A WHOLE NEW WORLD

FDA Regulations for Alcohol Manufacturers

WRITTEN BY JANA CARACCIOLO & JOHN P. THOMAS, II

Many distilled spirits manufacturers have recently begun exploring different avenues to boost their profit margins and increase sales of their main distilled spirit product. These different avenues include everything from offering non-alcohol versions of the spirit to selling complementary products to pair with it, such as mixers. However, all distillers should be forewarned: Federal regulations applicable to these adjunct products differ from the federal regulations that apply to their traditional distilled fare.

Under the Federal Alcohol Administration Act,1 the Alcohol and Tobacco Tax and Trade Bureau (TTB) has regulatory jurisdiction over distilled spirits containing seven percent or more alcohol by volume (ABV) and the U.S. Food and Drug Administration (FDA) has regulatory jurisdiction over alcohol beverages that contain spirits but are less than seven percent ABV, with several exceptions. While distilled spirits products typically fall well over the seven percent ABV threshold, distilled spirit manufacturers looking to expand their business into low-alcohol ready-to-drink beverages, including spirits-based seltzers and pre-mixed cocktails in a can, should be aware of FDA’s regulations pertaining to permitting, ingredients, and labeling.

Permitting

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 requires the FDA to take steps to protect the public from a threatened or actual terrorist attack on the United States food supply. In response to the Bioterrorism Act, the FDA promulgated regulations that, among other things, require food facilities to register with the federal government.2 Not only must food and beverage facilities register under the Bioterrorism Act and the related FDA regulations, but so must bonded wine premises, breweries, distilled spirits plants, alcohol beverage distributors, importers, warehouses, and wholesalers.3 Distilled spirit manufacturers wishing to expand their business into low- or no-alcohol products already should be registered with the FDA. Therefore, additional registration at the federal level should not be needed. However, such distilled spirit manufacturers should contact their state regulators to see what additional state regulations and registrations apply.

1 27 U.S.C., Chapter 8, §§ 201-212.

2 See 42 U.S.C. § 262a; 21 C.F.R. §§ 1.225-245.

3 See Public Law 107-188, Alcohol & Tobacco Tax & Trade Bureau (May 2, 2018), https://www.ttb.gov/laws-and-regulations/public-law-107-188.

Ingredients

The Federal Food, Drug, and Cosmetic Act defines a “food additive” as “any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food.”4 Excluded from the food additive definition are foods that are “generally recognized as safe” or GRAS, and foods proven to be safe due to their use in the food system prior to 1958. These laws and regulations apply regardless of whether a product is regulated by the TTB or FDA.5 Stated differently, distilled spirit manufacturers should be familiar with the FDA’s definitions of food additive and GRAS, because the ingredients used in TTB-regulated distilled spirits must be FDA-approved food additives or GRAS.

If an ingredient is on the FDA’s GRAS list, then a food or beverage manufacturer may use that substance. However, if an ingredient is not on the FDA’s GRAS list, the food or beverage manufacturer should research whether the FDA has an authorizing regulation for it. If there is not an authorizing regulation, which states the food ingredient may be used in the way the food manufacturer intends for the ingredient to be used, then the food manufacturer must go through the FDA’s ingredient petition process.6 However, if a food manufacturer believes that a substance should be GRAS, the food manufacturer can submit a GRAS Notice to the

4 21 U.S.C. § 321(s).

5 See Determine If and How Ingredients May be Used in Your Beverage, Alcohol & Tobacco Tax & Trade Bureau (Aug. 16, 2016), https://www.ttb.gov/formulation/determining-if-and-how-ingredients-may-be-used-in-yourbeverage.

6 See Determining the Regulatory Status of a Food Ingredient, Food & Drug Admin (Sept. 20, 2018), https://www.fda.gov/food/food-ingredients-packaging/determining-regulatory-status-food-ingredient.

FDA in which the manufacturer provides the FDA with generally available and accepted scientific data, information, or methods that show the scientific community recognizes the substance is GRAS.7

The FDA does not conduct pre-market recipe approval. Instead, if an FDA-regulated food or beverage product contains an “unsafe food additive,” or a food additive that is not FDA approved, then the FDA considers the product adulterated.8 However, the FDA will only become aware of the adulterated product after it is on the market. This differs from the TTB. Although the TTB does not conduct pre-market formula approval on all products, it conducts pre-market formula approvals for those products that contain flavoring and coloring.9 The TTB conducts recipe approvals on alcohol products that contain flavoring and coloring regardless of whether the product is regulated by the TTB or FDA. If a product does not contain any alcohol, however, the only regulator involved is the FDA, and the TTB does not need to approve the formula.

Labeling

Both the TTB and FDA have regulations on product labeling. However, knowing which agency regulates a product is important because each agency requires labels to contain different information. Although certain information, such as the product name, is required regardless of who regulates the product, each agency has specific requirements for each label component. For example, the FDA has a regulation that the size of any text on a label cannot be smaller than 1/16 of an inch.10

There are certain label components required by the FDA that are not required by the TTB. One important component of an FDA-regulated label, which is not required on a TTB-regulated label, is the nutritional facts panel. Most Americans are familiar with the nutritional facts panel because it appears on most foods sold within the United States. The panel outlines certain nutrients and shows how much of each nutrient is present in the food. Although the FDA’s labeling requirements apply to the alcohol beverages that fall under its jurisdiction, these beverages must also adhere to the TTB’s government warning labeling.11 Stated differently, if a product contains alcohol, its label must include the TTB government warning regardless of whether the product is regulated by the TTB or FDA.

Additionally, the TTB and FDA do not conduct product label reviews in the same manner. Unlike the TTB, the FDA does not conduct pre-market label reviews. Before a TTB regulated product can hit the market it must obtain a Certificate of Label (or Bottle) Approval (COLA) from the TTB.12 The FDA, on the other hand, does not look at or approve food labels before manufacturers can market them. Instead, the FDA has mandatory recall authority which allows the agency to require the manufacturer to remove the product from the market if it is misbranded.13 However, the FDA tends to first send warning letters if the agency becomes aware of a misbranded product.

7 See About the GRAS Notification Program, Food & Drug Admin (Jan. 1, 2018), https://www.fda.gov/food/generally-recognized-safe-gras/ about-gras-notification-program.

8 Id.

9 See Formula Approval Basics for Domestic Products and Importers of Alcohol Beverages, Alcohol & Tobacco Tax & Trade Bureau (Sept. 18, 2018), https://www.ttb.gov/formulation/approval-basics.

10 See 21 C.F.R. § 101.2(c).

11 See 27 C.F.R. Part 16.

Conclusion

When a distilled spirits manufacturer decides to explore new ways to sell its products, either by offering no- or low-alcoholic beverages or selling complementary products to be consumed with the distiller’s higher-proof products, the manufacturer should understand that the new products may be regulated by the FDA. Although there is some overlap between the TTB’s and FDA’s regulations, manufacturers should understand the different permitting, ingredient, and labeling regulations that apply to various products.

The laws and regulations that apply to alcohol beverages and food can be confusing, so seeking guidance from an experienced alcohol beverage lawyer can help ensure a manufacturer’s business is compliant with the law.

John P. Thomas, II is an associate in GrayRobinson’s Tampa office and a member of the firm’s Nationwide Alcohol Industry Group. John works with all three tiers and all three segments of the alcohol industry, including substantial work experience with distillers. Prior to joining GrayRobinson and while in law school, John served as a Senior Judicial Intern at the U.S. District Court for the Middle District of Florida for the Honorable Amanda Arnold Sansome. Subsequently, he became a Gubernatorial Fellow for the Florida Gubernatorial Fellows Program where he served within the Department of Management Services. Call (813) 273-5046 or email john.thomas@gray-robinson.com for more information.

Jana Caracciolo is an associate in GrayRobinson’s Tampa office and a member of the firm’s Nationwide Food Law Group. Jana provides an astute knowledge of food labeling regulation and interpretation and counsel related to food safety-related issues. She also provides legal counsel and compliance guidance to farmers, ranchers, producers, processors, distributors, and retailers on compliance issues with the Food and Drug Administration (FDA), the Department of Agriculture (USDA), and various state agencies’ requirements on food safety, food and beverage labeling and packaging, and product development. Prior to joining GrayRobinson, Jana served as a staff attorney at the National Agricultural Law Center, researching and analyzing food safety and food labeling issues. Call (813) 273-5124 or email jana.caracciolo@ gray-robinson.com for more information.

12 See Certification/Exemption of Label/Bottle Approval (COLA), Alcohol & Tobacco Tax & Trade Bureau (May 12, 2022), https://www.ttb.gov/ alfd/certificate-of-label-aproval-cola.

13 See 21 U.S.C. § 350I.