May 31, 2016
The Food and Drug Administration (“FDA”) recently released final industry guidance on the new menu labeling requirements in accordance with 21 C.F.R. § 101.11, implemented to comply with a provision of the 2010 Affordable Care Act. The new menu labeling rules require chain restaurants to provide calorie information on the menu and provide, upon customer request, additional nutritional information for menu items. The FDA’s final guidance can be found here, and will help industry members comply with these new menu labeling rules, which the FDA will begin to enforce in May 2017. This blog post provides a summary of the menu labeling rules and the FDA’s industry guidance.
What businesses must comply?
The new menu labeling rules apply to restaurants or similar retail food establishments, such as a bakery, a convenience store selling foods intended for immediate consumption, or a concession stand, that are a part of a chain with 20 or more locations that do business under the same trade name and that offer substantially the same menu items for sale. Additionally, a restaurant or retail food establishment may voluntarily register to be subject to the menu labeling requirements.
What is required of those businesses?
Under the new menu labeling rules, these businesses will be required to include calorie information on menus for all standard menu items. Additionally, these businesses will be required to have written information available upon customer request, regarding nutritional information for standard menu items, including the amount of total calories, calories from fat, total fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, dietary fiber, sugars, and protein. These requirements apply to standard menu items, and do not apply to daily specials, custom orders, alcoholic beverages on display that are not self-service, or temporary menu items that only appear on the menu for less than sixty days per calendar year.
Are alcoholic beverages included?
Yes, the new menu labeling rules apply to alcoholic beverages sold in a restaurant or similar retail food establishment that is required or has registered to comply with the menu labeling rules. The rules apply to all alcoholic beverages that are listed on the establishment’s menu, subject to the exceptions for daily specials, custom orders, alcoholic beverages on display that are not self-service, or temporary menu items that only appear on the menu for less than sixty days per calendar year. The exception for alcoholic beverages on display that are not self-service will be helpful for establishments preparing mixed drinks. If the liquor bottles are on display, and the drinks are not listed on the menu, the establishment will not be required to make available calorie or other nutritional information.
How can calorie and nutrient information for alcoholic beverage products be obtained?
An establishment must have a “reasonable basis” for determining the calorie and other nutritional information for standard menu items. Establishing a “reasonable basis” may include utilizing nutrient databases, published cookbooks that contain nutritional information for recipes in the cookbook, nutrition information determined by laboratory analyses, or any other means that is reasonable. The
U.S. Department of Agriculture (“USDA”) maintains a nutrient database, available here, which the FDA’s guidance refers to as reasonable basis for calorie and nutrient calculations.
How will alcoholic beverage producers be affected?
The new menu labeling regulations will impact all alcoholic beverage producers that sell products to chain establishments with 20 or more locations. Those establishments will likely request that the alcoholic beverage producer provide the calorie and nutritional information for its products sold at the establishment. As most alcoholic beverages are not subject to the FDA rules governing labeling and nutritional information, this law will mainly affect alcoholic beverage producers that do not currently maintain calorie or nutritional information regarding the beverages that they produce. Alcoholic beverage producers should check the USDA database referenced above to see whether their products match entries currently listed in the database, as the database includes entries for several common types of alcoholic beverages. Additionally, the Brewers Association has announced that it will be running laboratory analyses for approximately 100 beer styles over the next year, which the Brewers Association plans to submit for inclusion in the USDA database. Alternatively, producers could submit their products for laboratory analyses in order to obtain accurate nutritional information.
For more information about menu and product labeling requirements, contact one of the attorneys at Strike & Techel for a consultation.
December 28, 2015
The Alcohol and Tobacco Tax and Trade Bureau (TTB) has further expanded the list of ingredients used in the production of beer that are exempt from the formula requirements of 27 C.F.R. § 25.55. On December 17, 2015, the TTB issued Ruling 2015-1, Ingredients and Processes Used in the Production of Beer Not Subject to Formula Requirements (LINK), which modifies and supersedes Ruling 2014-4. Ruling 2014-4 exempted 35 ingredients from formula approval requirements, including ingredients such as honey, chocolate, cherries, oranges, allspice, and clove. Ruling 2015-1 now exempts more than 50 additional ingredients from the formula requirements, including ingredients such as tea, oyster shells, jasmine, rosemary, grapes, and figs. A complete list of ingredients used in the production of beer that are exempt from formula requirements is located in Attachment 1 to Ruling 2015-1 (LINK).
Ruling 2015-1 also clarifies the TTB’s position regarding extracts, essential oils, and syrups. These preparations may contain alcohol or other ingredients, and thus are not exempt from formula requirements. For example, although vanilla, spearmint, and strawberries are included on the list of exempt ingredients, the use of vanilla extract, essential oil of spearmint, or strawberry syrup would still trigger the formula requirements of 27 C.F.R. § 25.55.
Ruling 2015-1 was issued in response to an ongoing conversation between the TTB and the Brewers Association, which has been petitioning the TTB since 2006 to expand the list of exempt ingredients. The most recent Brewers Association petition was submitted on September 30, 2015, and Ruling 2015-1 exempts all of the ingredients requested by the Brewers Association in that petition, with the exception of licorice, juniper branches, pluot, spruce leaves, squid ink, and woodruff. The TTB declined to adopt licorice as an exempt ingredient due to Food and Drug Administration (FDA) regulations regarding that ingredient. The TTB declined to adopt the remaining ingredients at this time because it did not find that the available data established that these ingredients are “traditional” in the production of beer. Although the TTB did not exempt all the ingredients requested by the Brewers Association, the TTB is open to future petitions from brewers regarding additional ingredients that brewers believe should be exempted from formula requirements. A procedure for such a petition is located at 27 C.F.R. § 25.55(f).
Contact an attorney at Strike & Techel today with any questions about beer regulations or formula requirements.
January 07, 2015
In December 2014, the California ABC posted a new Industry Advisory about merchandising services. Free services provided by suppliers to retail licensees, such as stocking shelves, pricing inventory, rotating stock, etc., are prohibited things-of-value under California Business & Professions Code sections 25500 and 25502. However, a number of permitted exceptions are separately provided for in Section 25503.2. The Advisory was posted in response to inquiries and complaints about the scope of permissible activity. When ABC receives multiple complaints about impermissible conduct, investigations and license accusations may well follow, so it would be prudent for suppliers to review the scope of permissible merchandising activities.
Permitted activity varies depending on the type of retailer and the products involved so we created a simple chart below to help keep it straight.
Note that in all cases, any merchandising activities can only be done with the retailer’s permission. In no case can a supplier move the inventory of another supplier, except for “incidental touching” to access the space allocated to the licensee providing the merchandising service.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2015 · All Rights Reserved ·
December 29, 2011
On January 1, 2012, California Business and Professions Code Section 23394.7 goes into effect, which aims to regulate alcohol sales at self-checkout terminals. The controversial law provides that “no privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.” The law has been opposed since its inception by grocery stores with self-checkout and has been supported by retail clerks labor unions, among other entities.
The California Alcoholic Beverage Control issued an Industry Advisory to explain the new law last week, and the California Grocers Association (“CGA”) just filed a petition contesting the terms of the Advisory. For example, the Industry Advisory provides in part, “it is clear that ‘customer-operated checkout stand’ means a checkout stand or station that is designated for operation by the customer.” In its petition in the California Third District Court of Appeal, the CGA argues that the ABC overstepped its regulatory authority by defining one of the law’s key provisions in the Advisory, rather than going through the formal rule-making process required by the California Administrative Procedure Act. The CGA also argues that the definition put forth by the ABC is inconsistent with the statute. The CGA has asked that the Advisory be set aside, or that its effect at least be delayed until the issue has been resolved. Check back for updates!
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·
November 16, 2011
The California ABC released an Advisory earlier this month that outlines a compliant path for California alcoholic beverage licensees to engage unlicensed service providers. In our practice, this issue comes up often in reference to websites that look like wine shops, but hold no alcoholic beverage licenses of their own. The Advisory is available here.
We were active on the working group that made suggestions on this issue to the ABC, and were pleased that the ABC was willing to listen to industry feedback before deciding on a course of action. We’ve been getting lots of questions on the provision regarding control of funds, which (is long!) and states:
“The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party provider may act as an agent for the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds. This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee. The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for services rendered. Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee. So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account. Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.”
We’re looking forward to seeing how the industry adapts to this provision, which seems to require that all funds for an alcoholic beverage sale settle to the account of a licensee before they are disbursed. Will new “alcohol escrow” businesses pop-up to service the need? Will each unlicensed website create its own special accounting to comply? Will fee collection be adversely affected for the unlicensed websites, such that the business model becomes less viable? We’re watching this issue unfold with great anticipation.
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