Here’s a fun fact: Last year, Alcohol & Tobacco Tax & Trade Bureau issued more certificates of label approval (COLAs) for imported product (98,114) than it did for domestic product (86,958), “thereby demonstrating the strong consumer demand for imported distilled spirits, wine and malt beverages,” Robert M. Tobiassen, president, National Association of Beverage Importers told TTB in a letter urging modernization of label rules. “Today’s world is clearly different than in 1935,” Tobiassen adds drily. Many core areas of label regulations date from Repeal of Prohibition.
One big change: Consumers in the U.S. “are intelligent and global in outlook and understanding,” he says, and “not only for alcohol beverages but for a huge range of consumer food and beverage products.”
Consumers can read, interpret and understand truthful, accurate and specific information on labels and in advertisements. “Many areas of alleged confusion by consumers can be resolved immediately through their online search skills for information,” he says.
“The instant availability of information via the Internet provides consumers with a self-policing tool that far surpasses what TTB can do as a regulator in gauging or “second guessing” consumer deception through general regulations. Inaccurate, false, and unauthentic claims about a product can result in “brand death” in the marketplace via consumer complaints going virtual online,” Tobiassen says.
And through its commercial speech cases, the Supreme Court has significantly reduced “the zone of discretion” for TTB, setting a “high bar for the Federal Government in backing up and proving its claim that any one representation on a label or in an advertisement is misleading, Tobiassen says. He suggests TTB might be better off “waiting for consumer complaints about specific labels or advertisements than purely speculating in advance.”
In his comments, Tobiassen urges TTB to deal with private and controlled labels in a second round of proposed rulemaking. “Unlike other labeling topics this one implicates unfair trade practices because many questions arise by producers or importers of private label products on how they can distribute these products without facing allegations of trade practice violations,” he writes.
TTB routinely waives COLA requirements for product brought into the U.S. for use at trade shows and not for subsequent sales in the U.S. as well as samples used for soliciting orders. Tobiassen urges TTB to abandon the current waiver process and replace it with a notice to TTB and a three-year recordkeeping procedure by the importer. In addition, “the regulation could require all bottles and containers bear a firmly affixed strip label declaring the product is not for sale and is restricted to use only at a trade show or convention.
“This simplified process would greatly reduce the burden on importers with a commensurate resource relief on TTB,” he says, adding TTB has replaced application procedures with notice procedures in some other instances.
In his comment letter, Tobiassen joins with comments raised by the Tequila Regulatory Council in stressing the importance of TTB insuring that consumers aren’t misled by labels on products not eligible for distinctive categories of origin. He urges TTB to develop criteria to be used by TTB in recognizing product names and to issue a second notice of proposed rulemaking to seek comment on TTB’s proposed criteria.
He recommends suppliers be allowed to use barrels smaller than 50 gallons for aging. “No solid reason exists for denying flexibility to distillers in their production and development of products,” he says.
Since COLAs Online is a permanent cyberspace record of all approved COLAs, Tobiassen says there is no legitimate business reason to require importers to maintain these records on their premises. “Given the volume of imports, the retention of certificates for each shipment is extremely burdensome so the shortening of this period leads to a lesser regulatory burden and compliance time burden,” he says.
Tobiassen also recommends a number of other recordkeeping simplifications, including simply requiring COLA identification numbers to be on file with the importer, rather than a line-by-line listing of each COLA identification number, and a recognition that importers often rely on information from foreign producers.
NABI also recommends TTB clarify whether QR codes are labeling or advertising, allow imported wines as well as domestic wines to use the term “estate grown, “allow non-grape wines to use the names of American or foreign viticultural areas to provide more information to consumers.
Tobiassen said there’s no reason additional information on a label should be subject to type size uniformity. “Given the puffery and promotional nature of additional information, we believe there is good reason why current regulations do not require such uniformity and believe proposed regulations should clarify that uniformity is not required.”
TTB should allow successor entities to adopt COLAs, just as the proposed regulations allow adoption of approved formulas by a successor to the entity holding the approved formula,” he said.
Tobiassen notes that under a longstanding interpretation of the COLA requirement, TTB and its predecessor agencies required wineries and distiller to obtain a certificate of exemption for products produced and sold in a single state. The same requirement should apply to beer, he said.