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Kombucha Law Hits WSJ, Courts

wsj

Kombucha law is on the front page of tomorrow’s Wall Street Journal. Because kombucha law is so interlinked with alcohol beverage law, this is to underscore some alcohol beverage points only touched upon lightly in the article (subscription required).

  1. TTB has decided that most kombucha is beer for tax and permit purposes.
  2. This is because it is fermented tea. It is beer rather than a “malt beverage” because it lacks hops and malted barley.
  3. Most kombuchas are over 0.5% alcohol by volume during production, but less than that amount after bottling and at consumption. These can be called over-under kombuchas.
  4. It is ok for a kombucha to be 0.5% alcohol by volume or higher, after bottling, but only if the product jumps through most of the hoops required for Budweiser. This would include permits, taxes, a Government Warning, no sales to minors, sales via the three tier system. These can be called over-over kombuchas.
  5. Unlike Budweiser, the legal requirements would not include TTB label approval, because, like gluten free beer, the product lacks the hops and malted barely that would otherwise confer labeling jurisdiction upon TTB.
  6. Most kombuchas need FDA rather than TTB labeling.
  7. The article mentions a few recent lawsuits on these topics. So far there are five class action lawsuits. Two of them allege that GT Dave’s Enlightened Kombucha has hundreds of percent more than the legal limit of alcohol, for a product marketed as non-alcoholic. One of them alleges similar for the Health-Ade brand.
  8. The biggest case is Retta v. Millennium Products, Inc. I say biggest because it is a nationwide class action suit, and it is much farther along in litigation, compared to the other cases. It was first filed in March of 2015 but it was only amended to include the alcohol claims as of October 8, 2015. Before that, the claims were based on allegedly exaggerated anti-oxidant claims. This case is filed in federal court in Los Angeles. The first three pages of the 85-page complaint are here.
  9. Two other class action lawsuits allege that the same brands grossly understate the amount of sugar.

wsj2Kombucha raises some great legal issues. Lately I have been saying that kombucha has a lot to do, to catch up with the law, and the law has a lot to do, to catch up with kombucha. For lots more information on this topic, see this post from just a few hours ago, covering a kombucha law webinar of last week. And for lots and lots more information on this topic, see AHPA‘s six or so recent hours of webinars on kombucha law. It was a great pleasure to be part of this webinar series.

For those without a Wall Street Journal handy, here are some juicy excerpts:

Federal regulators have fired off warning letters in recent weeks to some kombucha producers after finding alcohol levels above one-half of 1%, the U.S. dividing line between alcoholic and nonalcoholic drinks.

Two consumer complaints seeking class action status also were filed last month in California claiming deceptive practices in alcohol-content labeling by industry leader Millennium Products Inc., the maker of GT’s Enlightened and Synergy brands. One of the lawsuits allege alcohol levels of up to 3.8% compared with about 5% in beer.

Millennium and others dispute the government’s and the lawsuits’ alcohol-content allegations, and say the government’s method of testing is flawed. Millennium says its drinks’ alcohol content is below the U.S. limit for labeling alcoholic drinks.

And for those without Westlaw, here are some juicy excerpts from the Retta complaint:

Millennium Products, Inc. has passed off millions of bottles of its wildly successful kombucha beverages as non-alcoholic, when, in fact, the beverages contain two to seven times the legal limit for non-alcoholic beverages. Having been caught selling alcoholic kombucha beverages to unsuspecting customers in 2006 and 2010, Millennium decided to market and distribute an alcoholic version of its kombucha products (the “Classic” kombucha line) and a “non-alcoholic” version (the “Enlightened” line), knowing that the non-alcoholic line has a much greater market appeal and could be sold in far more retail locations. But the purported distinction between the “Classic” and “Enlightened” lines is a sham designed to confuse the public and government regulators, as both lines of products contain alcohol levels far surpassing the legal limit for non-alcoholic beverages.

Just like Ben Carson who finds himself newly in the spotlight for good (polls) and bad (almost stabbing a person with other than a scalpel), kombucha has so arrived. It faces the glare of TTB, the courts, the plaintiffs bar, AHPA, the press and Rep. Polis.

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512 Posts

Vote here, y'all

A few weeks ago, with little to no fanfare, we passed the 500 posts milestone. It has been a wild and fun ride since late 2008. This blog is now up to 512 posts as of yesterday. Google tells me Bevlog has had 555,404 visitors and 832,024 pageviews so far, with an average of 44 seconds per session.

The most popular posts are Tito, Blue Moon and Palcohol (with 37,587, 36,183 and 17,022 views respectively in the past two years). I am not sure whether the blog has led directly to any particular revenue, but it has put me on e.g., The Today Show and CBS News, and I don’t imagine any other (legal) way to accomplish that.

Some of the posts are fun and easy, and take no more than a few moments (examples). Others, somehow, take hours and hours — even if they seem so simple beforehand. I am pleased to report that we’ve heard of no substantial inaccuracies so far, and we’ve had very few complaints. One big company oh so smoothly asked for a clarification. One multi-billion dollar organization demanded a change but settled for something approximating a change in punctuation. Along the way I met Tito, the Hatfields (and McCoys), and E-40. And now we are pleased to report we have been selected (from more than 2,000 nominations and tens of thousands of law blogs) as one of the best law blogs for 2015, by The Expert Institute. Please vote if you have not already.

Vote here, y'allWe don’t charge anything for this information. We don’t accept any advertising and we routinely turn it down. We do ask you to enjoy, comment, pass the word along — and if you think it’s really good, please consider voting for it here. We only have 27 scrawny votes as of this writing — and we are getting beat by “The Wedding Lawyer” of all people (at least we are beating the horse lawyer). My mom will be proud (if I don’t get beat by the Wedding Lawyer).

Finally, thanks for reading and please let us know any great topics or ideas to make the blog better in the coming years.

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Dan on CBS Radio (talking about — what else?)

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In past years Dan was talking about beer law in magazines, podcasts, CLEs, on forums, and on Twitter. Now he has moved on, to radio. He was on CBS radio earlier this week, with Stacy Lyn, regarding the dramatic rise of craft brewing. Listen to Dan Christopherson and Stacy in the sound clips below. In a few years it will be hard to believe, but Dan notes that (in recent generations) “there weren’t any production breweries in the DC area until … 2011.”

 

 

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Palcohol is Back

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Palcohol is back.

After approval from out of nowhere about a year ago, and cancellation of the same approvals a few days later, it is back. I have it on good authority that TTB has ironed out the kinks and approved the labels this week. Sen. Schumer will not be pleased (aka, he may be very pleased to have this whipping boy back within striking distance). Many states have already banned it. But this gives new life to this new category. Hats off to Mark Phillips for weathering the storm and persevering.

Below is the approved label as of 2014 alongside the label as approved on March 10, 2015. There are small, technical changes, mostly relating to how to measure the taxable commodity. Boxes 20 and 23 reconfirm that it took Mark almost a year to get this approval. The back label makes it look like an awful lot of work and controversy for a small amount of alcohol (when prepared, it only has half the liquid of a beer, and 1/4 the abv compared to vodka?!?).

both

In an email on the day of re-approval, Mark, the force behind Palcohol, explained:

Yes, Palcohol is back. It’s been quite a journey, over four years to get Palcohol approved by the TTB. I do want people to know that the TTB has been great to work with. Very fair and professional. And I’m not just saying that to kiss up to them as they have now approved Palcohol and it’s done.

The next challenge is trying to stop the states from banning it based on misinformation and ignorant speculation. It is a mistake for a state to ban Palcohol because…

(more…)

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A Great Bud Ad

What was the best beer ad, or ad of any type, in yesterday’s Super Bowl broadcast? Hint, it was a Bud ad, but not the one with the dogs, horses, and wolf. Instead, it was the one above. The one in which Bud took on its main competition, directly and powerfully, roughly like those on the field. It’s the first time in many years that Bud did not seem to be on the defensive. It seems clear that Bud’s plan is to defend Bud the brand such as above, and defend Bud the company by buying a bunch of esteemed craft brewers. Maybe they can have their cake and eat it too.

h3Before I scope out anyone else’s views, here are mine:

  1. The 60 second ad opens with a view of an old brewery with a big Budweiser sign and a small American flag atop it; the building is bathing in the sun and surrounded by trees and evokes old-time Americana within a couple seconds.
  2. Within five seconds, it says BUDWEISER, PROUDLY A MACRO BEER and shows lots of real and good looking ingredients, to go along with the pretty buildings way back at seconds 1 and 2.
  3. The ad takes dead aim at and skewers various hipsters such as the ones above. Hipster number 1 is perfect, with his mustachio, earnestness, believability, dancing eyebrows. The others are just as good, as they fumble and fawn over their wee glasses of beer, as much as is probably possible in the span of 2 seconds.
  4. The music is just right and sets a defiant tone.
  5. Lots of big machines, big horses and Bud’s history are packed into this ad; it yields nothing in terms of declaring the work that goes into making this beer great.
  6. It suggests those hipsters are phonies and don’t necessarily enjoy drinking beer as much as normal Bud consumers.

The ad is so good, and so expertly crafted that I can’t even think of any ways to try to refute or find fault with it. Now, having said that, I am eager to go to others to see what I missed in this ad that overflows with powerful imagery.

I was surprised to see Paste call it anti-craft rather than deftly pro-Bud. The article seems to say Bud spent $9 million to air it and I would not be surprised if it cost even more to produce it (or as much as an average movie of 90 times the duration). The Atlantic calls it the event’s riskiest ad and says it’s likely to appeal to those over but not under about 40. The LA Times points out that the ad touts that it’s for people who like to drink beer, but asks you to notice that “the ad doesn’t say the beer is for people who like to taste beer.” The article says most of the ad is on target and wraps up saying “Craft drinkers have dismissed macro beer and have been openly condescending to its fans for years; turnabout is certainly fair play.” Ad Age says, and I agree, the ad is notable for its swagger. The ad, by Anamoly, “marks the return of ‘This Bud’s For You,’ which has not been used in a significant way in Bud advertising since the late 1970s, according to the brewer.”

The debate still rages over whether Bud is good beer. But the debate is over about whether Bud can craft good ads.

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