When FDA Takes Control: What Alcohol Beverage Companies Need to Know About the FDA
Wine, spirits, and malt beverages are regulated by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”). This generalization holds true for matters pertaining—but not exclusive—to labeling, licensing, formulation, advertising, and tax. However, there are some instances where the Food and Drug Administration (“FDA”) has jurisdiction over alcohol beverage products. This article surveys some of those occasions when FDA takes charge of alcohol beverages.
When is an Alcohol Beverage Product Regulated by FDA?
The Federal Alcohol Administration Act (“FAA”) regulates the interstate and foreign commerce of wine, spirits, and malt beverages and bestows general authority to oversee these products to the TTB. Despite this, the labeling of some beers and some wines are regulated by the FDA. The beers and wines that are subject to FDA’s jurisdiction fall outside of the FAA’s definitions of wine and malt beverage.
The FAA defines wine as containing 7% or more alcohol by volume (“ABV”) and designates the labeling jurisdiction of wines meeting this definition to the TTB. Wines containing less than 7% ABV are not defined by the FAA and are subject to the food labeling and packaging regulations of the Federal Food Drug and Cosmetic Act (“FD&C Act”), the Fair Labeling and Packaging Act (“FP&L Act”), and the implementing regulations of the FDA. These wines can include wine coolers and dealcoholized or partially dealcoholized wines and ciders. Note that wine in these classes is not exclusive to grape wine and includes wine made from other agricultural products, such as apricots or cherries, as well as saké.
Some beers do not meet the FAA definition for malt beverages and are not subject to the labeling regulations of the FAA or the jurisdiction of the TTB. The FAA defines “malt beverages” as:
[A] beverage made by the alcoholic fermentation of an infusion or decoction, or combination of both, in potable brewing water, or malted barley with hops, or their parts, or their products, and with or without other malted cereals, and with or without the addition of unmalted or prepared cereals, other carbohydrates or products prepared therefrom, and with or without the addition of carbon dioxide, and with or without other wholesome products suitable for human food consumption. 27 U.S.C. 211(a)(7).
Beers that are not made from both malted barley and hops—but are instead made from a malted barley substitute (such as corn, rice, or wheat)—or are made without hops do not meet the FAA’s definition for malt beverages. Such beers are not subject to the labeling regulations of the TTB. Beers that fall outside of the FAA’s definition for malt beverages are subject to the food labeling and packaging regulations of the FD&C Act, FP&L Act, and the implementing regulations of FDA. For beer products—unlike wine—FDA can have jurisdiction over the product regardless of the beer’s ABV percentage provided the beer does not meet the FAA’s definition for malt beverage.
What Label Regulations Govern Alcohol Beverage Products Regulated by FDA?
In instances where a wine or beer falls within the labeling jurisdiction of FDA, several significant differences from standard TTB labeling should be noted. Food labeling regulations are codified in 21 CFR Part 101. FDA food labeling requirements include the following:
1. Ingredients statement, containing a list of the common or usual names of the ingredients in the product in descending order of predominance by weight;
2. Nutrition Facts Panel listing nutrients and vitamins including calories from fat, saturated fat, trans fat, cholesterol, dietary fiber, sugars, Vitamins A and C, calcium, and iron;
3. Statement of Identity or the name of the food, as established by law or regulation or, in absence of such, the common or usual name of the food. The Statement of Identity must appear on the front label in bold text and must generally be at least one half of the size of the most predominant text on the front label;
4. Net quantity of contents in weight, measure, or numeric count in the lower 30% of the front label in lines generally parallel to the base of the container;
5. Name and address of the manufacturer, packer, or distributor; and
6. Declaration of major allergens including but not limited to milk, egg, fish, and peanuts, as defined in the Food Allergen Labeling and Consumer Protection Act.*
* Not an exhaustive list and does not explore exceptions.
Several statements are still required to appear on alcohol beverage products whose labeling falls within the jurisdiction of FDA. These statements include, but are in no way limited to, the health warning statement (also known as the Government Warning Statement), the alcohol by volume statement, the country of origin, and the sulfites statement (for wines).
FDA also regulates voluntary statements or claims on labels, including nutrient content claims, health claims, and structure/function claims. Statements like “Fat Free,” “Low Calorie,” and “Light” are considered to be claims and are subject to FDA regulations. To assert these types of claims, the product must meet the terms and conditions as established by FDA’s label regulations, which are generally found in Subparts D, E, and F of 21 CFR Part 101. Further, manufacturers have the onus of warranting that claims on the labels of their products are truthful and not misleading and can be substantiated.
What are Regulatory Differences That Should be Noted?
A key difference for wines and beers regulated by FDA is that, unlike TTB, pre-market approval of labels is not required. In other words, the labels of wines less than 7% ABV and beers not made from both malted barley and hops do not need a federal label approval (also known as a COLA). In fact, if a label for one of these products is submitted to TTB, the TTB will not issue an approval and will instead note the label falls within the labeling jurisdiction of FDA. While TTB will notify the applicant of the agency’s lack of jurisdiction, it will not share such information with FDA; instead, the applicant is required to ensure that its labels comply with FDA regulations. Unlike TTB, FDA does not require pre-market approval for food or beverage products, and FDA usually will not review a food or beverage label before a product goes to market.
The FDA can, however, police the market and issue agency actions, such as warning letters or recalls, for products falling within its jurisdiction that are mislabeled or adulterated. For this reason, it is extremely important that a label falling within the jurisdiction of FDA be reviewed in compliance with applicable federal rules and regulations before the product is sold at market. Further, since there is no pre-market approval or review of FDA-regulated labels, ensuring that these statements and claims comply with FDA rules and regulations is particularly imperative.
Small Business Nutrition Labeling Exemption
Often, the Nutrition Facts Panel can be unfamiliar to alcohol beverage producers, as such panels are not required on alcohol beverage products regulated by the TTB. The FD&C Act requires that FDA-regulated food products bear a Nutrition Facts Panel, unless the product qualifies for an exemption. The Small Business Nutrition Labeling Exemption is one option for smaller or low-volume producers who may not want to display the facts panel on a label. The exemption applies if the individual claiming the exemption employs fewer than an average of 100 full-time employees and less than 100,000 units of the product are sold (or expected to sell) in the United States during a 12-month period.
The Small Business Nutrition Labeling Exemption must be applied for through FDA every 12 months (based on time of filing), otherwise the Exemption will no longer apply. The FDA maintains a list of firms that have applied for and been granted the Exemption, along with the time duration for the Exemption. Manufacturers should be prudent to note that, if the product’s label, labeling, or advertising contains a nutrient content claim, health claim, or other nutrition information, the Small Business Nutrition Labeling Exemption is not applicable. Further, if the Exemption is granted, other mandatory label requirements—such as the ingredients statement or statement of identity—are still required.
FDA Food Facility Registration and Requirements for Alcohol Beverage Producers
Even though TTB has primary jurisdiction over alcohol beverages, FDA does have jurisdiction over food safety and adulterated food products, which, by definition, include all alcohol beverages (wine, beer, and spirits). Section 402 of the FD&C Act considers a food to be adulterated if the food is found to meet—but not limited to—the following: (1) Prepared, packed, or held under conditions that are insanitary; (2) Contains any poisonous or deleterious substance which may cause the food to be injurious to health; or (3) Contains an unapproved food additive. This applies to all alcohol beverages, regardless of whether the products fall into the labeling jurisdiction of FDA. For example, several years ago, FDA determined that caffeine added to alcohol beverage products was an unsafe food additive, the inclusion of which rendered the alcohol adulterated. While TTB maintained labeling jurisdiction of the alcohol products, FDA evaluated the safety of ingredients added to alcohol (in this case, caffeine) under the FD&C Act.
In January 2011, President Obama signed the Food Safety Modernization Act (“FSMA”) into law, simultaneously amending sections of the FD&C Act. FSMA aims to stop foodborne illness breakouts before adulterated or misbranded food items are released into interstate commerce for sale or consumption and is probably one of the most significant changes to U.S. food law in decades. Additionally FSMA signifies some of the most significant changes to the U.S. food law in 70 years.
FSMA instituted new requirements, including updating facility registrations every even-numbered year (otherwise known as biennial renewal), mandating e-mail addresses on food facility registrations, and requiring that food facilities establish preventative control measures (or, essentially, a HACCP plan). Furthermore, FSMA bestows the FDA with considerable power: the ability to suspend a food facility’s FDA registration should the agency determine the facility’s food has a reasonable probability of causing death or serious illness to humans.
Are Alcohol Beverages Included in the Definition of “Food Facility” for FDA Registration Purposes?
While it is undeniable that FSMA has many layers, the new law is a great example of how food and alcohol beverages intersect in the legal world. Alcohol beverage facilities are not exempt from FSMA, although they are excused from more burdensome provisions of the law. FSMA and related provisions consider alcohol beverage facilities to be food facilities, including facilities of products primarily regulated by TTB. In general, both domestic and foreign facilities that manufacture, process, package, or hold alcohol beverages for human consumption within the U.S. are required to register with FDA. The registration requirement is not new—alcohol beverage facilities have been required to register with FDA since the 2002 Bioterrorism Act. Every domestic winery, brewery, and distillery should be registered with FDA for food facility registration purposes. For international facilities, the regulations are somewhat more specific, but generally if a facility manufactures, processes, packages, or holds food that will be consumed in the U.S. (without further manufacturing or processing outside the U.S.), that facility needs to be registered with FDA and have a U.S.-based Agent.
In addition to registration, breweries, distilleries, wineries, and other alcohol beverage facilities are subject to FDA inspections. On the domestic level, inspections are usually conducted by state agencies. While this rule is not new either, pre-FSMA alcohol beverage facility inspections were not very common. However, this number is growing what with inspection frequency mandates established by FSMA. Shortly after FSMA’s regulations were implemented, Wine Spectator reported that roughly 261 U.S. wineries were inspected in fiscal year 2011-12 in comparison to 132 in 2009-10. Although FDA inspections may be new to a brewery, distillery, or winery, an establishment that is alert, well managed, and informed should not fear an inspection. During inspection, alcohol beverage facilities are held to current Good Manufacturing Practices (“GMPs”), which are found in 21 CFR Part 110.
Moreover, whereas non-alcohol food facilities are held to stricter standards, FSMA creates specific carve out provisions for alcohol beverage facilities. For example, alcohol beverage facilities are exempt from FSMA’s requirements that facilities establish and implement preventative control measures. Alcohol beverage facilities, however, should still be aware they are required to register with FDA, that the registration must be updated biennially, can be subject to mandatory recalls or administrative detention, and their facilities are subject to FDA inspections.
Alcohol beverage products are generally regulated by the TTB with respect to licensing, advertising, labeling, tax, and formulation. However, there are some instances where FDA may have primary jurisdiction over a beverage product. These instances range from low volume alcohol wines to beers that do not meet the FAA’s definition for malt beverage to FDA food facility registration and inspections. When bringing a new product to market, comprehension of these rather important details is essential to avoid possible regulatory issues, extra expenses, delays, and even agency actions. Further, while commonly assumed that TTB is the one regulatory agency with jurisdiction over alcohol beverage products, brewers, distillers, and vintners must be aware of when the rules and regulations of other agencies, such as the FDA, take hold.
Lindsey A. Zahn is an alcohol beverage and food attorney at Lehrman Beverage Law, PLLC. She regularly assists wine, beer, spirits, and food companies with regulatory counseling, FDA and FSMA compliance, advertising and promotions, licensing, labeling, import and Customs issues, and supplier and co-manufacturing relationships. In addition, she is an award winning author on wine law and publishes the blog On Reserve: A Wine Law Blog.