By: Brad Berkman and Louis Terminello, Greenspoon Marder
There is a strange concoction that lurks within the bowels of the brewer’s tank. It is formed with malt, but is not beer, it is something other whose mere mention may frighten beer aficionados to the essence of their being. This mysterious liquid soon slithers through tubes and to the bottling line where 12oz bottles are filled with this ethereal liquid. The bottles make their way to the grocery shelf where it is soon removed from its cold box perch to the refrigerators of eager consumers. There the potion rests until its top is popped and it’s brought to the lips of the drinker. A first sip and this bottled creature metamorphizes to a glorious nectar, causing a love affair that is reflected in astounding Nielsen numbers. To the disappointment of any beer geeks, the flavored malt beverage or FMB is a darling of the brewing industry, not for its purist nature but for the sound of jingling coin that comes from the brewer’s pocketbook after each batch is made and sold and drank and asked for more of. The FMB is a clear consumer favorite.
The FMB as a category, has an Alcohol and Tobacco Tax and Trade Bureau (TTB), codified definition. Before we get there, however, the reader should be aware that the style of drink isn’t a new phenomenon. The drink made its way first on to the shelves of certain European countries in the late 1990’s, among other places, and caused quite a bit of controversy for its generally sweet flavor profile, small bottle size, and perceived target audience.
Of course, it bears refreshing the memory that these drinks were and are offered as beer alternatives. They are meant to be, in most iterations, a light, flavorful alternative to traditional beers. Initially, they were referred to as alcopops, and now are more commonly called Ready-to Drinks or RTD’s (there are many drinks formulas that fall into the RTD category, including spirits based and non-malt based (see hard seltzer), but certainly FMB’s are a leader in that general category. Another publication reports that beer RTD’s “make up the vast majority of overall RTD’s sales with 42.7% of RTD dollar sales coming from FMB’s.
Some early precursors to contemporary FMB’s, the reader may recall, were Smirnoff Ice, WKD and Hoopers Hooch. In fact, this writer recalls from his prior career in “the industry”, travelling to the UK and witnessing the small cold-boxes stationed below virtually every back bar and thinking that the English will drink anything and wondering how long it will take before these drinks make their way across the Atlantic to the shores of the United Sates. Woe is me, if I only had bought stock.
Well, the answer to the above question is, arguably 1993 with the introduction of Zima by the Coors Brewing Company. Buffs of the history of the drink will clearly remember Zima, (and the pun is intended), as the first clear, citrus-like malt-based beverage to make its way onto the beer shelf. Offered as a light alternative to beer, it had a modicum of success at introduction, but its popularity faded quickly (it was in fact re-introduced in 2017 but sales quickly sputtered out).
The origins of RTD’s likely stemmed from restrictions on the activities permitted on the brewing premises by federal law. Creative brewers looked to unique formulations using permitted brewers’ ingredients only. A driving force behind limiting ingredients and production processes at a brewery is to ensure that tax revenue generation is not jeopardized. As the reader likely knows, malt is taxed at a different rate than wine which is taxed at a different rate than spirits and never shall the thrice be combined. I point the reader to the following section of the Internal Revenue Code (the IRC):
26 USC 5411:
The brewery shall be used under regulations prescribed… for the purpose of producing, packaging, and storing beer, cereal beverages containing less than one-half of 1 percent of alcohol by volume, vitamins, ice, malt, malt sirup, and other byproducts and of soft drinks; for the purpose of processing spent grain, carbon dioxide, and yeast… and for such other purposes as the Secretary by regulation may find will not jeopardize the revenue.
As we see from the above the purpose of the brewery premises is limited to the production of beer and storing certain brewing materials. Also, the code section below has arguably a more profound limiting effect on the materials permitted on the premises. But here, I caution the reader to pay careful attention to subpart (b) of the following and different code section. It is here that lays the codified origin of the FMB.
§ 25.15 Materials for the Production of Beer
(a) Beer must be brewed from malt or from substitutes for malt. Only rice, grain of any kind, bran, glucose, sugar, and molasses are substitutes for malt. In addition, you may also use the following materials as adjuncts in fermenting beer: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials.
(b) You may use flavors and other nonbeverage ingredients containing alcohol in producing beer. Flavors and other nonbeverage ingredients containing alcohol may contribute no more than 49% of the overall alcohol content of the finished beer. For example, a finished beer that contains 5.0% alcohol by volume must derive a minimum of 2.55% alcohol by volume from the fermentation of ingredients at the brewery and may derive not more than 2.45% alcohol by volume from the addition of flavors and other nonbeverage ingredients containing alcohol. In the case of beer with an alcohol content of more than 6% by volume, no more than 1.5% of the volume of the beer may consist of alcohol derived from added flavors and other nonbeverage ingredients containing alcohol.
The above code section limited the amount of alcohol from flavors and nonbeverage ingredients containing alcohol to 49% but that didn’t stop brewers and drinks makers from creating unique products with malt base and taxed at the beer rate, making for a competitively priced product on the beer shelf. In fact, TTB permits the use of mixed cocktail names such as Margarita or Moscow Mule on malt-based products that resemble these cocktails. Many brewers have done a fine job of emulating these mixed drinks flavors under the FMB rubric. Of course, that hasn’t stopped consumers from bringing civil actions against producers arguing that these drinks have been mislabeled and are untruthful but that is a topic for another days.
I’m sure it’s obvious to the reader that the hard seltzer craze finds its origins in the FMB category, many of which, but not all are malt based. The bottom line here is that this category of malt beverage finds its roots in three factors; consumer demand for variety of taste profiles, the brewer’s ability to create these brews within the confines of government tax revenue regulations and using ingredients that do not jeopardize revenue collection w maintaining the desired shelf price. This writer for one looks forward to watching how consumer demand for unique flavors pushes brewers to come up with creative FMB formulas which surely will lead to greater excitement in the category.
