Brewers’ Voluntary Disclosure Initiative Introduced
As the food and beverage industry trends toward products and practices that promote consumer choice and transparency, the Beer Institute has recently announced a new Voluntary Disclosure Initiative (the “Initiative”), which encourages participating brewers to display caloric and nutritional information on labels, disclose ingredients, and provide freshness dating. The Initiative provides brewers with a means to provide valuable information to consumers, and distinguish their product from other beer makers. Both large-scale and craft breweries have agreed to participate in the Initiative, which recommends compliance across product lines by the end of 2020. When deciding whether to participate in the Initiative, brewers should consider their restaurant retail partners’ impending need to comply with the FDA’s menu labeling requirements (set to take effect in December 2016, with enforcement to begin on May 5, 2017).
Voluntary Disclosure Guidelines
The Beer Institute—a Washington D.C.-based national trade association for the American brewing industry representing both large and small brewers, as well as importers and industry suppliers—announced its Initiative on July 12, 2016, to encourage breweries to display specific consumer information on products, packaging and websites. The Initiative is intended to provide consumers with meaningful information to empower their decision-making when purchasing beverages. As part of the Initiative, participating brewers and importers must include a serving facts statement and must date their products for freshness.
The Initiative supports and encourages participating members to adopt and consistently apply the following guidelines:
- Provide information on calorie, carbohydrate, protein, fat and alcohol by volume (or alcohol by weight as required by state law) on all labels in the form of a ‘serving facts statement’ consistent with federal guidelines;
- Disclose product ingredients on either the label or secondary packaging, by referring consumers to a website, or by including a QR code on the label; and
- Clearly display a freshness date or date of production on all labels or primary containers.
By adopting these guidelines, brewers may make their beers more marketable to retail restaurant partners who are required to comply with the Food and Drug Administration’s (“FDA”) Nutrition Labeling Requirements. 1
While the FDA makes clear that the Nutrition Labeling Requirements do not apply to and have no effect on the labels of alcoholic beverage containers,2 the FDA Nutrition Labeling Requirements will require restaurants with more than 20 locations to disclosure certain nutrition information, such as caloric information, for standard menu items. From a public health perspective, the FDA has stated that mandatory nutrition labeling of standard menu items is more likely to enable consumers to compare options and make informed order selections in covered establishments. Because Section 403(q)(5)(H) of the Federal Food, Drug, and Cosmetic Act does not provide a general exemption for alcoholic beverages and the FDA considers beer to be a “standard menu item,” the nutrition labeling requirements will apply to beers that are listed on the menu in covered establishments.
Invariably, these establishments will look to the beer industry to provide the full nutrition profile of their products. Accordingly, the Beer Institute is encouraging the beer industry—which includes over 3,300 brewers—to participate in the Initiative, which may be viewed as a proactive effort for industry self-regulation to preempt government regulations. Indeed, several major beer companies are on board: breweries that collectively produce more than 81 percent of the volume of beer sold in the U.S. (including Anheuser-Busch, MillerCoors, HeinekenUSA, Constellation Brands Beer Division, North American Breweries and Craft Brew Alliance) have agreed to participate in the Initiative and adopt the voluntary disclosure guidelines. The Initiative recommends compliance across product lines by the end of 2020, giving breweries some lead time to adjust label designs and work through current packaging inventories and purchase commitments without incurring an unanticipated financial hit. Brewers must also refine their testing processes, as the accuracy of nutritional information is critical to maintain consumer trust, preserve brand loyalty and avoid legal repercussions.
Implications for Craft Brewers
The Initiative may prove to be a mixed blessing to craft brewers. While the Initiative is the Beer Institute’s attempt to promote its reputation as an alcohol beverage industry leader in quality and transparency, compliance may prove to be a challenge for smaller craft breweries. Many craft and artisanal brewers make dozens of different styles of beer, many of them seasonal, which makes it more time consuming and costly to analyze the nutritional content for each brew. Craft breweries that are interested in participating in the Initiative may consider limiting the options that they provide to consumers, or find less costly means to analyze the nutritional content of beer.
Alternately, the requirement for ingredient disclosure may ultimately work in favor of the craft brewers, as the variety and quality of ingredients is frequently what separates craft from many of the large-scale breweries (some who may use GMO or high fructose ingredients for their brews).3 As customers become increasingly savvy, discerning, and curious about what they consume, craft brewers might find that the Initiative provides them with another means to distinguish their products from other craft brews, as well as provide craft brewers with an opportunity to set themselves apart from products that are mass produced with lesser quality ingredients.
Consumers across the U.S. market can expect to see the impact of the Initiative immediately, which will likely define a new industry standard and shape consumer expectations. Craft breweries, particularly those who partner with retail restaurants affected by the FDA’s Nutrition Labeling Requirements, may ultimately face market pressure to comply with these voluntary guidelines. While the burden of compliance will likely have a greater effect on smaller craft breweries in terms of costs and complexity, those who adopt the Initiative may benefit by distinguishing their products and being more transparent for the growing segment of consumers that proactively make informed choices about their food and beverages.
For specific guidance or questions on this new Initiative, please contact Greg Bernabeo, Rick Carroll, Olufunke Fagbami or another member of the Craft Brewery, Craft Distillery and Winery Services team of Saul Ewing’s Food and Beverage practice.
In December 2015, the 2016 Omnibus Bill extended the compliance date for the Nutrition Labeling Requirements’ final rule to one year following the publication of final guidance. The FDA will begin enforcing the final rule on May 5, 2017.
Beer labels are regulated by the Alcohol and Tobacco Tax and Trade Bureau under the Federal Alcohol Administration Act.
The ‘craft’ movement is gaining popularity across all segments of food and beverage. As measured by the Brewers Association, the craft beer industry now accounts for 12 percent of the U.S. beer market, and in 2015, craft brewers produced 24.5 million barrels and saw a 13 percent rise in volume, as well as a 16 percent increase in retail dollar value. In non-alcoholic beverage markets, major manufacturers are also jumping on the ‘craft’ bandwagon as overall soda sales decline (according to Beverage Digest, 8.8 billion cases of soda were sold in 2014, down from 10.2 billion in 2004). Although craft sodas are only a small portion of the $77 billion-per-year soda market, that sector is growing and manufacturers are clamoring for market share, as evidenced by PepsiCo’s August 5, 2016 announcement that it has begun selling its own brand of ‘craft’ sodas at major retailers nationwide.