Controversial Four Loko Case Could Reach Craft

Paul Gatza

Paul Gatza, the director of the Brewers Association, believes the FTC’s ruling in the Four Loko case could shake loose proposed TTB rule changes dating back to 2008. In January of that year BA submitted comments on Notice 73, a proposed TTB rule that would require beverage alcohol makers to display ABV, provide serving facts such as calories and carbohydrates and also reference serving sizes based on alcohol percentages.

“We don’t have a problem if it’s required,” Gatza said. “It is the consumers right to know. At a minimum, the option should exist for brewers to put that [serving facts] on there.”

Gatza said the style of the label change would be his organization’s chief concern. An extra panel — like the one required of Four Loko — would cost brewers because they would have to add equipment for the extra label. He said the BA would prefer a linear display running vertically along existing labels — something that is already present on many light beer brands. Gatza also expressed concern at the idea that the FTC could require that certain package types be made resealable, saying that change could cause quality issues in addition to expense.

For now, the case against Phusion and the fallout for the company are isolated, however.

“We work on a case by case basis,” said Janet Evans, a senior attorney in the FTC’s division of advertising practices. “This is the resolution of a case against Phusion in connection with its advertising and marketing of Four Loko. This order, which applies only to Four Loko, is designed to address those allegations.”

Officials at the Beer Institute, a national trade association for the brewing industry, confirmed they were watching the case, but downplayed the potential effects of the outcome for the entire industry.

“This is a final order that is limited to one company and its products in response to allegations of false and misleading advertising,” Beer Institute president Joe McClain told Brewbound.com in a prepared statement. “The vast majority of brewers and importers in the United States advertise and market beer responsibly.”

The Four Loko case was largely spurred on by public concern about the potency of its products — a situation that may have been exacerbated by its history, which includes parental and law enforcement complaints as well as past tangles with other government agencies like the FDA. In 2010, that agency forced Four Loko, and other so-called “energy malternatives” like Joose, to take caffeine out of their products — and, in a situation that ended up having ramifications for the craft beer business, also forced the demise of caffeinated craft brand Moon Shot.

But there are other forces at work that may cause the current Four Loko situation to come back and force changes for craft brewers. Large alcoholic beverage manufacturers used the case as an occasion to push for label changes based on economic reasons. Diageo, for example, issued a statement encouraging changes to all alcoholic beverage labels based on serving sizes and alcohol content.

Guy Smith, the executive vice president of Diageo North America, said that additional label statements providing serving sizes are a necessary change for all beverage alcohol products.

“It’s about providing information to consumers to make them more informed,” Smith said. “The reason, quite simply, is that we think consumers should be able to have that kind of information.”

A PDF of the agreement between the FTC and Phusion can be read here: http://www.ftc.gov/os/caselist/1123084/130212phusiondo.pdf

  • Jared

    My concern isn’t so much the “alcohol facts” panel (that would require a label change, not a huge expense) as it is the precedent set by requiring Phusion to put any beverage over 2.5 servings of alcohol in a resealable container. For a 22oz bottle, that puts the ABV cut-off at 6.8% (5.9% if you are doing 750mL format bottles). If this trickles over into craft, breweries will either have to cease bottling most IPAs/DIPAs/BBA beers in the 22oz (as well as most specialty beer in the 750mL packaging) format or invest in expensive equipment to accommodate resealable packaging.