Controversial Four Loko Case Could Reach Craft

A recent agreement ending a U.S. Federal Trade Commission (FTC) action against controversial flavored malt beverage maker Phusion Projects, LLC could have future implications for the craft beer industry.

On Tuesday, Phusion agreed to change its packaging and add an additional label statement about its alcohol content on cans and bottles of its Four Loko product, the result of an FTC complaint in which it said that the company had understated and improperly advertised the alcohol content in its Four Loko line of beverage products.

The FTC said that the Chicago-based beverage maker had advertised its 23.5 oz. can of 12 percent ABV Four Loko to contain the alcohol equivalent of one to two 12 oz. beers.

In settling the charges, Phusion agreed to disclose the alcohol servings in its products via an “alcohol facts” panel, displayed on the backside of Four Loko packages containing more than two servings of alcohol. The company has also agreed to move products containing more than two and a half servings of alcohol into resealable packages within six months.

The FTC, citing USDA guidelines which peg the serving size of alcohol at 0.6 ounces of pure alcohol, said Four Loko actually contained as much alcohol as four or five of the domestic beers that comprise the best-selling brands in the U.S.

While the edgy marketing and constant barrage of blackout videos involving Four Loko would seem to have little in common with the emphasis on high-quality ingredients and careful brewing processes engendered in the craft brewing world, there are two things both product classes can have in common, as anyone who has ever cracked a 22 oz. “bomber” of Imperial Stout would know: alcohol levels that can climb far higher than the levels in those same best-selling domestic brands, and packages for those products that can be much larger than the standard 12 oz. can or bottle.

“The FTC and other regulatory agencies are taking a closer look at the alcoholic beverage industry and craft brewers could eventually see stricter label requirements because more and more of their beers have higher alcohol contents,” said Eugene Pak, an attorney with Wendel Rosen Black & Dean – a law firm serving clients in the food and beverage industries.

According to Pak, craft brewers should take note of the required changes to Four Loko’s packaging and be conscious of any claims they make about serving sizes.

“You have to be able to back up any claims you make about a product,” he said.

That’s not to say that craft brewers are running from potential regulatory changes that could require more disclosure. In fact, they are in favor of it, in a way.

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