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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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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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Chokin’ Chicken Vodka

You read that right. It’s far from Chopin Vodka. It’s Chokin’ Vodka. Chokin’ Chicken Vodka to be more precise. This may signal that it’s time for the Wild Turkey and even the Rex Goliath to step aside and make way for another bird.

We are pleased to see that many fun, inventive labels keep going through. I am a little surprised that it was ok to say “Not intended To Grow Hair On A Goat’s Ass.” Chokin’ Chicken is bottled by Gatlinburg Barrelhouse LLC of Gatlinburg, Tennessee.

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Cool Bottles

I am glad we are not stuck in this era. Work would not be fun.

Many years ago, TTB/ATF contemplated putting such shackles on the alcohol beverage industry, with a proposal to ban “non-standard containers.” This old chestnut (from about 1999):

proposes to “standardize” the appearance of all alcohol beverage containers. The proposal would accomplish this by prohibiting “Any container that, by virtue of the material from which it is composed or by its shape or design, or that by its ordinary and customary use is likely to mislead the consumer as to the alcohol character of the product. . . .” The proposal expresses ATF’s concern about containers that might confuse consumers about the presence or absence of alcohol in any form. The proposal secondarily expresses concern about containers that might confuse consumers, regulators and the trade about the “alcohol character of the product.” This part of the rule could conceivably be used to prohibit a malt beverage from being packed in a container that looks like a wine bottle, or a distilled spirit cooler from being packed in a container that looks like a beer bottle.

I am delighted to report that this proposal got buried not too many years apart from when one of its foremost proponents got buried. We might otherwise be deprived of all these great ideas that make the industry more competitive, modern, vibrant and fun. A good and further example is Double Agent, as above (approved at Bendistillery, an excellent contract bottler for spirits in Bend, Oregon). The outer chamber is vodka and the inner chamber is liqueur. I am pretty sure nobody will mistake it for a juicebox. Another good example, along these lines, is Milagro Romance Tequila.

Don’t hold your breath, but if we get really creative, perhaps it would only take a few more decades to identify good reasons why this sort of thing should be prohibited (preferably well after the government is running big surpluses, unemployment is below 3%, and other priorities are well under control).

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Flavor Flav Flavored Vodka

Who is this joker and why does he have a vodka? Flavor Flav has a flavored vodka, and it happens to be Bubba Gum flavored. It took almost three months to get the label approved, and so I am enjoying a vision of William Jonathan Drayton, Jr. calling in regular and increasingly anxious status checks to TTB, and arguing about font sizes.

Le Flav joins the swelling ranks of celebrity-endorsed vodka products, alongside Voli (Fergie, Pitbull), Ciroc (Sean Combs), Aftermath (Dr. Dre) and many others.

 

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