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Big Formula Changes at TTB

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TTB put out Ruling 2016-3 at the end of September. It relates to spirits formula approvals, and is intended to cut some of the burdens for spirits companies and for TTB. It’s also sort of long. Word says it is 3,573 (carefully chosen) words. My mission is to break it down to 15% or less.

The gist is, TTB will help you avoid formula approval for many products in these big categories: vodka, rum, whisky, brandy. Some details, on each category, are below. If you want the whole story, you can go to the Ruling, and the elaborations at Industry Circular 2016-1 (for imports) and Guidance 2016-3. Rather than knocking out the formula approval requirements in the spirits regulations, TTB explains: “TTB will not accept for review new formulas submitted for products approved under this ruling. This ruling serves as the approval that is required by §§ 5.26, 5.27, and 19.348.”

  1. Vodka. The Ruling takes advantage of the fact that vodka already has a narrow standard of identity and explains that if you are clearly within it, the Ruling should be used instead of submitting a formula. Only a bit of sugar and citric acid allowed.
  2. Rum. The standard is not quite so narrow, as compared to vodka, but it’s apparently narrow enough. If you only add a bit of sugar, molasses, caramel, the Ruling should be used instead of submitting a formula.
  3. Whisky. The rule is similar, as to whiskey — except for the reminder that neither straight whisky, nor bourbon whiskey, can have any additives (with or without a formula). The former because that’s a big part of what straight means. The latter because the Bureau decided it is not (and should not be) customary to put additives in bourbon.
  4. Brandy. If you only add a bit of sugar, caramel, fruit juice, wine, the Ruling should be used instead of submitting a formula.

TTB does reserve the right to look into this further, as needed, on a case-by-case basis. The Ruling “provides immediate relief from the formula submission requirements for these specific products.”

TTB took a similar action with respect to malt beverage formulas about two years ago. This must have helped, because TTB later expanded this to other malt beverage products. TTB has also, at the end of September, expanded this approach, to wine. We have covered the beer issues in the past, we are covering spirits here, and may cover the wine issues in the future. I am guessing Ruling 2016-3 cuts several hundred formulas per year. LabelVision says TTB approved 748 vodkas in the most recent year (this is a count of label approvals, for unique brand names, on products coded as vodka, since most formula data is not public). A svelte 446 words.

Bacon Labeling 101

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After a full day wrangling booze labels, I heard a good story about bacon labeling on the way home from work (bringing home the bacon, as it were). The radio story emanated from a Bloomberg web story, “Why Supermarket Bacon Hides Its Glorious Fat.” The story touches upon the intersection of our love-hate relationship with fat and with government, and also upon labeling issues and wily businesspeople. Explaining that bacon has “one of the most unusual and underappreciated packaging formats of any supermarket product” it says:

The standard one-pound package shows the bacon slices fanned out, with only their leading edges exposed. The industry term for this is a shingle pack—a reference to the way the slices overlap. Because those front edges tend to feature more lean muscle than the fattier back edges, and because the face of the top slice is invariably covered by a paperboard flap containing the manufacturer’s logo and other branding information, the consumer sees a relatively unbroken field of red protein, creating the illusion that the bacon is leaner than it is.

Lest the bacon packaging hide the fat too much, the U.S. government requires the packaging to show the real story, at least on the back window. The window allows the consumer:

to see how the bacon truly looks in all its fatty glory. … [T]he shingle pack doesn’t just present an idealized bacon fantasy—it also provides a built-in reality check. It’s hard to think of another package that engages in such a clever sleight of hand on the front and then gives away the game on the back.

The story also has a nifty video about the machinery used to slice the bacon slabs optimally. In a radio version of the story, Lukas says the shingle pack is “ingeniously deceptive.”

And if you don’t think bacon shingles have a lot to do with booze marketing, you should take a peek through this window.

Most Helpful TTB Website Pages

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TTB’s website at www.ttb.gov can be pretty helpful. Here are a few of the pages we check most often.

  1. TTB Newsletter. This comes out about once a week and can be very useful. For example, the August 19, 2016 edition provided background information about Tom Crone – with 53 years of federal service!
  2. Formula Tool. Don’t guess about whether you need a formula approval. If you guess, you are likely to be wrong because it’s not always intuitive. For example, why does all sake need a formula approval (and lab analysis) – when other fermented rice beverages (such as beer) don’t? If you make this mistake, it can be time-consuming and costly. With this tool, you can check most any class/type, and get a better view of what needs a TTB formula approval, and what does not.
  3. FAQs. TTB here answer dozens of common questions. One example is, what is “pear cider”?
  4. Public COLA Registry. This is a good place to look up all or almost all recent COLAs. At this point it goes back 20 years or more. We say almost because it does not cover wine coolers, kombucha – or other products that happen to be alcohol beverages, but don’t fall within TTB’s labeling jurisdiction. Last time we checked, this database had images back to around 1999, and text only results back to about the 1980s. With some creativity, you can find all COLAs for your competitor, or all whiskies made in Hawaii, etc. The same database can be a lifesaver when it comes to trademarks. Though this resource is good, for some things ShipCompliant’s LabelVision is even better.
  5. FOIA. This page is particularly helpful because it links to such crucial information as what are other people asking TTB to provide by way of Freedom of Information Act disclosure, most issued permits, and the Electronic Reading Room.
  6. APTs. TTB does a pretty good job, here, of showing how long the typical label, or permit, or formula takes (the “Average Processing Times”).

We could go on. But we are not sure you want us to. If you know of other great pages, within or without ttb.gov, let us know.

VABC Allows “Self-Distribution” for Virginia Distillers

The Virginia Department of Alcoholic Beverage Control Board (VABC) will now allow Virginia Distilleries to “self-distribute.” Previously, restaurants were required to purchase all spirits through their assigned VABC Store. Now, VABC has authorized distilleries to sell directly to restaurants.

Unfortunately, restaurants will be required to physically go to the distillery to purchase the spirits (delivery from the distillery is not allowed yet), but it is still a move in the right direction for Virginia to compete with Maryland and Washington D.C.’s more favorable distillery laws.

This change occurred within the past couple of weeks. We have not seen any explicit law change, but through discussions with the VABC and knowledgeable distillers, we understand that this is an important change in interpretation of existing laws.

Peter Ahlf, of Mt. Defiance Distillery, in Middleburg, Virginia was excited about the new allowance, because now it allows for greater distribution of some of their rarer, craft spirits. He said:

Not everything we produce is available in VABC stores, so this lets local restaurants come straight to us and purchase those seasonal and rare products. We would no longer have to drive small orders to Richmond, just to have it shipped back up to the VABC store down the street.

Virginia has been slowly broadening sales allowances for distilleries. We look forward to seeing whether this leads to more, and more successful craft distilleries nearby.

Johnny Love Vodka Wins “Sexy Lips” Trademark Appeal Against Jim Beam

Johnny Love Beverage Company LLC (“JL”) and Jim Beam Brands Co. (“Beam”) are fighting over the right to use “sexy lips” imagery on flavored vodkas. JL’s logo (the subject of U.S. trademark registration no. 4,044,182; shown below left) dates back to 2005, and is described by Johnny Love’s creator and namesake Johnny Metheny as “definitely sexy.” Metheny apparently felt the same way about Beam’s new logo, adopted in 2011, (shown below right), and sued Beam in federal district court for trademark infringement, false designation of origin, and unfair competition.

jllips After filing suit, JL promptly moved for preliminary injunctive relief, essentially requesting that the court order Beam to stop selling products with Beam’s new logo during the pendency of the trial. Beam cross moved for summary judgment. The district court denied JL’s motion, and, in a surprise move, sustained Beam’s motion, dismissing the case and holding, “For reasons articulated in the Order denying the Preliminary Injunction, the Court determines that no issues of material fact remain which could provide Plaintiff a basis for success on any of its claims.”

beamlipsJL appealed the district court’s decision to the 9th Circuit Court of Appeals and, on July 14, 2016, the 9th circuit court issued its ruling, reversing the district court. The circuit court held that the district court improperly applied the preliminary injunction standard to Beam’s motion for summary judgment. The circuit court pointed out that “both [logos] have puckered, human lips as the focal point of their design; the lips have a similar angle and shape; and the lips are color-coordinated with the flavor of the vodka.” Accordingly, the circuit court found that a reasonable fact-finder could determine that Beam’s logo was confusingly similar to JL’s logo and that summary judgment was, therefore, inappropriate.

Most observers know that a lot of the good words are taken, when it comes to that delicious intersection of beverages, brands and trademarks. This case is a useful reminder that a lot of the good images (some but not all sexy lips!) are taken, as well. It is also a prime example of a little guy scoring big points on a behemoth. Judge Wallace mentioned:  “Jim Beam instructed its legal counsel to perform a clearance search for lips designs. The legal department found 40 references to lips for alcohol-related products.”

Note: With JL having now ultimately survived Beam’s motion for summary judgment, experience tells us that it would not be surprising to see the case quietly settle in the near future, with Beam moving to a design less similar to JL’s (not less sexy, just different sexy).

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