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Tito Responds

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Over the years many have suggested that Tito’s vodka is not really made in small batches or by hand. I tried to keep an open mind, as the brand grew, and even in the face of the lawsuits summarized here.

So I have been particularly looking forward to a response, on the merits, at long last, from the source. Tito finally responded, on November 17, 2014, in the form of a motion to dismiss the Florida case. (The defendants also filed a similar motion, a month later, in the California case. The California motion is 28 pages and substantially similar to the one filed in Florida, right down to mangling the name of the agency that issued the so-crucial approvals. It does add a dash of spice here:  “Plaintiff himself knows nothing, and he filed a lawsuit that ignores what the Tito’s label actually says and instead bases his claim on hearsay statements in a magazine article, hoping he can later commit discovery to get the facts he admittedly lacks.”)

With the aid of more than one big law firm, and a superior command of the facts, I was eager to sit back and see how deftly Tito could shut down its many detractors. The motion weighs in at 20 or so pages and it does not seem an exaggeration to say that the entire brand, the company, and just about everything on the front label hang in the balance. Also, Tito had the immense benefit that he knew or certainly should have known this day would come around sooner or later. This should have been clear since the first references to “handmade.” This should have been further clear upon the various inquiries about the term over the years, as described in the motion.

The motion starts pretty strong, asserting that plaintiff’s complaint is so vague:  “We do not know how many bottles they bought or how much they paid, because they do not tell us those facts. They do not claim there was anything wrong with the vodka they allegedly purchased, or that they did not like it for some reason. They do not claim they complained about it, tried to return it, or even notified anyone of their dissatisfaction … .” Then, “With so many details missing, Fifth Generation is not in a position to make a meaningful response to the Complaint (other than simply to deny the allegations). Nor is the Court in any position to assess whether all or any of the claims pass the plausibility standard. … Measured by those standards, the Complaint is woefully deficient and must be dismissed.”

This may be a good start, but by page 3, the motion seems to go off the rails. It tries to say that the plaintiffs could not have been deceived, because a 2013 Forbes article had already suggested Tito was playing fast and loose with the truth. Tito’s motion says:

In light of what Plaintiffs have pled – and in particular their reliance upon a widely-circulated 2013 Forbes magazine article – it is hard to see how they could plausibly claim they were misled by the label on Tito’s Handmade Vodka for any purchases made after the article was published. Similarly, the number of times they purchased may raise plausibility concerns: If they enjoyed the taste of the product and thought it was a good value, did the label truly influence any but their first purchase? And, if the first time they ever tasted Tito’s Handmade Vodka was at a party, at a restaurant, or in some other setting in which they decided they liked the taste before they ever saw the label, could the label plausibly be said to have influenced even their first purchase? Plaintiffs’ skeletal allegations raise all of these questions and more, but answer none of them.

The defendants seem impressed with this point, breaking out the bolded italics.

Maybe I am missing something fundamental, but this seems absurd as any kind of defense, let alone a cornerstone of a defense. Does it really make sense to assume the plaintiffs would, should, or did get key information about the product from a magazine article — instead of the big, federally mandated, reviewed and approved label plastered on the front of the bottle? The Forbes article is interesting, relevant, and important — but is it really so epochal that everyone interested in vodka should be intimately familiar with it, from the moment of its publication? On the very same page, the motion makes clear in any event that “Plaintiffs never claim that they saw or read the article.” The motion seems to be saying that even though the article is wrong, and low-quality, every yahoo from Texas to California to Florida should know all about it, from the moment of its publication. Perhaps Tito seeks to argue that the lead plaintiffs knew about the article before the purchases at issue, and that this should have caused them not to buy the vodka, or, at the very least, that it would make them not good representatives for the class.

Next, the motion veers over into shaking the pompoms, declaring Tito’s to be “great tasting” and with a value proposition “true to its Austin, Texas roots.” By page five, the motion tees it up beautifully, saying “Plaintiffs contend that Tito’s Handmade Vodka cannot be ‘handmade’ because it is ‘made from commercially manufactured neutral grain spirit that is trucked and pumped into Defendants’ industrial facility.'” This would seem to be the heart of the matter. And so I move to the edge of my seat, waiting for Tito to hit this duly teed-up softball out of the park. And then I wait some more, as the softball seems to sit on the tee, without the benefit of even a swing or a miss, let alone a base hit. Immediately after raising this tantalizing question, the motion changes the subject toward an unilluminating primer on how vodka is normally made.

The defense is a bit too romantic when it explains how the “secret,” “pre-Civil War” pot still methods somehow make the product handmade. And it moves in the other direction when it describes how Tito grasped a pen with his own hands to design the label:  “The label on Tito’s Handmade Vodka is also ‘handmade’ in its origins. The graphic of the old fashioned pot still was drawn by Tito Beveridge himself. He chose the fonts, the colors and the other elements of the label that communicate the consumers the essence of the brand.”

Tito makes a stronger point by explaining that TTB inspected Tito’s labels, plant and methods on many occasions, and still allowed the “handmade” claim. The defendants make quite a few other technical arguments and on some of those it’s hard to know who is right. And yet I find myself still waiting for the defendants to simply assert, at long last, that they do not bring in tankers of commodity spirits mass produced with continuous stills, far from Texas or the hands of anyone in Austin. Looks like we will need to keep waiting.

Finally, for all those who wrote in and said the label claims don’t matter and are only for nerds, please take another look at the label and web page depicted above. This is a screenshot of www.titosvodka.com as of January 4, 2015. I did not add any words or images but I did add a yellow tag near each of the most relevant spots; I emphasized the relevant portions and discarded a lot of the less relevant matter.

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Maker’s Mark Bourbon Got Tito’d

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I have focused on beverage labeling law since 1988. During that time it has been very rare for a private party to bring any action against a beer, wine or spirit supplier’s labeling or advertising — unless the basis was trademark.

Instead, most people assumed the states, TTB, and FDA would take care of this, pretty much to the exclusion of anyone else. Pom began to unravel this in a big way over the past couple of years, and this trend seems to be gaining momentum.

A San Diego law firm filed a class action lawsuit, on December 8, 2014, in federal court in California. The case is called Nowrouzi et. al. v. Maker’s Mark Distillery, Inc. A few pages of the complaint are here. If you want a copy of the whole complaint, or updates, they are available upon request and without obligation.

The complaint goes right for Beam’s jugular (Jim Beam owns Maker’s Mark). It essentially says Maker’s Mark is lying about whether the product is “handmade.” The first count is for false advertising. The second is for unfair competition and fraud. Next is negligent misrepresentation and then intentional misrepresentation. The lawsuit asks for a jury trial, punitive damages, an injunction, reimbursement to consumers, interest, and lawyer’s fees.

An example of the labeling at issue is above, and here is a recent TTB approval therefore. Maker’s Mark is way out there, on a limb. Very similar to the Tito’s vodka controversy (as regards “Handcrafted”) the whisky label has “Handmade” right out there, front and center. Maker’s Mark, though, doubles down and declares it is “America’s only handmade bourbon. …” That may be too extravagant to be maintained, and is certainly a big, provocative statement. Not least, it has indeed provoked a few lawyers in San Diego.

Here are highlights from the 33 page complaint (replete with photos and stirring allegations):

  1. “Defendant’s whisky is manufactured using mechanized and/or automated processes, which involves little to no human supervision, assistance or involvement, as demonstrated by photos and video footage of Defendant’s manufacturing process.”
  2. “[T]he matter in controversy, exclusive of interest and costs, exceeds the sum or value of $5,000,000.”
  3. “Defendant has shipped approximately 1.4 million cases of whisky in 2013.”
  4. “’Handmade’ and ‘handcrafted’ are terms that consumers have long associated with higher quality manufacturing and high-end products. This association and public perception is evident in the marketplace where manufacturers charge a premium for ‘handcrafted’ or ‘handmade’ goods.”
  5. “Defendant’s website also states that, ‘[w]hile most distilleries use a modern hammer mill to break up their grains, Maker’s Mark uses an old antique roller mill, which is less efficient, but reduces the chance of scorching the grain and creating a bitter taste.’ This is done in an apparent attempt to market the whisky as being of higher quality by virtue of it being made by hand. As a result, Defendant induces consumers.”
  6. “[C]ontrary to Defendant’s misleading labeling, its whisky is predominately or entirely made by mechanized and automated processes.”
  7. “Defendant has faced continual production shortages and has attempted to remedy those shortfalls by expanding and mechanizing its facility. Defendant’s supply shortages have been so severe that Defendant even proposed ‘watering down’ its whisky’s alcohol content to meet production demands.”
  8. “Defendant’s mill is neither old nor antique. Defendant’s mill is a modern mechanized and/or automated machine that requires little to no human supervision, assistance or involvement to grind and prepare the grain, which is the primary ingredient in Defendant’s whisky. … [T]here is virtually no human involvement in this system, other than perhaps the pressing of a button.”
  9. “Defendant is guilty of malice, oppression, and fraud, and each Plaintiff is therefore entitled to recover exemplary or punitive damages.”

For the most part, the complaint strikes me as careful, serious and well-written. But this part seems to go a bit too far toward the land of make believe:

Producing consumer goods by means of mechanized or automated process has long [been] touted as a cheaper way to “mass produce” consumer goods. By utilizing machines to produce goods, manufacturers are able to make more goods in a shorter period of time at a lower cost. Mechanization of course sacrifices quality, as machines cannot exercise the skill and care of a human craftsman. Every consumer would undoubtedly prefer a higher quality product, however many are not able or willing to pay for such quality. The demand for higher quality products has always existed amongst consumers and thus manufacturers market their products to those seeking higher quality goods and demand a premium price for that quality.

As a great distiller once explained to me, “artisanal” is not always a compliment. When it comes to cars, or computer chips, for example, I am pretty sure I would rather have one made by a modern robot than a genial old man.

I don’t really have a dog in this fight as of this writing. I do think this has reached a critical mass such that TTB should step in and seek to define terms of this nature, lest TTB be relegated to a role as a mere spectator in the gladiation of others. I do also think the term at issue is not quite puffery (such as “premium”) but not quite a factual statement, either (such as “aged 5 years”). The law probably needs to wake up and stop dealing with the easy cases, at one extreme or the other, only.

As one would expect:  “A spokesman for Beam/Suntory, the parent company of Maker’s Mark, called the claim ‘without merit’ . … ‘We will defend this case vigorously and we are confident that we will prevail’ ….”

As mentioned above, this case has a lot in common with the Tito’s vodka case. As to that case, it probably sounds like I have lined up on the other side from Tito in recent weeks. Not really. I started out with an open mind, recognizing the plaintiff’s may be mistaken, or Tito may be a wily coot who saw this coming and planned accordingly. But it has really been the hapless responses of the Tito’s supporters, in the weeks after the lawsuits flew, that colored my view. They made laughably inane arguments like, who cares about the labeling, or TTB said it’s fine. More recently, Tito’s lawyers filed a response, and it seems good, and much more persuasive than anything said on Tito’s behalf in the interim (as should probably be expected). I look forward to assessing the responses, in both cases, soon.

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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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