It is likely that all beer, wine and spirits labels will change dramatically in the near future. TTB has been working on new rules since CSPI and other groups submitted a petition in 2003. The new rules would require a “Serving Facts” panel on every container. This panel would include a lot more information, such as the typical serving size, number of servings per container, calories, carbohydrates, protein and fat. Because this is a big, controversial change, TTB has received more than 18,000 public comments during the past few years. There are far too many comments for most people to review, and so we will highlight and summarize the most noteworthy comments here. The most recent proposal and comments are here. This is comment 16 in a series; to see others, click on the “serving facts” tag below.
The Small Business Administration’s 2-page comment said:
- information from WineAmerica indicates that the proposal would have a significant economic impact on a substantial number of small wineries, so the proposal can not be properly certified under the Regulatory Flexibility Act.
- TTB estimated that lab analysis would cost about $250 per product, but the comment suggests it would be closer to $750 per product.
- This suggest a 3.4% revenue impact for a very small winery (with $500,000 in revenue, about 15 products, and about $17,000 in new costs). This is significant and is not mitigated by a longer phase-in.
Is the SBA right?
A small winery with 15 products and only $500,000 in revenue needs to reconsider their business plan irrespective of TTB labeling requirements. Anyone winery with a wine of protein or fat content to the extent it would require a lab test to quantify it, needs to find another winemaker.
Seems all we are really talking about is reporting the alcohol and sugar content accurately and doing some math on calories. And there I think is the rub. It seems the wine industry wants to continue to report such inaccurate information on the label such that a wine labeled 12.5% alcohol can legally be as high as 14.0% or as low as 11.0% or be bone dry or very sweet with no indication whatsoever on the label.
It is a fundamental law that a single unreasonable position on an issue creates the conditions for an equal and opposite unreasonable position on that same issue. It’s time for the industry to learn from the past.
Absolutely, I believe that more detailed nutrition labeling is coming to wines. When the neighbor down the street starts looking at alcohol % as one of the determinants of her wine purchases, it is not too far behind that the regulators will find it necessary to display such information more prominently. GET READY.
This has been in the wind for years. When 96% of the responses to the TTB’s petition drive point to customers looking for some sort of nutritional info on alcoholic products, it’s time to quit moaning about costs and start being responsive to the wants of your customers.
A few years ago, the owner of a regional-sized brewery hung-up on when when I got ahold of him and requested the nutritional information of his products for a project I was working on. “We brew our beers for their tastes, not any nutritional benefits” he told me as he hung-up.
Soon after, another regional started brewing a “skinnier” version of beer. It was an instant hit. Today, the brewer who hung up on me has done a lab analysis of all his products and has even posted the info online. It’s probably this kind of quick response to the obvious change in the market that has helped make his brewery a larger, and still growing regional brewery and not some 15,000 barrel a year operation that doesn’t understand market responsiveness.
Get the info on the labels or websites of all alcoholic beverages and let the marketplace decide. If drink manufacturers were baking and selling a line of cookie products or breakfast cereals, nutritional labeling would simply be part of the costs of business.
Morton Leslie (above) is right. If you’re bottling 15 wine products and pulling in $500,000 a year, you better cull your portfolio, tighten up your operation or get into another business.
There are too many breweries in business today that are guilty of the same thing. Why do you need 20 labels? No brewer’s market is that segmented.
In a few years, when the EU starts demanding nutritional labeling of all imported alcoholic beverages, the entire argument will be moot.
Barbara’s right. Get Ready, Indeed!
I can understand having some more info on the label or least access to it. But wine doesn’t have much to offer like it was a cookie or box of crackers. It would take up a lot of room on the label plus the cost incurred for a small winery to pay for all new labels with different specs would be enough to break them. I can understand to need for the information being available. Perhaps the winery can have online profiles of there wines. Imagine having to pay for new labels and lab testing every time you need to make a change. I understand the customer side but think of the small family operations that might be just hanging on in this skinny economy.
By the way to you enjoy wine for you health or for simple pleasure of a nice glass of wine.
Most of the comments were by consumers but I would like to point out to Bob that most of them were form letters. I know this because I made it a point to read five pages of comments ont eh TTb website last year, let it also be known that the source of the form letters: Diageo set up a web site with a “click to here send a pre written letter to the TTB” button.
Being somewhat jaded in my opinion of Diageo in particular, knowing they are a major purveyor of flavored malt beverages (so called alcopops) in addition to their other broad portfolio of products alcoholic beverage I am inclined to believe that by pushing for this requirement of additional legal space fillers on the label (in addition to the already required barcode, sulfite disclaimer,alcohol and pregnancy warning, percent alcohol …. etc) this is a way to force smaller producers to purge their personal stories from the back label via loss of space and still make it seem they (Diageo) are doing it for purely altruistic reasons. It is clever strategy really, simultaneously causing small competitors to lose any warm fuzzy advantange that they may have held in the wine aisle over the larger company’s more ubiquitous and better advertised corporate line up and engendering the goodwill of the zealots at the Center for science in the public interest and people to dull to comprehend the meaning of the alcohol percent already indicated on the label without further interpretation.
This proposal is cost prohibitive and will result in the removal of hundreds of SKUs – both domestic and especially imported – from the universe of wines available to consumers.
Doubly maddening is that labeling and bottling are done at the same time. We need to order labels with a decent lead time – i.e. before the blends and wines are finalized.
The typical wine won’t vary much from its neighbor on the shelf; the result will be look-alike back labels that limit availability of information important to the consumers’ purchasing decisions while restricting selection.
Why doesn’t the industry address these ill-conceived concerns by educating the consumer in a widespread and general manner?
I concur with Eileen – this whole thing is a result of sitting passively by while Diageo ginned up (pun intended) public concern over a non-issue in an attempt to increase spirits consumption and reduce competition from smaller wineries.
There should be a formal term for when a market actor tries to impose costs on smaller competitors through the abuse of the regulatory process.
Any good ideas for such a term? None of these new words seem to fit: http://schott.blogs.nytimes.com/. “Astroturf” is close, as here: http://www.sourcewatch.org/index.php?title=Astroturf.
We are owners of two small wineries. One has annual revenues of ~800K, makes about 20 wines each year. The other has revenues of about $220K and makes 15 wines per year, averaging just 100 cases of each wine.
We have shopped around for the cost of analysis, and if we do the alcohol measurement ourselves, we can have the necessary analyses done for about $350-500/wine. Add to this the cost of revamping every label, including new steel rule dies for new label sizes, and the hassle of re-approving every label, and we estimate this will cost each winery about $10,000 to $15,000 per year. This will not drive the larger winery out of business, but it will mean that we will have to reduce salaries for key employees or ask the survivors to take on additional work if others are dropped from the payroll. For the smaller winery, this is at least half of our annual operating income, and would mean we could no longer pay a winemaker to produce the excellent wines we now make. Thus, the smaller winery would likely disappear from the marketplace, along with the revenue we have enjoyed for years.
The administrative burden is harder to estimate, but ordering all the analyses, collating the data and funneling it to the correct wine each year is not insignificant.
Gumpinski makes a great point. I haven’t been able to stop thinking about it since.
I propose T-BAGGING as the word for this. Here’s why it may fit:
1. T is the symbol for AT&T, the biggest, baddest monopolist during much of the nation’s history (arguably).
2. The evidence is here: http://www.slate.com/id/2156918/pagenum/all/. AT&T mounted a herculean, many-decade effort to close out all long-distance competitors, on some wacked out theory that it would break the system. To what extent did the government watch their back and play along? Is there a better example of a company that carefully arranged the laws as a moat around their castle?
3. I admit that “tea bagging” is all the rage this weekend, as explained here: http://www.examiner.com/x-1765-Underground-Examiner~y2009m4d10-Who-is-going-to-tell-them-Teabagging-explained. But that makes it more, not less . . . fitting. More than a few small companies will choke on what Diageo is dangling.
4. The similarity to sandbagging doesn’t hurt either.
What do you think Gumpinski and others? Does the bag fit? By the way, this is not meant to imply that the big company proponents of new labeling are acting in other than a rational manner.
As a micro winery that produces small lots of wine (25-30 cases) for marketing trials, perfecting a blend or new wine, or for offering these as special wines for club members only, having to absorb $750 per label is difficult. On a 25 case lot you are looking at $30 per case for a wine you may only be selling for 1 few dollars over costs to begin with, which either means absolutley no profit, a loss, raising prices or needing to drop a very valid business process and plan.
Some of us are in it for the romance of wine, the change in lifestyle or the opportunity to create something, as opposed to making massive amounts of money.
Maybe there needs to be a cutoff point for compliance? If you make less than 100 cases of a wine, you are exempt from providing the information.
I also believe there needs to be an allowance if you are changing nutritional information, you do not have to re-submit labels for approval, just like a vintage year change. This would help reduce the costs for the winery when merely updating information.
I kind of like reader’s unintentional suggestion of “Moating.” It definitely describes what they’re doing.
Moating seems too benign. Isn’t “moating” good and what a good company should be doing? Gumpinski’s earlier point, to the contrary, seemed to suggest that the big-company-proponents were pushing something nefarious.