“Gluten-Free” Labels for Wine, Beer and Distilled Spirits. We’re Still Waiting.

On February 11, 2014, TTB released a Revised Interim Policy on Gluten Content Statements in the Labeling and Advertising of Wine, Distilled Spirits, and Malt Beverages (the 2014 Interim Policy). The 2014 Policy updates the 2012 Interim Policy in the wake of FDA’s final rule on the use of the term "gluten-free" for products under their labeling jurisdiction. (Note: FDA has labeling jurisdiction over certain alcoholic beverages, including certain beers that are not sake, certain malt beverages and wine with less than 7% ABV.) TTB issued the 2014 Policy in order to parallel FDA’s requirements and reduce confusion for consumers. Ultimately, as it pertains to beverages, nothing much has changed, and confusion remains. For FDA and TTB, items can still be labeled “gluten-free” if they do not contain an ingredient that is a gluten-containing grain or inherently does not contain gluten (i.e. wine and vodka distilled from ingredients that do not contain gluten). TTB requires anyone making such claims in an advertisement or on a label to be responsible for verifying that the producer has taken proper measures to avoid cross-contamination, and they should be prepared to substantiate such claims.

Things get trickier when trying to use a “gluten-free” label with a food or beverage that was made with a gluten-containing ingredient and processed to remove the gluten. According to FDA, such items may be entitled to a “gluten-free” designation if the gluten-containing ingredient itself, and not the finished product, was treated to remove gluten such that 20 parts per million or less of gluten remains. However, “gluten-free” is not appropriate where the finished product has been processed. TTB does not anticipate this distinction to matter for malt beverages or distilled spirits made with gluten-containing grains, as the finished product is treated to remove the gluten. Problematically, FDA admits that there is still no scientifically valid way to determine the gluten content in fermented and hydrolyzed foods (including beer), and they are going to issue a proposed rule to address the “gluten-free” labeling of beers subject to its labeling requirements given this quandary. In the interim, FDA will exercise enforcement discretion with respect to FDA-regulated beer.

Celia Saison - created for the brewer's wife with celiac disease.

Therefore, beverage manufacturers seeking to alert consumers to the fact that their finished product has been processed to remove gluten may not use a “gluten-free” designation. However, TTB will approve statements about gluten they conclude are not misleading, which will be evaluated on a case by case basis and may require a disclaimer. This language can be wordy, making label compliance burdensome for producers. As with the 2012 Interim Policy, labels can contain “[processed or treated or crafted] to remove gluten” if they have certain qualifying statements and are not likely to mislead consumers. On the other hand, TTB will consider statements such as “contains x ppm gluten” to be misleading given the lack of scientific validity. Despite this fact, they will still require label applications to include a detailed description of the method used to remove gluten and the submission of results of a gluten assay for the finished product only to confirm there was some change in the gluten level. As with the 2012 Policy, anything that characterizes the relationship of the product to a health condition (such as celiac) is prohibited unless in compliance with TTB regulations.

When FDA issues further guidance or a final rule with respect to gluten-free statements on foods that contain fermented ingredients, TTB will evaluate again whether its own policy should be revised.

AB 1252: Sanitation Overkill?

New legislation effective January 1 in California banning food employees from touching “ready-to-eat” food with their bare hands is causing an uproar in the bartender community. Ready-to-eat food must now be handled with “suitable utensils,” effectively requiring bartenders to wear gloves when making drinks that contain something edible, including cocktail basics such as lime and mint. As of January 28, over 9,000 people have signed the petition on change.org to exempt bartenders from this requirement. However, limiting the exemption to bartenders does not go far enough. Wine and beer tasting room employees will also be required to wear gloves if they serve food in addition to drinks at the tasting room, which is common practice at many locations. While larger brewpubs and wineries often have commercial kitchens with staff that prepare food for guests, many smaller operations do not. For example, under this law leanly staffed establishments may now have to require their tasting room employees to don gloves between pours in order to prepare a cheese and cracker plate ordered to accompany a tasting unless there is a dedicated employee for food service that is properly outfitted. This requirement is not only esthetically irksome, but wasteful and unwieldy.

It is not a foregone conclusion that bartenders and tasting room employees will be wearing gloves in the immediate future. As reported by NPR, California Assemblyman Richard Pan stated that "the purpose of the law was not to force everyone to wear gloves, as much as to ensure that we have cleanliness and food safety in restaurants." Indeed, the requirement can be avoided by applying for prior approval from the appropriate regulatory authority (usually local health agencies), and maintaining documentation regarding food safety procedures, health policies and special training for food employees. However, applying for this exemption is no small burden for bars and tasting rooms - and local health agencies will no doubt be inundated with exemption requests.

While we have been informed that no penalties will be issued for six months while proprietors adjust to the new requirements, it will be interesting to see how health department and other regulators enforce the new requirements in establishments that are not primarily in the business of serving food. Right now the ABC does have the authority to enforce (and does enforce) the health laws in establishments that serve alcoholic beverages. Check back for updates in the near future.

Growlers: Not Just for Beer Anymore

In the past few years, wine packaging and dispensing in the U.S. has taken on new forms, going beyond the now-ubiquitous screw caps on bottles.  These include the various permutations of wine “in a box,” Tetra Paks, and single servings of sparkling and still wine in cans.  On-premise retailers are also increasingly offering wines on tap by the glass or carafe, which retain their freshness better than wines from open bottles. These new technologies offer a range of benefits, from environmental (reduction in the use of glass and the supplier’s carbon footprint) to economic (cheaper packaging and lighter, more efficient freight loads), to widening wine’s appeal to new consumers—particularly the younger set, who are more likely to welcome innovation and are less bound to tradition.

Enter the concept of growlers for wine.  A “growler” is a container that most commonly is filled with beer from a tap at a brewery or on-premises beer seller for the consumer to take home, drink, and then refill and use again. Originally a growler might have been a simple metal pail, but today’s growlers are likely to be glass or ceramic jugs.  Since they are reusable, they are better for the environment, fitting right in with the modern day “reduce, reuse, recycle” ethos.

Starting before Prohibition, when wineries sold most of their wines in bulk rather than bottles, wineries in California and elsewhere have been allowed to fill reusable containers for customers at the winery.  This has also been a longstanding practice in Europe (in France, where it is referred to as wine “en vrac,” it’s not uncommon to see a winery employee filling up a customer’s 1.5 liter plastic Evian bottle with wine from a hose).

Filling 'er up with Côtes de Provence AOC Rosé - Photo courtesy of Gastrocycling.com.

But while many states also allow retailers to sell beer by the growler, very few states allow retailers to sell wine by the growler.  Oregon is one of the first.

Oregon passed House Bill 2443 in April 2013, which, for the first time in that state, permitted wine and cider to be sold in growlers (or, as worded in the bill, “securely covered containers provided by the purchaser”).  The new law also expands the privilege to off-premise licensees, so now restaurants, wine shops, and grocery stores can join breweries and wineries in offering growlers of wine and cider (as well as beer) to their customers.

The law restricts the size of growlers to a maximum of 2 gallons each, and any employee who dispenses alcoholic beverages into a growler must hold a valid service permit issued by the Oregon Liquor Control Commission.

Some winery associations in Washington hope to have a similar law soon in their state, which currently only allows wineries to sell growlers of wine at the winery location itself, and not at additional tasting room locations.  They would also like to see wine growlers become legal for Washington retailers to sell.

Could California be next?

California Legislative Roundup 2014

A new year brings new California laws regulating the alcoholic beverage industry and in our first Booze Rules post of 2014, we’re highlighting some of the biggest changes. AB 1116: Supplier Entertainment of Consumers Events

An issue near and dear to many of our clients engaging in consumer tasting events, Assemblymember Hall’s AB 1116 extends and slightly opens up B&P Code § 25600.5, which provides a mechanism for suppliers to entertain consumers off their premises and without charge.  Previously, these events were restricted to in-state licensees (distilled spirits manufacturers, winegrowers, rectifier, distillers or their authorized agents) and could only be conducted at premises not licensed for retail sale with the supplier purchasing the alcohol for the event from a licensed caterer.  Under the new law:

- Events may now be conducted by out-of-state distilled spirits shipper’s certificate holders. Note that wholesalers, beer manufacturers, out-of-state wineries and beer manufacturers are still excluded from hosting these events.

- Suppliers may now hold events on licensed hotel premises, except for lobby areas and areas designated as a club, nightclub, or other similar entertainment and alcohol may be purchased directly from the hotel, rather than using a caterer.   This is in addition to venues without a permanent retail license.

- The total number of consumers and their guests allowed at an event may be up to 600 people, instead of the previous limitation of 400 people.  Event hosts are still restricted to 12 events per calendar year with an attendance of more than 100 people and 24 events per calendar year with attendance of under 100 people.

This opens up areas like hotel restaurants and cafes (and permits hotels to cater these events), as long as the hotel keeps other areas open to the public not attending the event.  This is a welcome development for qualified suppliers who were struggling to find venues for their events.

We expect the ABC to issue a trade advisory outlining the changes to this section in the near future. In the meantime, for guidance about the other requirements for conducting these types of events, please see the ABC’s previous trade advisory here.

AB 636: More Bottlesignings!

AB 636 from Assemblymember Hall amends B&P Code § 25503.4, the winemaker’s dinner law, allowing you to add even more signed bottles to your collections.  According to the law that went into effect last year (B&P Code § 25502.2), suppliers and their agents may sign bottles at promotional events at off-sale retailers, but the same privilege was not explicitly extended to on-sale locations in the ABC Act (despite winemakers so commonly signing bottles at winemaker’s dinners that many believe the practice was implicitly authorized by the ABC).  With AB 636, winegrowers, wine importers and their agents may now also sign bottles at on-sale locations such as a restaurant where a winemaker hosts a winemaker’s dinner (B&P Code § 25503.4).  Note that beer and spirits suppliers are not included in this section—the privilege for on-premises bottlesignings is only held by wineries and importers.  This will continue to expose the on premise venues that allow celebrities to autograph bottles of cognac, tequila, vodka and other spirits products to regulatory discipline.

AB 933: Distillers Can Charge for Tastings

AB 933, sponsored by Assemblymembers Skinner and Hall, amends B&P Code § 23363.1 (distilled spirits tastings) and adds § 23363.3 (brandy manufacturer’s tastings).  These sections create a limited privilege that enables distilled spirits manufacturers and brandy manufacturers, respectively, to charge consumers for up to six ¼ ounce tastes of the manufacturer’s own products on its licensed premises. Using the tastes at the distillery in cocktails is expressly prohibited. This will create difficulty for distillers who market their products for use in cocktails.

AB 647: Regulating Beer Growlers

AB 647, sponsored by Assemblymember Chesbro, amends the container labeling requirements for beer containers provided by the consumer to be filled for off-premise consumption (aka “growlers”) by beer manufacturers (also referred to here as breweries), who are more clearly defined by this bill as those who use their facilities and equipment to manufacture beer for commercial purposes.  The new law allows consumers to re-use growlers they previously purchased and had filled by one brewery, at different brewery, though each brewery can decide for themselves whether or not to adopt this practice.  If the brewery does adopt the practice, it must affix a new label to the growler containing all the mandatory information (brand and type, manufacturer and bottler), and completely obscuring all information related to the first beer that had filled the container (brand/name of manufacturer, etc.).

AB 779: Cider Rules

Assemblymember Bocanegra sponsored AB 779, which permits a beer manufacturer who produces more than 60,000 barrels of beer per year to manufacture cider or perry (pear cider), and sell to any licensee authorized to sell wine.  This is interesting, because California regulates cider the same way as wine, as cider is fermented from fruit.  California law also limits the alcohol manufacturer to one category of beverage per manufacturing site, meaning before this bill, cider could only be made by winegrower licensees.  Now large beer manufacturers with the facilities to make cider can do so, although note that the privilege does not go the other way—cider manufacturers do not now have the privilege to make beer.

Also on the Horizon…

Proposed Rulemaking: ABC Rule 106(d)

This isn’t a legislative update, but we wanted to mention that the ABC has proposed amending Rule 106(d), which currently permits suppliers to furnish alcoholic beverage lists to retailers, up to $25 per unit cost to the supplier.  If adopted, the proposed rule will raise the limit to $50 per unit.  Comments closed on December 30, 2013, so an update should be coming out soon.

AB 520: Streamlining the Consumer On-Sale Tasting Law

The Wine Institute and Assemblymember Chesbro are sponsoring a bill to update B&P Code § 25503.5 and add § 25503.57 to permit a supplier or its representative and the on-sale retailer to independently advertise a tasting event, and permits a wine and spirits wholesaler to conduct consumer tastings on behalf of the supplier without prior ABC approval.  These changes provide more flexibility for who may conduct tastings and enables industry members to advertise more easily to consumers without potentially violating the tied house laws.

We’ll be delving into some of these topics in more detail in future postings, so stay tuned for more Booze Rules in 2014!

Build It and They Will Come: Craft Products Get New Privileges in CA and TX

Big news for craft producers in California and Texas, two of the biggest consumer markets in the United States: Texas craft brewers and distillers now have expanded retail sale and on-sale consumption privileges and California craft distillers have expanded tasting privileges as a result of newly enacted legislation.  But why does this matter?  Why is it important to give craft producers more control over the experience consumers enjoy on their premises? While now such an essential part of California culture, it is almost hard to remember that the big business of California wine country tourism is a relatively new phenomenon.  It was less than forty years ago in 1976 that the Judging of Paris famously put California wine on the global map and helped shape what is now the fourth largest wine-producing region in the world.  The demand for California wine in the 1970’s fueled rapid growth and the number of wineries in the state ballooned from 227 in 1966 to more than 3,400 in 2010, according to the Wine Institute.  Strength in numbers and burgeoning state revenue created a powerful lobbying force, and California wineries pushed for legislation to give wineries broad privileges to allow consumers to experience California wine country by tasting and buying wine directly from the beautiful winery properties for both on-premises and off-premises consumption (and later, the privileges of shipping directly to consumers, but that’s another bedtime story).  Other states soon followed suit, and wine countries popped up across the country, to give the new American wine consumer access to small producers who didn’t have mass distribution in America’s retail establishments.

But under an alcohol regulatory system in which everything is prohibited unless expressly permitted, these tasting and retail privileges did not always extend to local brewers and distillers, whose sectors were dominated by the mass-produced national and international brands, most of whom did very well through the traditional three-tier system and had little interest in bringing consumers to experience their production facilities.

As craft breweries grew in popularity in the 1980’s, California granted the same privileges to local breweries, brewpubs and microbreweries to conduct on-premise tastings and sell to consumers for off-premises consumption.  See Cal. Bus. & Prof. Code § 23357.  We’ve since seen a massive explosion of craft beer that just keeps growing at exponential rates across the country.  The Brewers Association estimates the number of craft brewers to have grown from 8 in 1980 to 537 in 1994 to over 2300 in 2012, with more than 1500 in development around the country.

As a sign of this ever-expanding growth, earlier this year Texas expanded the privileges of brewpubs and microbreweries to permit consumers to tour and taste at the licensed premises and to permit expanded routes to market for small brewers:

• Brewpubs can manufacture up to 10,000 barrels annually instead of 5,000 and can sell to distributors and up to 1,000 barrels to retailers, in addition to consumers who visit their premises (SB 515).
• Brewers and manufacturers who sell less than 125,000 barrels can self-distribute up to 40,000 barrels directly to retailers (SB 516 and SB 517).
• Brewers and manufacturers who produce less than 225,000 barrels annually can sell up to 5,000 barrels of malt beverages produced on the premises for on-sale consumption to consumers (SB 518).

See TABC Press Release, “New craft beer laws signed by Governor Perry, go into immediate effect,” available at https://www.tabc.state.tx.us/home/press_releases/2013/20130615.asp

Craft spirits are growing too, especially with Millennials, who can be seen across the country in bars ordering exclusive specialty cocktails prepared by mixologists, key influencers for growing small batch brands.

As a result of this growth in craft spirits, this year Texas also opened up its laws to include local distillers and rectifiers, who are now able to sell or give away samples of their products to consumers for on-sale consumption up to 3,000 gallons annually, and sell up to two 750ml bottles of their products every thirty days to a consumer who visits the premises, up to 3,500 gallons annually. (SB 905).

This year in California, Governor Brown signed AB 933, which will permit distilled spirits manufacturers to charge each consumer for up to six ¼ ounce tastes of the distillery’s own products on its licensed premises.  The bill will become law in January, meaning distillers will be able to begin charging for tastings, without the necessity of using a work-around protocol like charging for glassware but not the tasting.

It is worth noting that AB 933 does NOT permit distillers to charge for or provide mixed drinks as part of the tastings, specifically stating that these tastings “shall not be given in the form of a cocktail or a mixed drink.”  This is an unfortunate restriction because it deprives consumers of the ability to taste the distilled spirits in the form they are most likely to consume it—in a cocktail.  Moreover, in our current cocktail culture, many distilled spirits manufacturers have very specific drink recipes and mixer recommendations intended for their products that they will not be able to share with consumers on site as part of these tastings.

Additionally, while neither current California law nor AB 933 will permit California distilled spirits manufacturers to sell bottles of their products directly to consumers from tasting rooms—all products will be required to be sold from a retail-licensed premises through the three-tier system—we hope this privilege will not be far behind, despite strong opposition from the distribution tier.

Will craft beer and spirits follow the example set by the American wine industry?  If you build it, will they come?  We hope that the expanded experiential marketing and retail sale privileges that helped the American wine industry tell its story to consumers will now extend to the craft beer and spirits industries, giving consumers the opportunity to fall in love with more small, local and creative brands than ever before.

For more information about craft beverages, please check out the Craft Beverage Expo in May 2014 in San Jose, California.  Hinman & Carmichael’s Rebecca Stamey-White serves on the Advisory Board.