Crossover alcohol products face increased regulatory attention

As more companies – including those with and without alcoholic beverage experience – choose to leverage their brands and brand equity across the beverage spectrum, regulators, trade associations and companies themselves are focusing on ways to responsibly label, advertise, market and present these products to avoid consumer confusion and potential sales to minors.

Crossover alcohol products are typically classified as alcoholic beverages that use products and intellectual property (e.g.brand names, logos) of a pre-existing non-alcoholic brand. While not yet legally defined, such products include Dunkin’ Spiked Original Iced Coffee, Eggo Brunch in a Jar, Lipton Hard Iced Tea, and SunnyD Vodka Seltzer, among others. As these examples show, products like Lipton Hard Iced Tea leverage the Lipton Iced Tea non-alcoholic tea brand for a new product in the alcohol space.

As crossover alcohol products have become more common in the marketplace, state regulators have begun to take notice and provide guidance to alcohol manufacturers on how to ensure that these products are not “false or misleading,” as defined in alcohol regulations, or that they do not induce minors to drink the alcohol product through product labeling, packaging, or in-store display. In particular, the Commonwealth of Virginia has taken the lead by issuing Circular 23-01, which provides guidance to alcohol manufacturers when developing these products. This guidance focuses on the following issues, among others:

• Ensuring that the crossover product clearly states the type of alcohol it contains, and that this information is visible in at least three to six different places.
• Ensuring that alcohol-related mentions and warnings are appropriately large and noticeable compared to other text on the product label.
• Ensure that any changes to product labelling, containers and secondary packaging clearly distinguish crossover products from the original non-alcoholic products to prevent misleading consumers; these changes may include colour palette, font type, graphics, word positioning, images and descriptions or background elements.
• Providing additional closures such as aluminum foil lids, plastic wrapping, mouth shields, stickers or other “child-resistant” packaging to prevent accidental consumption by minors.

Recently, a coalition including 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) (representing three tiers of the industry: suppliers, wholesalers, and retailers) issued a joint commitment to the responsible marketing and merchandising of crossover alcohol products. Similar to the Virginia guidelines, the coalition focuses on ensuring that these products are not confused with their non-alcoholic counterparts and do not appeal to people under the legal purchasing age based on the appeal of the core brand. Accordingly, the coalition expects alcohol manufacturers to commit to the responsible production, packaging, and marketing of crossover alcohol products by:

• Complying with responsible advertising principles, such as the Distilled Spirits Council Code, to ensure these products are packaged and sold in an appropriate and responsible manner.
• Creating product packaging and building a brand that is clearly and easily distinguishable from soft drink packaging.
• Providing sufficient and clear information on the product label and packaging that the product contains alcohol.
• Focus on packaging and advertising campaigns aimed at adults of legal drinking age, rather than those under 21.

Together, these guidelines provide an initial outline of steps companies can take to ensure that such crossover products are marketed and sold responsibly and without breaching applicable alcoholic beverage laws and industry codes.