With crossover products gaining shelf space, more guidance is emerging from trade associations and states to steer how brands, retailers and regulators define and treat these offerings.
A mid-year overview of those changes as well as other regulatory developments was the focus of a webinar yesterday from the alcohol regulatory and distribution team at McDermott Will & Emery. Here are the major takeaways:
Guidance, Regulation Taking Shape For Crossover Beverages
While regulations often need time to catch up to industry transformations, new guidance documents are aiming to shape how crossover products such as Hard MTN Dew (Boston Beer Company/PepsiCo), Fresca Mixed (Constellation Brands/Coca-Cola), Simply Spiked (Molson Coors/Coca-Cola) and Topo Chico Hard Seltzer (Molson Coors/Coca-Cola) show up on the shelf.
The guidance centers on two areas: distinguishing between alc and non-alc products, as well as keeping alcoholic products away from minors. In June, The Distilled Spirits Council of the United States (DISCUS), Wine & Spirits Wholesalers of America (WSWA), FMI – The Food Industry Association, and the National Association of Convenience Stores (NACS) announced a joint commitment related to the responsible marketing and merchandising of crossover alcoholic beverages across tiers.
For suppliers, the key tenets of the guidance include: advertising responsibly, making product distinct and distinguishable from non-alc counterparts, multiple prominent notices that the product contains alcohol, and appealing to adults in packaging and via advertising.
At the retail level, retailers need to have separation and additional signage, as well as train employees on merchandising.
States have also begun specifying what that looks like: Virginia has issued the most succinct guidance thus far on crossover beverages. A recent Pennsylvania bill passed the House that also would require that retail licensees assure that all displays and placements of crossover products indicate that they are alcoholic and are placed away from products that could cause confusion.
Although much of the new protocols are presented as guidance, McDermott Will & Emery’s Alva Mather warned that the consequences of not adhering are immediate: Suppliers seeking to sell in Virginia will be gated based on the new law’s criteria, while the Federal Trade Commission (FTC) and the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) “do look to whether or not industry members are in compliance with those trade association guides as indicators of their overall adherence to compliance within the industry.”
Direct-to-Consumer Advances, But Scrutiny High
New York, Maryland and Delaware have made progress this year with direct-to-consumer (DTC) shipping laws.
In New York, DTC was previously permitted only for wine, but now craft spirits, cider and mead producers can ship directly to Interstate and interstate consumers.
In Maryland, a new law took effect July 1 allowing counties to order alcoholic beverages from local merchants for delivery by third party platforms. Under the new law, delivery drivers will have to apply for a service permit to deliver the alcohol, and they will also also be subject to requirements for age gating.
In Delaware, a bill expanded direct distribution of alcohol, allowing restaurants, breweries and other venues with liquor licenses to use contractors to deliver alcoholic beverages to the homes of Delawareans.
Meanwhile, Mather and staff attorney Christine Dower cautioned that direct-to-consumer scrutiny is heating up, citing recent enforcement in Tennessee and Washington.
“As you’re looking to vet e-commerce options and get your product out to consumer sector, it’s really important to make sure that if you are engaging with a platform that you’re doing your due diligence,” Dower said, “and they’re doing their diligence to make sure you’re doing what is allowed, not only just under state law, but also understanding all of the nuances in terms of ID checks and things like that.”