Compliance tips for marketing health benefits in alcohol

Health-conscious consumerism is a growing trend, particularly among consumers who are increasingly prioritizing health-promoting diet and lifestyle choices. This focus on health and well-being has had ripple effects across the food and beverage industry, and alcohol is no exception. Some alcohol brands appear to be following this trend and meeting consumer demand by selling alcohol products with claims around certain health benefits which suggest that these products may be comparatively “healthier” than traditional alternatives. Among recent examples are vitamin-fortified hard seltzers and non-alcoholic malt beverages, and even alcohol products with naturally occurring vitamin and minerals.

As companies craft their marketing strategies around these alcohol products, they may wish to consider the impact of product classification on their claims. Accurately understanding product classification along with the regulatory agencies involved will make it easier for companies to craft claims that avoid regulatory risk.

I. FEDERAL POSITIONS ON HEALTH CLAIMS IN THE CONTEXT OF ALCOHOL PRODUCTS

Before implementing benefit statement claims, a critical first step is to determine the product’s likely classification and the regulatory oversight of the product at issue. This allows the company to properly understand which agency’s regulations may be applicable to the product. Those regulations can have a marked impact on not only the type of claims that are allowed but also the substantiation and regulatory oversight that is required in making those claims.

A. TTB’S POSITION ON HEALTH CLAIMS

The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates the labeling and advertising of alcohol products subject to the Federal Alcohol Administration Act (FAA Act) and implementing regulations. The FAA Act and regulations apply to most traditional alcoholic beverages, with the exception of (i) wine products containing less than 7% alcohol by volume (eg, wine coolers) and (ii) beer products that do not conform to the definition of a “malt beverage” under the FAA Act because they are not made with both hops and malted barley.[1]  For example, a non-alcoholic malt beverage product made from hops and a malted barley substitute (such as sorghum, rice, or wheat) would not qualify as a “malt beverage” and would therefore not be subject to the labeling, advertising, and other provisions of the TTB regulations promulgated under the FAA Act. These products are still subject to TTB’s Government Health Warning Statement requirement under the Alcoholic Beverage Labeling Act (ABL Act) and certain marking requirements under the Internal Revenue Code (IRC).

In general, TTB requires pre-approval of alcohol labels, and alcohol producers must apply for a certification of label or bottle approval (COLA), unless otherwise exempt. In contrast, TTB does not require advance review or pre-approval of alcohol advertisements, although industry members may submit advertisements for voluntary pre-approval and TTB may evaluate alcohol advertisements that are currently on the market on a case-by-case basis to determine whether they are truthful and not misleading.[2]

Health statements generally are divided into three categories by TTB: (1) health-related statements; (2) health-related directional statements; and (3) specific health claims. The regulation of these categories varies, depending on whether the health statements are made in connection with labels or advertisements, and is subdivided by product type (wine, distilled spirits, and malt beverages).[3]  The distinction in oversight and approval may have risk implications for the types of claims industry players choose to use on labels as compared to advertisements.

1. Health-related statements

TTB advertising and labeling regulations prohibit any “health-related statements” that are untrue “in any particular” or that tend to create a misleading impression as to the effects of consumption of alcohol on health.[4]  A health-related statement is a statement that is “related to health” and includes statements of a curative or therapeutic nature that, expressly or by implication, suggest a relationship between the consumption of alcohol, or substances within alcohol, and health benefits or effects on health.[5]  Health-related statements include both specific health claims and general references to alleged health benefits or effects on health associated with consumption of alcohol products.[6]   They also encompass claims that a certain physical or psychological sensation results from consuming alcohol, as well as claims of nutritional value.[7]

One example of a health-related statement includes advertisements or labels that imply that the consumption of a particular alcoholic beverage with caffeine will have a “stimulating or energizing effect, or will enable consumers to drink more of a product without feeling the effects of the alcohol.”[8]

Notably, TTB’s regulations do not impose an outright ban on health-related statements. Thus, health-related statements that are properly crafted, substantiated, and qualified, may be deemed permissible.

2. Health-related directional statements

TTB defines health-related directional statements as statements that direct consumers to a third party or other source of information regarding the effects of an alcohol product on health.[9]  For example, an alcohol manufacturer may state on its website that consumption of its product has health benefits, and the statement may feature links to third-party studies and other sources touting the benefits of its product. This may be deemed a health-related directional statement.[10]

Health-related directional statements are “presumed misleading” unless they direct consumers “in a neutral or other non-misleading manner to a third party or other source for balanced information regarding the effects on health of wine or alcohol consumption” and unless the statement has a disclaimer or includes some other qualifying statement sufficient to dispel misleading impressions created by the statement.

3. Specific health claims

Specific health claims are “health-related statement[s] that, expressly or by implication, characterize[] the relationship of the [wine, malt beverage, or distilled spirit], alcohol, or any substance found within the [product] to a disease or health-related condition.”[11]   Specific health claims include “symbols, vignettes, or other forms of communication” that suggest a relationship exists between the wine, malt beverage, or distilled spirit, alcohol, or any substance found within the product, and a disease or health-related condition.[12]  For example, a statement suggesting that consumption of red wine has been proven to reduce the risk of heart disease may be deemed a specific health claim.

To make a specific health claim on a product label or in an advertisement, TTB expects that certain requirements will be met. These requirements include that the specific health claim be “truthful and adequately substantiated by scientific or medical evidence; sufficiently detailed and qualified with respect to the categories of individuals to whom the claim applies; adequately discloses the health risks associated with both moderate and heavier levels of alcohol consumption; and outlines the categories of individuals for whom any levels of alcohol consumption may cause health risks. This information must appear as part of the specific health claim.”[13]

Additionally, for product labels, TTB has stated that it will consult FDA as needed on the use of a specific health claim. If FDA determines the claim is not in compliance with the Federal Food, Drug, and Cosmetic Act (FDCA), then TTB will not approve the use of that claim on the label.[14]

B. FDA’s position

While most traditional alcohol products fall under TTB oversight, FDA regulatory requirements may apply to certain alcoholic products and related statements made in connection with an alcohol advertisement or label. According to the 1987 Memorandum of Understanding (MOU) between TTB and FDA, TTB is responsible for the promulgation and enforcement of regulations with respect to the labeling of distilled spirits, certain wines, and malt beverages pursuant to the FAA Act. However, certain alcohol products fall outside of the FAA Act, impacting how the products must be labeled.

As clarified in FDA and TTB guidance, products that fall within this TTB oversight exception include diluted wines and ciders containing less than 7% alcohol by volume,[15]  as well as brewed products made from substitutes for malted barley (such as sorghum, rice, or wheat) or made without hops. The latter affects the trending industry of hard seltzers.[16]

In cases where an alcoholic beverage is not covered by labeling provisions of the FAA Act, the product is subject to FDA’s food labeling requirements under the FDCA and the implementing regulations that are administered by FDA. In addition, per the Fair Packaging and Labeling Act (FPLA), alcoholic beverages that are not covered by the labeling provisions of the FAA Act are subject to the provisions of the FPLA, which is administered by FDA. Relative to TTB regulation, although these products are exempt from FAA Act-related requirements, they are still required to comply with applicable IRC beer marking requirements and the ABL Act, which mandates the inclusion of a health warning statement on alcoholic beverages containing at least 0.5 percent alcohol by volume.

Adding vitamins and minerals

Of particular relevance in the better-for-you alcohol space is the growing trend of adding vitamins and minerals to alcoholic beverages. In its Fortification Policy, FDA has noted that alcoholic beverages should not be fortified with vitamins and minerals.[17]

Industry groups, such as the Center for Science in the Public Interest (CSPI), have seized on this reference and have taken a public position against such fortification and related implications that alcohol products can be a healthful source of nutrients.

To date, FDA has neither taken enforcement actions against companies marketing fortified alcoholic beverages nor issued overarching guidance or commentary on health claims in alcohol labeling and advertising.

II. IMPLICATIONS

Given the potential divergence in how alcohol advertising claims are regulated, companies operating in this space must carefully assess how the product and claim at issue is classified. This will help them determine whether, and to what extent, any claims about the product’s health benefits may be permissible. This process can be complex: in some cases, it is not always intuitive whether a particular alcohol product’s labeling is governed by TTB or FDA’s labeling requirements.

For example, an industry member wants to make a general health claim in an advertisement related to sake; the claim does not mention a specific disease or condition and does not refer consumers to third-party information. In this instance, the industry member would first need to determine how saké is classified by TTB. Notably, saké is classified as a wine under the FAA Act, but as a beer under the Internal Revenue Code (IRC). This means that for matters relating to production and tax, saké is treated as beer under the IRC; but for matters related to labeling and advertising, saké is treated as wine.[18]  Thus, one would need to refer to TTB’s advertising regulations for wine, which are set forth in 27 C.F.R. Part 4.

Similarly, certain hard seltzers made from the fermentation of malted barley substitutes and/or without hops and exceeding 0.5% alcohol by volume present their own unique regulatory issues. These products are legally defined as “beer” by TTB, but do not qualify as “malt beverages”; they are subject to FDA’s food labeling requirements and TTB’s beer labeling requirements. If the hard seltzer manufacturer wants to add claim a “good source” of antioxidants on its product label, it would first have to comply with FDA’s regulations pertaining to antioxidant nutrient content claims.[19]  In this instance, the hard seltzer would have to contain at least 10-19% of the recommended daily intake or daily recommended value of that nutrient.[20]  Any hard seltzer manufacturer contemplating such claims must consider the FDA regulatory overlay in determining whether its claims are permissible.

Here is another example. Any non-alcoholic malt beverage that contains less than 0.5% alcohol by volume is regulated by TTB as a malt beverage and therefore subject to the FAA Act and regulatory restrictions pertaining to health statements, as detailed above even though technically qualifying as “non-alcoholic.” There are significant nuances around labeling such products. They cannot be labeled “beer” or “lager” since the alcohol content does not meet the legal threshold. Instead, TTB requires that the label of a non-alcoholic malt beverage bear the class designation of “near beer,” “cereal beverage,” or “malt beverage.”[21]

III. CONCLUSION

As the better-for-you trend continues to shape consumer decisions in the alcohol space, it will be important for alcohol industry members to keep in mind the various applicable regulatory requirements and prohibitions as they plan their advertising and labeling claims. These claims and the corresponding regulatory oversight will depend in large part on the product’s classification, making this a pivotal component of industry compliance.

Learn more about these regulatory requirements and prohibitions and their implications for your business by contacting any of the authors.

An earlier version of this article appeared on Law360 on October 15, 2021.

[2] 27 CFR 4.64(i); 27 CFR 5.65(d); and 27 CFR 7.54(e)

[3] See, e.g., 27 C.F.R. § 4.64; 27 CFR § 4.39; 27 C.F.R. § 5.65; 27 CFR § 7.54.

[4] See TTB FAQ’s, https://www.ttb.gov/faqs/alcohol; see also TTB Newsletter – August 14, 2020, available at https://www.ttb.gov/images/newsletters/archives/2020/ttb-newsletter08142020.html  (“We remind industry members that the TTB advertising regulations prohibit any health-related statement that is untrue in any particular or tends to create a misleading impression as to the effects of consumption on health.”)

[5] See, e.g., 27 C.F.R. § 4.64; 27 C.F.R. § 5.65; 27 C.F.R. § 7.54.

[6] Id.

[7] Id.

[8] See TTB Letter to National Association of Attorneys General, September 20, 2007, available at https://www.ttb.gov/images/pdfs/naag.pdf.

[9] 27 C.F.R. § 4.64; 27 C.F.R. § 5.65; 27 C.F.R. § 7.54.

[10] Id.

[11] Id.

[12] Id.

[13] 27 C.F.R. § 4.64; see also 27 CFR § 4.39 (same).

[14] Id.

[15] CPG Sec 510.450 Labeling - Diluted Wines and Cider with Less Than 7% Alcohol | FDA (Aug. 1996).

[16] See FDA, Guidance for Industry, Labeling of Certain Beers Subject to the Labeling Jurisdiction of the Food and Drug Administration; see also TTB Ruling 2008-3, dated July 7, 2008.

[17]  FDA, Guidance, Questions and Answers on FDA’s Fortification Policy (Nov. 2015).

[18] See TTB Information Re Saké.

[19] See 21 CFR § 101.54(g).

[20] See 21 CFR § 101.54(g)

[21] See 27 CFR 7.24(d) (“Products containing less than one-half of 1 percent (.5%) of alcohol by volume shall bear the class designation “malt beverage,” or “cereal beverage,” or “near beer.”)