TTB Set To Implement Changes To Some Whisk(e)y Labeling, Advertising Rules

The Alcohol and Tobacco Tax and Trade Bureau (TTB), for those unfamiliar with it, is the arm of the U.S. government in charge of instituting management of federal rules around liquor controls. This, in conjunction with the various state liquor control agencies, defines the legal oversight for this industry in modern times. The TTB, as one aspect, handles labeling and advertising regulations of spirits, and in late 2018 began considering some massive changes that could impact the information you get from brands and also, to some extent, how they produce liquor such as whiskey.

After an extensive comment period on a range of proposed regulation changes that included feedback from various whiskey industry groups, the TTB is now set to implement some of these overhauls. These modifications are considered not complete by the federal agency given the scope of comments received, and more items will be addressed by them in subsequent rule making changes.

Of particular note in what you’ll be reading below is the TTB’s consideration in not implementing some of the proposed changes, and their rationales for why.

With all of this being said, here are some of the amendments the TTB is enacting (or not), directly taken from a document published today by them. Given the length of some of these, I’ve included a select amount of key points, considerations and things to focus upon.

whiskey labels

A Templeton Rye whiskey label

Definition of “Oak Barrel”

The Proposal: TTB proposed to incorporate into its regulations in a definition of an “oak barrel” as a “cylindrical oak drum of approximately 50 gallons capacity used to age bulk spirits,” and specifically sought comments “on whether smaller barrels or non-cylindrical shaped barrels should be acceptable for storing distilled spirits where the standard of identity requires storage in oak barrels.”

Comments: TTB received almost 700 comments in opposition to the proposed definition, including comments from individuals, distillers, trade associations, and a United States Senator. These comments generally opposed the proposed size restriction, and many also opposed the proposed restriction on shape. Only a handful of individual comments supported the proposed definition. The trade associations that commented on this issue (such as DISCUS, the American Distillers Institute, the American Distilled Spirits Association, the American Craft Spirits Association, the American Single Malt Whiskey Commission, the Kentucky Distillers’ Association, the Texas Whiskey Association, and the Missouri Craft Distillers Guild) all opposed the proposed definition.

Most of the commenters asserted that this proposal conflicted with innovative industry practices where oak containers of various sizes and/or shapes are used to develop and age bulk spirits. Several stated that the proposed definition would economically burden distillers who age bulk spirits in oak containers other than cylindrical oak drums of approximately fifty gallons capacity. Many commenters suggested the proposed definition would impose an undue burden on small distillers, who use small or square barrels due to limited storage space or for other reasons. The consensus was that the proposed definition would stifle innovation and did not adequately reflect industry practices or consumer expectations regarding the aging of whisky and other distilled spirits whose standards of identity require storage in oak barrels.

TTB [also] received a few comments on oak barrels that went beyond the issues on which TTB specifically sought comment. For example, a few commenters supported regulatory amendments that would allow aging in barrels made of wood other than oak, and one comment supported the use of a metal container with oak staves.

TTB Response:After careful review of the comments received on this issue, TTB has determined that it will not move forward with the proposal to define an “oak barrel” as a “cylindrical oak drum of approximately 50 gallons used to age bulk spirits” or otherwise define the term in the regulations. After analysis of the comments, TTB has concluded that current industry practice and consumer expectations for aging whisky (and other spirits aged in oak barrels) do not support limiting the size and shape of the oak barrel in the manner proposed. Under the standard of identity for whisky in the TTB regulations among other things, a product labeled as whisky “possesses the taste, aroma, and characteristics generally attributed to whisky,” and is “stored in oak containers.” TTB’s intent was to define oak containers within objective parameters that would be consistent with a product possessing the taste, aroma, and characteristics generally attributed to whisky, not to unnecessarily limit innovation. 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.

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To the extent that a few commenters addressed other issues pertaining to the proposed definition, such as the acceptability of other types of wood and of metal containers with oak staves, TTB will consider these issues for future rule making efforts.

Use of Term “Bottled in Bond”

The Proposal: TTB proposed to maintain the rules for the use of the terms “bottled in bond,” “bond,” “bonded,” or “aged in bond,” or other phrases containing these or synonymous terms. The use of these terms was originally restricted to certain products under the Bottled in Bond Act of 1897, which was repealed in 1979. The Bottled in Bond Act was intended to provide standards for certain spirits that would inform consumers that the spirits were not adulterated. Treasury Department officers monitored bonded distilled spirits plants.

TTB’s predecessor agency, ATF, decided to maintain the labeling rules concerning “bottled in bond” and similar terms, because consumers continued to place value on these terms on labels.

Comments: TTB received 14 comments in response to the request for comment. The majority of the comments were in favor of maintaining “bottled in bond” as a term related to quality. Only two commenters recommended removing the term as confusing and irrelevant.

TTB Response: Consistent with the comments, TTB is maintaining the regulatory standards for “bottled in bond.”

Brand Labels

The Proposal: TTB proposed to revise regulations relating to the placement of mandatory information on distilled spirits containers, in order to increase flexibility. Current rules require that the following appear on the “brand 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. The term “brand label” is defined generally as the principal display panel that is most likely to be displayed, presented, shown, or examined under normal retail display conditions, as well as any other label appearing on the same side of the bottle as the principal display panel. Further, the definition states that “[t]he principal display panel appearing on a cylindrical surface is that 40 percent of the circumference which is most likely to be displayed, presented, shown, or examined under normal and customary conditions of display for retail sale.

TTB believes that the information that currently must appear together on the brand label (or “principal display panel”) is closely related information that, taken together, conveys important facts to consumers about the identity of the product. The proposal would allow this mandatory information to appear anywhere on the labels, as long as it is within the same field of vision, which means a single side of a container (which for a cylindrical container is 40 percent of the circumference) where all pieces of information can be viewed simultaneously without the need to turn the container. TTB believes that requiring that this information appear in the same field of vision, rather than on the display panel “most likely to be displayed, presented, shown, or examined” at retail, is a more objective and understandable standard, particularly as applied to cylindrical bottles.

Comments:  TTB received five comments related to this proposal. A distiller and an industry group each supported the change to a “single field of vision” concept. Another distiller noted that it would like the alcohol content to be permitted on the front label or the back label. Diageo said that it supports a provision that would allow all national mandatory information to appear on a single label. DISCUS noted that it supports the increased flexibility that the proposal would allow, bringing distilled spirits more in line with current requirements for wine. However, DISCUS also recommended that TTB liberalize placement rules further, allowing mandatory information to appear anywhere on distilled spirits labels.

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TTB Response: 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 a conforming change so that the net contents statement may appear on any label. TTB is also amending the definition of “brand label” 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.

Age Statements

The Proposal: TTB proposed to incorporate its current policy that only the time in a first oak barrel counts towards the “age” of a distilled spirit. That is, if spirits are aged in more than one oak barrel (for example, if a whisky is aged 2 years in a new charred oak barrel and then placed into a second new charred oak barrel for an additional 6 months), only the time spent in the first barrel is counted in the ‘‘age” statement on the label.

Comments:  TTB received approximately 50 comments in opposition to the proposal. For example, St. George Spirits stated, “We believe that all time spent in a barrel should be counted towards the spirit’s age statement–regardless of movement between barrels.” The Beverage Alcohol Coalition, a coalition of domestic and international distilled spirits industry groups, stated, “It is a common practice for many distilled spirits products, including Scotch Whisky, to mature in more than one type of cask. As proposed, the rule would mean whiskies matured in more than one cask, could not state the full time the product spent maturing, even if the second cask complies with class/type requirements.” Five commenters suggested that if multiple barrels are used, the label should contain an optional or mandatory disclosure of that fact.

TTB Response: After reviewing the comments, 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 the existing rule 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.

Multiple Distillation Claims

The Proposal: Would have defined a distillation as a single run through a pot still or one run through a single distillation column of a column (reflux) still. The proposal also would have maintained the current rule that only additional distillations beyond those required to meet the product’s production standards may be counted as additional distillations.

Comments: TTB received nine comments in support of this definition. Commenters included distillers and industry groups. For example, a distiller stated that “consumers would reasonably expect that a distillation means a single pass through an alembic or column still and not, for instance, a count of plates in a column.” The American Distilling Institute stated that “[w]e believe that [the proposed] definition is clear and readily understood by consumers.” However, some commenters sought a more scientific or technical definition of distillations.

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Many commenters opposed the provision that would not count the distillations necessary to meet the standard of identity towards multiple distillation claims, even though that provision has been in the current TTB regulations. For example, the American Distilling Institute said that the provision “flies in the face of standard industry convention, is highly dependent on the type of still being used and would require a significant amount of relabeling.” DISCUS said that the provision would mean that “brands cannot truthfully articulate the number of distillations a spirits undergoes.” Spirits Europe also commented that not allowing the distillations necessary to the production process would be “contrary to long standing labelling conventions.”

TTB Response:  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 also incorporating the proposed definition of a distillation (for purposes of multiple distillation claims) into existing rules, as well as the clarification that distillations may be understated but not overstated. Multiple distillation claims will remain optional, not mandatory.

Whisky Labeling

The Proposal and Comments: TTB proposed to require that, where a whisky meets the standard for one of the types of whiskies, it must be designated with that type name, with an exception provided for Tennessee Whisky. TTB solicited comments on this proposal as a potentially restrictive change to the regulations, because in the current regulations, when a whisky meets the standard for a type of whisky, it is unclear whether the label must use that type designation or may use the general class “whisky” on the label. However, historical documents indicate that TTB’s predecessor agencies classified whiskies with the type designation that applied, and required that type to be the label designation. For example, in January 1937, the Federal Alcohol Administration stated that “[w]here a product conforms to the standard of identity for ‘Straight Bourbon Whiskey’ it must be so designated and it may not be designated simply as ‘Whiskey.’”

Accordingly, the proposal provided that where a whisky meets the standards for one of the type designations, it must be designated with that type name, with an exception for Tennessee Whisky. The current TTB regulations state, in part, that the class and type of distilled spirits shall be stated in conformity with current rules if defined therein.

Two industry associations (DISCUS and the Kentucky Distillers’ Association) opposed the proposed change, stating that it would require a large number of revisions to labels for products currently on the market. The American Craft Spirits Association commented in general support of the proposal without addressing this specific issue.

TTB also proposed to specifically provide that the designation “straight” was an optional labeling designation for whiskies. Currently, TTB labeling policy requires whiskies that are aged more than two years to be designated as “straight.” DISCUS commented in support of making “straight” an optional designation, stating this would provide labeling flexibility.

TTB Response: After review of the comments, TTB believes that the proposed amendment does not necessarily reflect current industry practice or consumer expectations. We also recognize that requiring distillers to use a specific type designation for whiskies would require a number of labeling changes. Therefore, TTB will maintain its policy that distillers have the option of using the general class “whisky” as the designation or one of the type designations that applies. TTB also will liberalize its policy on the term “straight” and is amending current rules t o 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.