LABELING AND ADVERTISING MALT BEVERAGES
WITH LESS THAN ONE-HALF OF ONE PERCENT ALCOHOL
BY VOLUME AS "NON-ALCOHOLIC/ALCOHOL-FREE"
AND RESTRICTIONS FOR USE OF THE CLASS DESIGNATION "BEER"
Brewers, Wholesalers, Importers and others concerned:
PURPOSE: This circular notifies industry members of an
ATF Ruling which will be published in a future issue of
the Alcohol, Tobacco and Firearms Bulletin and reminds
industry members about restrictions for use of the class
designation "beer" for labeling and advertising malt
beverage products. The ruling will read substantially as
follows:
The Bureau has reconsidered its position with respect to
the use of the terms "Non-Alcoholic" and "Alcohol-Free"
for the labeling and advertising of certain malt beverage
products.
Sections 5(e) and 5(f) of the Federal Alcohol
Administration Act (FAA Act), 27 U.S.C. §§ 205(e) and (f)
provide in general terms that malt beverage labeling and
advertising shall not contain any statement which is
false, misleading, deceptive or likely to mislead the
consumer regarding the product. In addition, sections
5(e) and 5(f) provide that malt beverage labeling and
advertising shall not contain any statement concerning the
alcohol content of the product. More specifically,
sections 5(e)(2) and 5(f)(2) prohibit statements of, or
statements likely to be considered as statements of,
alcohol content of malt beverages except as required by
State law.
Regulations which implement these provisions are set forth
in 27 C.F.R. Part 7. In particular, sections 7.29(a) and
7.54(a) prohibit false and misleading statements in
labeling and advertising of malt beverages. In addition
sections 7.26 and 7.29(f) prohibit any statement of
alcohol content of the malt beverage from appearing on the
label unless required by State law. Section 7.29(f)
prohibits references to statements that are likely to be
considered as statements of alcohol content except where
required by State law. See also 27 C.F.R. § 7.54(c) as it
applies to advertisements.
Since prohibition, the term "non-alcoholic," without
further qualification, has been used to describe malt
beverages containing less than one half of 1 percent
(.5 percent) alcohol by volume. During prohibition these
products were legal because the alcohol level was so low
that they were not considered alcohol beverages. The
Internal Revenue Code (26 U.S.C. § 5052) also treats these
products as non-alcoholic by defining beer for tax
purposes as products containing "one-half of 1 percent or
more of alcohol by volume."
In recent years in response to an increased concern about
the effects of alcohol beverages, some malt beverages
which contain no alcohol have been marketed as
"alcohol-free". With the emergence of alcohol-free
products there is an increased risk that consumers would
consider the terms "alcohol-free" and "non-alcoholic" as
synonymous, both meaning the product contains "no"
alcohol, when in fact the non-alcoholic product contains
trace amounts of alcohol.
Under these circumstances, the use of the term
"non-alcoholic" on labels of products which contain some
trace amount of alcohol, but less than .5 percent, would
likely mislead the consumer unless the term is qualified
by some language that discloses that trace amounts of
alcohol are present in the product. However, as noted
earlier, sections 5(e) and (f) of the FAA Act prohibit
statements of alcohol content from appearing in malt
beverage labeling and advertising. The scope of this
prohibition was addressed in a recent ATF Ruling.
In ATF Rul. 84-1, 1984-2 A.T.F.Q.B., 35 the Bureau held
that statements of actual alcohol content by weight or
volume fall within the proscriptions of the FAA Act.
However, with respect to statements likely to be
considered statements of alcoholic content, the following
was stated:
In view of the statute's purpose, the Bureau
believes that the phrase "statements likely to
be considered as statements of alcoholic
content" relates only to statements that
represent the malt beverage as high in alcohol
content. The statute would not preclude
statements indicating that the alcohol content
of the malt beverage is below the range of
alcohol content found in regular malt beverages.
This position took into consideration the legislative
history of the FAA Act which established that Congress
intended that malt beverages should not be sold on the
basis of alcohol strength. The report of the Ways and
Means committee contains the the following statement with
regard to this provision:
The variation of alcoholic content has little
consumer importance and the industry recognizes
that attempts to sell beer and other malt
beverages on the basis of alcoholic content are
attempts to take advantage of the ignorance of
the consumer and of the psychology created by
prohibition experiences. (H. Rept. No. 1542,
on H.R. 8870, 74th Cong., Federal Alcohol
Control Bill, p. 12).
In view of these stated objectives of the FAA Act,
the Bureau has determined that qualifying the term
"non-alcoholic" with a statement that the product
"contains less than .5 percent alcohol by volume"
would prevent any misleading impression that would
likely arise with the use of the "non-alcoholic"
description. Such qualifying language is not a
statement of the actual alcoholic content, as
described in ATF Ruling 84-1. Moreover, it would not
violate the purpose of sections 5(e) and (f) because
it could not be used to sell the product on the basis
of alcohol strength. The only purpose for the
qualifying statement is to prevent the possible
misleading effect of the "non-alcoholic" description.
HELD, only malt beverage products which contain no
alcohol may be labeled and advertised with the term
"alcohol free."
HELD FURTHER, malt beverage products which are
labeled and advertised with the term "non-alcoholic"
will be considered misleading under sections 5(e) and
(f) of the FAA Act unless in direct conjunction with
the term "non-alcoholic," there is a statement
"contains less than 0.5 percent alcohol by volume."
HELD FURTHER, existing certificates of label approval for
malt beverage products which do not meet the requirements
of this ruling will expire at midnight, April 1, 1986.
Applications for certificates of label approval received
on or after September 4, 1985, must meet the requirements
herein discussed.
ADDED NOTE. The Bureau has found that some labels have
been approved which bear the class designation "beer" for
malt beverage products with an alcohol content of less
than 0.5 percent by volume. Industry members are reminded
that 27 CFR 7.24(d) and 7.54(d) prohibit the class
designations "beer", "lager beer", "lager", "ale,
"porter", or "stout" or any other class and type
designation commonly associated with malt beverages
containing 0.5 percent or more alcohol by volume to be
used in labeling and advertising any product containing
less than 0.5 percent alcohol by volume.
The Bureau recognizes that several industry members
have received certificates of label approval which may be
contrary to Section 7.24(d). Therefore, existing
certificates of label approval for malt beverage products
which do not meet the requirements of this regulation may
remain operative until April 1, 1986. Then those
particular certificates should be surrendered to the
Bureau for cancellation. Applications for certificates
of label approval received on or after September 4, 1985,
must meet the requirements herein discussed.
Industry members are reminded to carefully monitor the
alcohol content of malt beverages with less than 0.5
percent alcohol by volume, not only for labeling purposes,
but also for tax purposes, since malt beverages with an
alcohol content of 0.5 percent or more by volume are
subject to the beer tax imposed by 26 U.S.C. 5051.
INQUIRIES. Any person having questions regarding this
circular should refer to it by number, and address all
inquiries to the Associate Director (Compliance
Operations), ATTN: Chief, Industry Compliance Division,
1200 Pennsylvania Avenue, N.W., Washington, DC 20226.
Acting Director |