Leaders representing 22 independent wholesalers submitted comments to the U.S. Department of the Treasury and the Alcohol and Tobacco Tax and Trade Bureau (TTB) Thursday, expressing concern over the marketing and sale of bev-alc products co-created by large soft drink companies such as PepsiCo and Coca-Cola.
“The alcohol beverage sector is highly competitive and dynamic, with more choices available to consumers now than at any time in our history,” the wholesalers wrote. “We are concerned, however, that new entrants to the alcohol space are not following the same well-established regulations which have served consumers well for decades.”
Comments – addressed to Treasury secretary Janet Yellen and TTB administration Mary Ryan – were submitted in response to the TTB releasing its Advanced Notice of Proposed Rulemaking (ANPRM) last month, soliciting comments on how beer, wine and spirits regulations can be “tightened up, modernized” and “clarified.” The ANPRM is the latest move following the Treasury’s February report on competition. Comments are open through March 9, 2023.
The National Beer Wholesalers Association (NBWA) and its members have been critical of traditional non-alcoholic beverage producers entering bev-alc with products such as Hard MTN Dew – produced by Boston Beer and distributed by PepsiCo’s new distribution subsidiary Blue Cloud Distributing – and Topo Chico Hard Seltzer and Simply Spiked – produced by Molson Coors in partnership with Coca-Cola. Thursday’s letter shared similar sentiments expressed over the past year such as the potential illegal use of slotting fees.
“In recent months, large soft drink manufacturers have begun introducing alcoholic versions of their popular soft drink brands,” the wholesalers wrote. “Retailers that carry both the alcoholic and non-alcoholic versions of these brands (several of which have been marketed to minors for years) are displaying them together in the retail environment, often outside of the traditional alcohol aisle. It is unrealistic to think that soft drink manufacturers are not leveraging slotting fees for their non-alcohol brands to ensure preferential shelf space for the alcohol counterparts.”
Wholesalers also expressed concerns over “crossover” bev-alc products being sold “in places in which they do not belong” such as near “non-alcohol versions” of the same brands and by products typically marketed towards children, such as “toys and juice drinks.” The letter included photo examples of displays such as Hard MTN Dew stacked next to Kool-Aid Jammers and Hot Wheels, and Simply Spiked stacked near the frozen aisle next to Kellog’s Eggo waffles.
“We do not believe new regulations are needed for the already competitive and highly regulated alcohol industry,” wholesalers continued. “It is critical, however, that all members play by the same set of rules. The law is clear, and TTB should expeditiously use its authority to ensure that slotting fees are not being used by large soft drink manufacturers to sell alcohol in America today.”
Wholesalers represented in the letter include: Southern Eagle Distributing (Fort Pierce, Florida); Hensley & Company (Phoenix, Arizona); Dean Distributing (Green Bay, Wisconsin); Pepin Distributing (Tampa, Florida); Doll Distributing (Des Moines, Iowa); Southern Eagle Sales & Service (Metairie, Louisiana); Ohio Eagle Distributing (West Chester, Ohio); O’Malley Beverage of KS (Lawrence, Kansas); Penn Beer Sales (Hatfield, Pennsylvania); Eagle Distributing of Texarkana (Texarkana, Arkansas); Quality Brands (Rapid City, South Dakota); Kentucky Eagle (Lexington, Kentucky); Silver Eagle Distributing (Houston, Texas); Matesich Distributing (Newark, Ohio); Olympic Eagle Distributing (Puyallup, Washington); Wilsbach Distributors (Harrisburg, Pennsylvania); III Counties District Co. (Safford, Arizona); Southern Beverage Company (Batesville, Mississippi); National Distributors Inc. (South Portland, Maine); Tri-Eagle Sales (Midway, Florida); Maletis Beverage (Portland, Oregon); and Western Wyoming Beverages (Rock Springs, Wyoming).
Beer Institute Revises Marketing Code ‘to Address Alcohol Variants’
The Beer Institute released a revision to its advertising and marketing code Thursday addressing “alcohol variants of non-alcohol products,” such as the ones called out by wholesalers – a change meant to “help consumers distinguish between alcohol and non-alcohol versions of beverages with popular brands names.”
Effective immediately, the trade group advises that all “advertising and marketing materials for the alcohol variant of any non-alcohol product, including but not limited to packaging, should be readily distinguishable from the advertising and marketing materials of the non-alcohol product to not confuse consumers about the alcohol nature of the alcohol variant,” according to a press release.
Additionally, all “advertising and marketing materials, including but not limited to displays, signage, and sampling, should not feature both the non-alcohol product and the alcohol variant.”
“Brewers are committed to responsible self-regulation in advertising and marketing, and that includes ensuring consumers can easily distinguish between alcohol and non-alcohol variants of products,” Brian Crawford, the new president and CEO of BI, said in the release. “With this advertising code update, brewers are doing their part to ensure that advertising and marketing materials for these products are distinct in the marketplace. Updating the Beer Institute’s Advertising and Marketing Code to accommodate the growing number of innovative products in the marketplace gives consumers the information they need to make informed choices and consume responsibly.”
The Distilled Spirits Council of the United States (DISCUS) issued its own revised guidelines earlier this month, addressing concerns that “new alcohol crossover products” launched by traditional soft drink producers “may potentially be confused with their non-alcohol counterparts.”
The updated guidelines for suppliers included the development of “product packaging and branding that is clearly and easily distinguishable from non-alcohol beverage counterparts” and the inclusion of “product labels, packaging, and promotional materials that makes it clear that it contains alcohol.” The trade group also issued guidelines for retailers, including not to “display or promote crossover brand products in a manner that could create confusion with the non-alcohol beverage counterpart.”