We’ve been covering the recent updates to the new federal regulations related to labeling and advertising for alcoholic beverages as they related to the three commodities referenced in Notice 176. So far, we’ve covered, malt beverages and wine. Today we write about the changes to advertising and labeling for distilled spirits. The currently set changes to come out of Notice 176 (and there will be others) for the labeling and advertising of distilled spirits are as follows:

  • The definition of distilled spirits gets an update. In an amendment to 27 CFR 5.11 the TTB will clarify that the definition of distilled spirits include a statement to reflect the TTB’s policy that products containing less than 0.5% alcohol by volume are not regulated as distilled spirits under the Federal Alcohol Administration Act.
  • Oak Barrel will not get defined. The TTB had sought comment about relegating those using alternative sized or shaped oak containers to the fringes by defining an oak barrel as a cylindrical oak drum of approx. 50 gal. – but the TTB rejected this after commentators noted that such a proposal would conflict with innovation in the industry. “TTB believes the current regulatory text can be interpreted to allow different sizes and shapes of oak containers as long as the product meets the other criteria for the standard. In the absence of a regulatory definition for “oak barrel” or “oak container,” it will be TTB’s policy that these terms include oak containers of varying shapes and sizes.”
  • Brandy, Rum, and Cognac get their own paragraphs. The TTB proposed an organizational change to Section 5.52 to break up the existing paragraph defining brandy, Cognac and rum and also decided to remove references to certain countries laws regarding identity and manufacturing practices as redundant: “TTB is finalizing the proposed reorganization of the paragraph relating to brandy, Cognac, and rum to make the related provisions easier to read. In response to the comment from Spirits Canada, TTB is also removing references to the Immature Spirits Act for Canadian whisky, and also for Scotch and Irish whiskies. The current reference to compliance with the laws of the applicable foreign countries would cover any aging requirements of those foreign governments, and there is no need to specify the particular laws of those countries, which are subject to change. Finally, TTB is amending the paragraph on Tequila to incorporate the correct terminology relating to the certification process. These minor amendments are being incorporated into existing § 5.52.”
  • Bottled in Bond stays – gin barrels no longer require paraffin lining. The Bottled in Bond Act of 1897 – repealed in 1979 – created the terms meant to provide standards for spirits to inform consumers that spirits were not adulterated as the spirits plants were monitored by treasury agents. Following the repeal of the act, the ATF kept the standards and the terminology based on consumer value of the terms. Under the present standards, vodka and gin barrels, as opposed to whisky barrels, utilizing the terminology must be lined with paraffin or another substance to keep the vodka or gin from coming into contact with the wood. The TTB had sought comment about keeping the standards and definitions. After reviewing the comments: “TTB is maintaining the regulatory standards for “bottled in bond” with an amendment to allow gin to be stored in either paraffin-lined or unlined barrels. This amendment is a conforming amendment to account for changes made in this final rule that would allow for the aging of gin. … TTB is not changing the provisions allowing vodka to be labeled “bottled in bond”.”
  • Labels now allow mandatory information to appear on the same side of the container. The TTB is adopting a field of vision (single side of the container) standard for the mandatory information that must appear on a label the brand name, the class and type of the distilled spirits, the alcohol content, and, on containers that do not meet a standard of fill, net contents meaning that they must all be viewed simultaneously rather than simply requiring they be on a singular display panel (think circular bottles). “TTB is moving forward with liberalizing the placement rules as proposed, by allowing the brand name, class and type designation, and alcohol content to appear anywhere on the label as long as those three pieces of information are in the same field of vision. TTB is not adopting the DISCUS comment to eliminate all placement standards for mandatory information, because TTB believes that it is important to keep together on the label these three closely related elements of information that, taken together, convey important facts to consumers about the identity of the product. TTB is making a conforming change to existing § 5.32 so that the net contents statement may appear on any label. TTB is also amending the definition of “brand label” in existing § 5.11 to remove the requirement that the brand label be the principal display panel. To clarify, this means that the brand label may be on any side of distilled spirits bottles, but must show the brand name, class and type designation, and alcohol content within the same field of vision.”
  • Alcohol by volume tolerances are expanded to +/- 0.3%.  “TTB is finalizing the expanded alcohol content tolerance as proposed, to plus or minus 0.3 percentage points. This final rule amends §§ 5.37(b) and 19.356(c) and (d) to incorporate the language of the proposal. Finally, TTB agrees with the comment made by DISCUS regarding the need for a conforming amendment to § 19.353, and is amending that section to provide that the gauge must be made at labeling proof, subject to the tolerances set forth in section 19.356(c).”
  • All the time spent on Oak now counts toward age claims. Presently, only the time in the first oak barrel counts. If a product is moved to a second barrel, that time in a second barrel does not count toward the age of the spirit and cannot be used in stating or advertising the age of the spirits on labels or in advertising. The new rules change that. “TTB agrees that all the time spent in all oak containers should count towards the age statement. TTB notes that where a standard of identity requires aging in a particular kind of barrel, such as straight whisky, which requires aging two years in a new charred oak container, that aging must take place in that specified container type before being transferred to another vessel. TTB is amending existing § 5.40(a)(1) regarding statements of age for whisky that does not contain neutral spirits to provide that multiple barrels may be used and to provide that the label may optionally include information about the types of oak containers used. This does not affect current requirements to disclose aging in reused cooperage under 27 CFR 5.40(a)(4). TTB believes that the contemporary consumer understands the meaning of age statements and that there is consumer interest for innovative products such as aged gin. As a result, TTB is amending the regulations in current § 5.40(d) to allow age statements on all distilled spirits except for neutral spirits (other than grain spirits). Because neutral spirits and vodka are intended to be neutral, spirits that are aged would not meet the standard to be labeled as neutral spirits or vodka. A spirit that would otherwise be a neutral spirit but is aged would qualify for the designation “grain spirits,” which may bear age statements as provided in current § 5.40(c).”
  • Allowed statements about multiple distillation are expanded. “After review and consideration of the comments, TTB has determined that allowing distillers to count all distillations, including those required to meet a specific standard of identity when making labeling claims, provides the consumer with truthful and adequate information. TTB is liberalizing the provision found in current § 5.42(b)(6) accordingly. TTB is also incorporating the proposed definition of a distillation (for purposes of multiple distillation claims) into existing § 5.42, as well as the clarification that distillations may be understated but not overstated. Multiple distillation claims will remain optional, not mandatory. TTB is making conforming changes to the advertising regulations in § 5.65(a)(9).”
  • Vodka no longer lacks distinctive character, aroma, taste, or color. “TTB has determined that allowing distillers to count all distillations, including those required to meet a specific standard of identity when making labeling claims, provides the consumer with truthful and adequate information. TTB is liberalizing the provision found in current § 5.42(b)(6) accordingly. TTB is also incorporating the proposed definition of a distillation (for purposes of multiple distillation claims) into existing § 5.42, as well as the clarification that TTB agrees that the requirement that vodka be without distinctive character, aroma, taste, or color no longer reflects consumer expectations and should be eliminated. Vodka will continue to be distinguished by its specific production standards: Vodka may not be labeled as aged, and unlike other neutral spirits, it may contain limited amounts of sugar and citric acid. TTB is amending the existing regulations at § 5.22(a)(1) to remove the requirement that vodka be without distinctive character, aroma, taste, or color, and to incorporate in the regulations the standards set forth in the rulings discussed above(Revenue Ruling 55-552 and Revenue Ruling 55-740 (vodka may not be stored in wood); ATF Ruling 76-3 (vodka treated with charcoal or activated carbon may be labeled as “charcoal filtered” under certain parameters); and Revenue Ruling 56-98 and ATF Ruling 97-1 (allowing treatment with up to 2 grams per liter of sugar and trace amounts (1 gram per liter) of citric acid)), obviating the need for those rulings which will be canceled. TTB will also make a conforming change to existing § 5.23(a)(3)(iii), which discusses the addition of harmless coloring, flavoring, or blending materials to neutral spirits, to reflect the allowed additions to vodka in amended § 5.22(a)(1) distillations may be understated but not overstated. Multiple distillation claims will remain optional, not mandatory. TTB is making conforming changes to the advertising regulations in § 5.65(a)(9).”
  • You don’t need to call it “straight” whisky anymore. “TTB will liberalize its policy on the term “straight” and is amending current § 5.22(b)(2)(iii) to make it an optional labeling designation for whiskies that qualify for the designation, but will not expand the use of the term to other classes of distilled spirits. TTB will cancel and supersede Revenue Ruling 55-399, “Straight Whisky,” which relates to outdated provisions regarding wholesale liquor dealer packages.”
  • Agave Spirits are coming. “TTB believes that the creation of the “Agave Spirits” class will provide more information to consumers and will allow industry members greater flexibility in labeling products that are distilled from agave. Accordingly, TTB is amending the regulations in current § 5.22(g) to incorporate the proposed standard. Industry members who have approved labels for “spirits distilled from agave” may choose to change their labels to designate their products as “agave spirits,” but will not be required to do so. New applicants will continue to have the option of designating their products as “spirits distilled from agave” if they meet the requirements for use of this statement of composition. As a result of this change, products labeled as “agave spirits” are not subject to a requirement to submit a formula for approval, which reduces the burden on distillers and importers.”
  • Personalized labels are easier to obtain. The new rule creates a new section for malt beverages, wines, and spirits, each delineating a definition for personalized labels and allowing for changes in line with Guidance 2017-2.

Those issues summarized above and some of the other matters that we will cover in additional posts about these changes are reflected in these specific changes to 27 CFR part 5 that the Rule details which are:

PART 5— LABELING AND ADVERTISING OF DISTILLED SPIRITS

10.The authority citation for part 5 continues to read as follows:

Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.

Subpart A—Scope

11.Revise § 5.1 to read as follows:

  •  5.1General.

(a) The regulations in this part relate to the labeling and advertising of distilled spirits. This part applies to the several States of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.

(b) The regulations in this part shall not apply to distilled spirits exported in bond.

Subpart B—Definitions

12.Amend § 5.11 by:

a.Revising the definition of “Brand label”;

b.Adding the definition of “Certificate of label approval (COLA)” in alphabetical order; and

c.Adding a sentence to the end of the definition of “Distilled spirits.”

The revision and additions read as follows:

  •  5.11Meaning of terms.

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Brand label. The label or labels bearing the brand name, alcohol content, and class or type designation in the same field of vision. Same field of vision means a single side of a container (for a cylindrical container, a side is 40 percent of the circumference) where all of the pieces of information can be viewed simultaneously without the need to turn the container.

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Certificate of label approval (COLA). A certificate issued on form TTB F 5100.31 that authorizes the bottling of wine, distilled spirits, or malt beverages, or the removal of bottled wine, distilled spirits, or malt beverages from customs custody for introduction into commerce, as long as the product bears labels identical to the labels appearing on the face of the certificate, or labels with changes authorized by TTB on the certificate or otherwise (such as through the issuance of public guidance available on the TTB website at http://www.ttb.gov).

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Distilled spirits. * * *. The term “distilled spirits” also does not include products containing less than 0.5 percent alcohol by volume.

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Subpart C—Standards of Identity for Distilled Spirits

13.Amend § 5.22 by:

a.Revising paragraph (a)(1);

b.Amending paragraph (b)(1)(iii) by removing the word “shall” and adding in its place the phrase “may optionally” wherever it appears; and

c.Revising paragraph (g).

The revisions read as follows:

  •  5.22The standards of identity.

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(a) * * *

(1) “Vodka” is neutral spirits which may be treated with up to two grams per liter of sugar and up to one gram per liter of citric acid. Products to be labeled as vodka may not be aged or stored in wood barrels at any time except when stored in paraffin-lined wood barrels and labeled as bottled in bond pursuant to § 5.42(b)(3). Vodka treated and filtered with not less than one ounce of activated carbon or activated charcoal per 100 wine gallons of spirits may be labeled as “charcoal filtered.”

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(g) Class 7; Agave Spirits. “Agave spirits” are distilled from a fermented mash, of which at least 51 percent is derived from plant species in the genus Agave and up to 49 percent is derived from other sugars. Agave spirits must be distilled at less than 95 percent alcohol by volume (190° proof) and bottled at or above 40 percent alcohol by volume (80° proof). Agave spirits may be stored in wood barrels. Agave spirits may contain added flavoring or coloring materials as authorized by § 5.23. This class also includes mixtures of agave spirits. Agave spirits that meet the standard of identity for “Tequila” or “Mezcal” may be designated as “agave spirits” or as “Tequila” or “Mezcal” as applicable.

(1) “Tequila” is an agave spirit that is a distinctive product of Mexico. Tequila must be made in Mexico, in compliance with the laws and regulations of Mexico governing the manufacture of Tequila for consumption in that country.

(2) “Mezcal” is an agave spirit that is a distinctive product of Mexico. Mezcal must be made in Mexico, in compliance with the laws and regulations of Mexico governing the manufacture of Mezcal for consumption in that country.

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  •  5.23[Amended]

14.Amend § 5.23, paragraph (a)(3) by removing the phrase “a trace amount of citric acid” and adding in its place the phrase “citric acid in an amount not to exceed one gram per liter”.

Subpart D—Labeling Requirements for Distilled Spirits

15.Amend § 5.32 by:

a.Removing and reserving paragraph (a)(4);

b.Removing and reserving paragraph (b)(2); and

c.Revising paragraph (b)(3).

The revision reads as follows:

  •  5.32Mandatory label information.

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(a) * * *

(4) [Reserved]

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(b) * * *

(2) [Reserved]

(3) Net contents, in accordance with § 5.38.

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  •  5.35[Amended].

16.Amend § 5.35 by removing the word “designed” and adding in its place the word “designated”.

17.Amend § 5.36 by revising paragraph (e) to read as follows:

  •  5.36Name and address.

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(e) Cross reference—country of origin statement. For U.S. Customs and Border Protection (CBP) rules regarding country of origin marking requirements, see the CBP regulations at 19 CFR parts 102 and 134.

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18.Amend § 5.37 by revising paragraph (b) to read as follows:

  •  5.37Alcohol content.

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(b) Tolerances. A tolerance of plus or minus 0.3 percentage points is allowed for actual alcohol content that is above or below the labeled alcohol content.

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19.Amend § 5.40 by:

a.Redesignating the text of paragraph (a)(1) as paragraph (a)(1)(i);

b.Adding paragraph (a)(1)(ii);

c.Amending paragraph (b) by removing the word “Tequila” and adding in its place the phrase “agave spirits” wherever it appears; and

d.Revising paragraph (d).

The addition and revision read as follows:

  •  5.40Statements of age and percentage.

(a) * * *

(1) * * *

(ii) If a whisky is aged in more than one container, the label may optionally indicate the types of oak containers used.

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(d) Other distilled spirits. (1) Statements regarding age or maturity or similar statements or representations on labels for all other spirits, except neutral spirits, are permitted only when the distilled spirits are stored in an oak barrel and, once dumped from the barrel, subjected to no treatment besides mixing with water, filtering, and bottling. If batches are made from barrels of spirits of different ages, the label may only state the age of the youngest spirits.

(2) Statements regarding age or maturity or similar statements as to Start Printed Page 18724neutral spirits (except for grain spirits as stated in paragraph (c) of this section) are prohibited from appearing on any label.

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20.Amend § 5.42 by revising paragraphs (b)(3)(iii) and (b)(6), to read as follows:

  •  5.42Prohibited practices.

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(b) * * *

(3) * * *

(iii) Stored for at least four years in wooden containers wherein the spirits have been in contact with the wood surface, except for vodka, which must be stored for at least four years in wooden containers coated or lined with paraffin or other substance which will preclude contact of the spirits with the wood surface, and except for gin, which must be stored in paraffin-lined or unlined wooden containers for at least four years;

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(6) Distilled spirits may not be labeled as “double distilled” or “triple distilled” or any similar term unless it is a truthful statement of fact. For purposes of this paragraph only, a distillation means a single run through a pot still or a single run through a column of a column (reflux) still. The number of distillations may be understated but may not be overstated.

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Subpart F—Requirements for Withdrawal From Customs Custody of Bottled Imported Distilled Spirits

21.Amend § 5.52 by:

a.By revising paragraphs (a) and (b);

b.In paragraph (c)(1), adding the phrase “, or a conformity assessment body,” between the words “Government” and “stating”, and by removing the word “certificate” and adding the phrase “Certificate of Tequila Export” in its place;

c.In paragraph (c)(2), adding the phrase “, or a conformity assessment body,” between the words “Government” and “as”, and by removing the word “certificate” and adding the phrase “Certificate of Tequila Export” in its place;

d.Redesignating paragraphs (e) and (f) as paragraphs (f) and (g), respectively;

e.In newly redesignated paragraph (g), removing the phrase “(a) through (e)” and adding in its place the phrase “(a) through (f)”; and

f.Adding new paragraph (e).

The addition and revisions read as follows:

  •  5.525.52Certificates of age and origin.

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(a) Scotch, Irish, and Canadian whiskies. (1) Scotch, Irish, and Canadian whiskies, imported in containers, are not eligible for release from customs custody for consumption, and no person may remove such whiskies from customs custody for consumption, unless that person has obtained and is in possession of an invoice accompanied by a certificate of origin issued by an official duly authorized by the appropriate foreign government, certifying:

(i) That the particular distilled spirits are Scotch, Irish, or Canadian whisky, as the case may be; and

(ii) That the distilled spirits have been manufactured in compliance with the laws of the respective foreign governments regulating the manufacture of whisky for home consumption.

(2) In addition, an official duly authorized by the appropriate foreign government must certify to the age of the youngest distilled spirits in the container. The age certified shall be the period during which, after distillation and before bottling, the distilled spirits have been stored in oak containers.

 

(b) Brandy and Cognac. Brandy (other than fruit brandies of a type not customarily stored in oak containers) or Cognac, imported in bottles, is not eligible for release from customs custody for consumption, and no person may remove such brandy or Cognac from customs custody for consumption, unless the person so removing the brandy or Cognac possesses a certificate issued by an official duly authorized by the appropriate foreign country certifying that the age of the youngest brandy or Cognac in the bottle is not less than two years, or if age is stated on the label that none of the distilled spirits are of an age less than that stated. The age certified shall be the period during which, after distillation and before bottling, the distilled spirits have been stored in oak containers. If the label of any fruit brandy, not stored in oak containers, bears any statement of storage in another type of container, the brandy is not eligible for release from customs custody for consumption, and no person may remove such brandy from customs custody for consumption, unless the person so removing the brandy possesses a certificate issued by an official duly authorized by the appropriate foreign government certifying to such storage. Cognac, imported in bottles, is not eligible for release from customs custody for consumption, and no person may remove such Cognac from customs custody for consumption, unless the person so removing the Cognac possesses a certificate issued by an official duly authorized by the French Government, certifying that the product is grape brandy distilled in the Cognac region of France and entitled to be designated as “Cognac” by the laws and regulations of the French Government.

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(e) Rum. Rum imported in bottles that contain any statement of age is not eligible to be released from customs custody for consumption, and no person may remove such rum from customs custody for consumption, unless the person so removing the rum possesses a certificate issued by an official duly authorized by the appropriate foreign country, certifying to the age of the youngest rum in the bottle. The age certified shall be the period during which, after distillation and before bottling, the distilled spirits have been stored in oak containers.

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Subpart G-Requirements for Approval of Labels of Domestically Bottled Distilled Spirits

22.Add § 5.57 to read as follows:

  •  5.575.57Personalized labels.

(a) General. Applicants for label approval may obtain permission from TTB to make certain changes in order to personalize labels without having to resubmit labels for TTB approval. A personalized label is an alcohol beverage label that meets the minimum mandatory label requirements and is customized for customers. Personalized labels may contain a personal message, picture, or other artwork that is specific to the consumer who is purchasing the product. For example, a distiller may offer individual or corporate customers labels that commemorate an event such as a wedding or grand opening.

(b) Application. Any person who intends to offer personalized labels must submit a template for the personalized label as part of the application for label approval required under §§ 5.51 or 5.55 of this part, and must note on the application a description of the specific personalized information that may change.

(c) Approval of personalized label. If the application complies with the regulations, TTB will issue a certificate of label approval (COLA) with a qualification allowing the personalization of labels. The qualification will allow the certificate holder to add or change items on the personalized label such as salutations, names, graphics, artwork, congratulatory dates and names, or event dates without applying for a new COLA. All of these items on personalized labels must comply with the regulations of this part.

(d) Changes not allowed to personalized labels. Approval of an application to personalize labels does not authorize the addition of any information that discusses either the alcohol beverage or characteristics of the alcohol beverage or that is inconsistent with or in violation of the provisions of this part or any other applicable provision of law or regulations.

Subpart H—Advertising of Distilled Spirits

23.Amend § 5.63 by revising paragraph (a) to read as follows:

  •  5.635.63Mandatory statements.

(a) Responsible advertiser. The advertisement must display the responsible advertiser’s name, city, and State or the name and other contact information (such as, telephone number, website, or email address) where the responsible advertiser may be contacted.

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24.Amend § 5.65 by revising paragraph (a)(9) to read as follows:

  •  5.655.65Prohibited practices.

(a) * * *

(9) The words “double distilled” or “triple distilled” or any similar terms unless it is a truthful statement of fact. For purposes of this paragraph only, a distillation means a single run through a pot still or a single run through a column of a column (reflux) still. The number of distillations may be understated but may not be overstated.

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The post The new federal regulations on advertising and labeling malt beverages, wine, and distilled spirits. Part 3 – updates and issues regarding advertising and labeling regulations for distilled spirits. appeared first on Libation Law Blog.