therefore, Plaintiff sues these defendants by such fictitious names. … Plaintiff will amend the complaint to allege their true names and capacities when ascertained.”
amended9/30/2014: things just got much more serious for Tito, as the case ballooned into a nationwide class action suit. The amended complaint states:  “This is a nationwide class action case brought on behalf of all purchasers of vodka (“Vodka”) manufactured, distributed, marketed, and/or sold by FIFTH GENERATION, INC. dba Tito’s Handmade Vodka (hereinafter “TITO’S”).” Also boding ill, the original and amended complaints refer to Sidley Austin (suggesting that the small San Diego firm on the plaintiff side, may be working with a much bigger firm.) The same small law firm, in San Diego, just recently won hundreds of thousands of dollars in another labeling suit as described here in The Wall Street Journal.
10/3/2014: a copycat lawsuit filed in Florida on 10/25/2014, in federal court this time, under Florida law.
10/14/2014:  and now another lawsuit, this time in Illinois.
10/21/2014:  finally I was able to find a copy of Tito’s response. I looked around but was not able to find the press release earlier.
10/27/2014: Tito has a full-throated defense of his vodka today. I think he is saying it is in fact substantially made in a pot still in Austin. In Wine & Spirits Daily he says, “I, Tito Beveridge, believe the pot still distillation process, like that of single malt scotches and French cognacs, is the cornerstone of craft spirits production, period.” There are lots of other words in Tito’s statement but I can’t find much in it to suggest the degree or extent of this much-vaunted pot-/hand-/craft-production. Is it a fig-leaf kind of thing, or the main way the product is made? I see lots of other jazz about foreign companies, etc. but precious little new information about how this product is made, or anything important that makes it any more “handmade” than the next 500 vodkas.
11/10/2014another lawsuit, this time New Jersey.

The Forbes article explains:  “Tito’s has exploded from a 16-gallon pot still in 1997 to a 26-acre operation that produced 850,000 cases last year, up 46% from 2011, pulling in an estimated $85 million in revenue.” The article strongly suggests Tito is about to be a victim of his own success. You can say this post is a prime example of a lawyer taking something clear, like an affirmative, direct approval, and blurring it up to say it’s not really an approval. That would not change the messy, complicated reality, that TTB is not the only sheriff in town. We have a “system” and though it may be cumbersome, it actually does work pretty well. TTB approves Palcohol. Fine. That’s only one level. Then the private sector jumps in (i.e., us). This triggers the states, legislators, media, trade associations, on and on, to take action. TTB can’t and probably does not need to “do it all.” Customs jumps in on imports, states jump in on Santa and bitch issues, and now there is a clear right of private action in all such disputes. The floodgates are well open. A few weeks ago, in light of the Pom v. Coke decision, we predicted a flood of lawsuits around label claims. Some said “the sky is not falling.” Well, the water is starting to rise pretty high. Tito is up to his waist. Templeton is up to its knees. Bass and Becks are up to their ankles. All from private action with no trace of governmental intervention. Skinny Girl got dunked a few years back and we will need to go back and look to see how much water she swallowed.

The Tito’s lawsuit (Hoffman v. Fifth Dimension, Inc.) is here. Some juicy highlights are as follows (and on this page).

This is a class action case brought on behalf of all purchasers of all vodka (“Vodka”) manufactured, distributed, marketed, and/or sold by FIFTH DIMENSION, INC. dba Tito’s Handmade Vodka (hereinafter “TITO’S”). Through a fraudulent, unlawful, deceptive and unfair course of conduct, TITO’S, and DOES 1 through 100 (collectively “Defendants”), manufactured, marketed, and/or sold their “TITO’S HANDMADE” Vodka to the California general public with the false representation that the Vodka was “handmade” when, in actuality, the Vodka is made via a highly-mechanized process that is devoid of human hands. There is simply nothing “handmade” about the Vodka, under any definition of the term,1 because the Vodka is: (1) made from commercially manufactured “neutral grain spirit” (“NGS”) that is trucked and pumped into TITO’s industrial facility; (2) distilled in a large industrial complex with modern, technologically advanced stills; and (3) produced and bottled in extremely large quantities (i.e., it is “mass produced”).

The plaintiffs are asking for all the money, plus attorney fees, punitive damages, interest, costs, and taxes:  “all monies acquired by means of Defendants’ unfair competition.”

Right about now, every beer, wine and spirits company should be re-examining their labels, new and old, approved and prospective, and making sure every part is on firm ground. If you lack TTB approval it may hurt you a lot, but if you have it, it may not be sufficient to save you.

* A small disclaimer is, I have no idea about the underlying facts here. I am evaluating this from my couch, based on TTB approvals, public records, the plaintiff’s allegations, and the press. We look forward to presenting Tito’s side of the story, when it comes out.

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