What’s in a Label? Webinar Recap

Daniel Kostrzewa | August 30, 2018

It is hardly a revelation to say that brand labels are incredibly important in the sale of beverage alcohol. After all, in an industry with a seemingly endless supply of new SKUs, having a great label is one of the best ways to identify your products and stand out from the crowd. But when it comes to beverage alcohol labeling, a company’s marketing plan is only beginning of the story. As with so much in the beverage alcohol industry, there is a tremendous amount of regulations surrounding brand labels.

There are rules about the contents of labels: what can be on them, what has to be on them, what can never be on them. Suppliers are required to run their labels past government regulators who check on those rules. And this all occurs at both the federal and individual state levels. To help explicate this situation — at least to provide a basic understanding of what all is at issue — ShipCompliant by Sovos hosted a webinar on August, 23 to go over the ground level considerations that beverage alcohol suppliers should be aware of when bringing new products to market.

In the webinar, I was joined by Andres Gil Zaldana, Executive Director of the Colorado Brewers Guild, who brought the specific perspective of registering labels in the Centennial State.

The webinar is available here for you to rewatch, but I’ll discuss some of our key takeaways below:


Know the Federal Rules for Beverage Alcohol Labeling

The first step in navigating the world of label regulations is understanding the rules that are set forth in Title 27 of the Code of Federal Regulations (CFR). The CFR describes the guidelines that beverage alcohol suppliers must follow, and which, if followed, will get them 90% of the way. Though the CFR has different rules for the three types of beverage alcohol (beer, wine, and spirits), there are some general rules that apply to all labels.

As described in the CFR, all labels must include certain information. These include: a trade name (to identify the specific product being sold; the producer or importer’s name and address (to identify the source of the product); the product type or class (to identify what exactly is in the container — say, to discern between a whisky and an amber ale); the net contents (to identify the amount of product being sold); the government warning (to identify that, yes, alcohol can have toxic effects; and the alcoholic content (to identify how intoxicating the product is).

There are specific rules about each of these mandatory pieces of information. For instance, beer products must have net contents listed in imperial units, whereas wine and spirits must be listed in metric units. In addition, a statement of alcoholic content is optional for beer and “table wine”. Then, there is a slew of prohibited information, largely determined around the goal of preventing customer confusion. Types of prohibited label contents include health statements unsupported by scientific research, lewd and obscene images or phrases, unauthorized use of a famous person’s image (real or fictional, dead or alive), and plain-old falsehoods.

There are a lot of specifics when it comes to federal label rules, getting down even to the specific font-size for the government warning. Thankfully, the Tax and Trade Bureau (TTB) has issued product-specific manuals that go over all those specifics. Anyone designing labels should pay careful attention to these Beverage Alcohol Manuals (including, yes, a new and improved manual for wine labels). These BAMs can be found here for: beer, wine, and spirits.


Know How to Get Your Labels Approved by the TTB

To ensure that all these label rules are being followed, the federal government often requires that labels be screened by the TTB for approval. This review is known as a Certificate of Label Approval (COLA), and many labels cannot be sold in interstate commerce without getting a COLA.

There are some exceptions to getting a COLA: Beer products that are only being sold in the same state in which they are produced, and wine products with an alcohol by volume content of less than 7% both do not need a COLA. Wines and spirits that are only being sold in the same state in which they are produced will instead get a Certificate of Exemption from Label Approval.

But because receiving a COLA is often a requirement for a product to be sold, minimizing the delays in getting a COLA can be critical for a beverage alcohol supplier bringing new products to market.

Perhaps the best advice for getting a COLA quickly is to pay careful attention to the rules outlined in the CFR and scrupulously following the guidelines presented in the BAMS. It is also important to ensure your licensing information is correct — a discrepancy between your label and your federal basic permit, such as a missing trade name or a new address, is reason for the TTB to return a COLA application for correction. By using the “notes for reviewer” section, you can also help explain away some elements of your label that otherwise might raise an eyebrow.

Another key way you can avoid the COLA application process is to use the TTB’s guide for allowable revisions. These are changes that you can make to an approved label that do not require getting a new COLA. While there is no fee associated with applying for a COLA, and so it may seem free, there are still opportunity costs and the cost to the TTB for administering COLA reviews that make taking advantage of the allowable revisions process valuable.


Know How Things Work Among the States

By and large, states follow the rules and regulations outlined in the CFR regarding the allowable content of labels. So meeting those requirements should get you most of the way.

But there are some exceptions. A notable difference is statement on the alcoholic content of beer and table wines: where that is optional under the federal rules, a state could require it (e.g. Washington), or a state could specifically prohibit it (e.g. Mississippi). Such exceptions are rare, but the are something that a supplier entering a new state should make sure to look up.

Generally states are less particular about a label’s contents, trusting the COLA review for that. But they can still have intensive registration processes. For instance, states with franchise rules (rules that delimit a supplier’s ability to establish and amend the provisions of their agreements with distributors) will be more active in logging the details of a distribution arrangement.

As such, many states require more documentation than just a label or COLA for a brand label registration. They often want detailed descriptions of a distributors authorized territories, or even signed copies of a distributor agreement. Knowing what all a state may require when registering labels, and getting it all together ahead of time, can make the registration process much easier.


…And How Does it Work in Colorado?

Andres Zaldana, of the Colorado Brewers Guild, closed out the webinar, reviewing the registration process in Colorado.

As Andres noted, Colorado is one of the states that utilizes the Product Registration Online (PRO) system (a service that ShipCompliant by Sovos operates for state regulators). By working through PRO, beverage alcohol suppliers can easily get automatic approval for their labels in Colorado (other states using PRO may take longer to approve a registration), meaning they can sell those products in the state as soon as they have hit the “submit” button.

For Colorado-based brewers who only sell their beers within the state, however, there is a different system. Andres stressed that, instead of working through PRO, these brewers must instead use the “Alternative ‘Malt Liquor’ Product Registration” service, which is available here.

In recent years, Colorado has undertaken many initiatives to improve the registration process for beverage alcohol suppliers. This includes using modern online systems, like PRO, but also has entailed updating state regulations. One such change that Andres pointed out, was the removal of the 30-day waiting period for labels that were being imported into the state; as of August 1, these labels can now be sold as soon as they are entered into PRO.

The Colorado Brewers Guild works to promote the state’s craft beer industry, including by ensuring that the rules they operate under are both fair and complied with.


Remaining Questions

We always appreciate getting feedback and questions from our audience, but we are not always able to get to them or provide a complete answer in the webinar. As such, we have a follow up here:

The Craft Beverage Modernization and Tax Reform Act of 2017 changed the ABV limit for “table wine” for the purposes of calculating federal excise tax; what effect did this change have for labeling rules?

In the webinar, there was an interesting discussion about the proper definition of “table wine” for labeling purposes; this is an important distinction to recognize, as there are some differences for table wine and higher-ABV wines. Historically, the upper threshold for “table wine” has been at 14% ABV. While the CBMTRA did raise this threshold to 15% ABV, that change only affected the calculation of federal excise taxes. After reviewing documentation on the TTB’s website, it is apparent that for labeling regulations, including when a statement of alcoholic content is merely optional, “table wine” continues to be capped at 14% ABV. We apologize for any confusion on this subject.

You mentioned COLAs often when discussing state registrations, but what is the difference between a COLA and a state label registration?

A Certificate of Label Approval (COLA) is label registration with the federal government. Getting a COLA means that the TTB has reviewed your label and found that it meets the requirements found in the CFR. States can have their own, separate registration process, though. Generally this is less about getting approval for your label and more about informing the state about the labels you want to sell there, often including informing the state of your distribution agreements. Often a state registration will require supplying a copy of your COLAs. So having a COLA may be part of registering with the state, but getting a COLA and registering a label with a state are separate events.

If we only sell a wine into a state occasionally via direct shipping, what are our label registration requirements?

Registration requirements vary when it comes to suppliers making only direct-to-consumer (DtC) sales in a state. If you are selling across state borders, you do need COLAs for your labels, even if otherwise you only sell those labels in the same state where they’re produced. At the state level, the rules vary. Many states do not require registration of labels that are only being sold DtC, but some do. The rules vary from state-to-state, but they generally require only submission of a list of the brands you intend to sell DtC or the process is the same as any other label registration. For more information on DtC registration requirements, we recommend you check out our new state-by-state DtC Wine Shipping Rules pages.

If you change a label with an approved COLA in a way that is not listed on the TTB’s list of available revisions, what is the process for updating that COLA registration?

If you make changes to a label that are not in the list of allowable revisions, you will need to get a new COLA. This means submitting the label through COLAs Online and allowing the TTB to review the revised label. There are ways to make this easier, for instance by including a note to the reviewer indicating that a similar label had already been approved (include that COLA number) and pointing out the changes that you’ve made. While the old label’s COLA will remain valid, if you are permanently taking it out of distribution, you can surrender the old label’s COLA through COLAs Online iif you so choose. Instructions on surrendering a COLA can be found here.

Did you miss out on the webinar? Never fear – we recorded it for you! Head on over here to watch it in full.