There is little doubt that individual brewers face significant barriers to both entry and viability into and within the burgeoning craft beer industry. Any brewery owner, beverage law attorney, or restaurateur can speak insightfully about the woes of permitting, labeling, trademarking, distribution, excise taxes, and other costs associated with brewing up business.
Certainly, navigating the ramparts of prohibition is cumbersome at best. Local, state and federal law each impose their own burdens on alcoholic beverage entrepreneurs and those inclined to engage with their products. Thus, the narrative has been written, read and retweeted: craft beer is under attack.
There is some veritable merit in that notion. One need only look objectively at current alcoholic beverage regulation and upon the actions of those with the most to lose (ostensibly at the hands craft beer’s success) to see that significant incentive exists to halt craft beer’s momentum. However, incentive alone is insufficient for us to look upon the craft beer industry as the intended victim of any and all regulation to touch and concern it. Moreover, doing so distracts from the abounding opportunity available to use current regulation in upholding and expanding the well-regarded principles of localism, sustainability, and collaboration for which the craft beer industry stands.
At the very least, the Food and Drug Administration’s Menu Labeling Compliance mandate affords us the chance to test our ability to do just that. What should the craft beer community know about the provision? How will its imminent enforcement affect the industry? Perhaps the most important inquiry is how could the regulation potentially strengthen ties between breweries and the local communities they anchor? We have a few thoughts to offer in this regard. Let us first get acquainted with the regulation.
What law are we talking about?
We’re talking about the nutritional labeling provisions of the Affordable Care Act. One of the fundamental tenets of this landmark legislation was actually to increase the transparency between restaurants and their patrons about the nutrition information and calorie content of the food being offered. The idea is to make that nutrition information readily available and directly accessible so that we as consumers can make informed decisions about our dietary choices.
Does the data support such a government reach?
Here’s some of the evidence the FDA found compelling:
- More than 2/3 of adults and 1/3 of children in the US are overweight or obese;
- Overconsumption of calories is one of the primary risk factors for becoming overweight or obese;
- About 1/2 of consumers’ annual food dollars are spent on, and 1/3 of calories come from, foods prepared outside the home; and
- Many people either misunderstand or do not understand the calorie and nutrient content of these foods.
It’s fair to say that the government has obvious incentives to enhance public health and extend the life of its citizens. After all, people do pay a variety of taxes, but that’s substantially more difficult to do if you’re not alive.
What provision are we talking about and what does it require?
Section 4205 of the Affordable Care Act requires that “chain retail food establishments” provide calorie and nutrient information of its “food” to consumers.
As defined in the Act, “chain retail food establishments” are (1) restaurants and similar food establishments with (2) twenty (20) or more fixed locations, (3) doing business under the same name, and (4) offering for sale the same or substantially the same menu items.
As defined in 21 U.S.C. 321(f), “food” is broadly defined as “articles used for food or drink for man…”
You’re all over it. Under federal law, drink is food. Beer is definitely a drink. Thus, because beer is drink, beer is food. And because beer is clearly food, nutrient and calorie information of beer being served in a restaurant or similar food establishment with at least 20 fixed locations must be readily accessible to you, the customer. We're just the messenger here.
Some thoughts for craft beer:
Yesterday, USA Today published an article parsing the merits of the menu labeling mandate from the perspective of individual craft breweries and other industry members. On the one hand, some brewers see the added cost of calculating calorie and nutrient information for individual batches of beer as yet another overhead expense standing between their beer and the point of sale—one applying inequitably to small breweries considering their relative lack of financial resources. On the other hand, some brewers and lab owners welcome the mandate, citing the ability to make the relevant calculations in-house, the incentive to market to health-conscious beer lovers, and the potential for even more localized entrepreneurial opportunity to mitigate the cost in the long term.
Regardless of how individual breweries receive the imminence of the menu labeling mandate, one thing is clear: brewery ties with local retailers, such as bottle shops, growler stations, restaurants and other outlets, stand to be strengthened. Under the Act, non-chain restaurants may opt in to the mandate. Will these restaurant owners partner with local breweries to defray the cost of nutrient calculation? Collaboration appears when there’s an eye for it.
As a final note, it will be interesting to track the impact of the menu labeling mandate on existing distribution agreements, and those to be executed in the future. Those breweries making provisions to delegate product placement to a distributor in any capacity should be mindful of how this cost is to be apportioned.
Chain retail food establishments have until December of this year to comply. If you are a brewery concerned about the applicability of the menu labeling mandate to your beer and/or the ongoing relationship to your distributor(s), or a retail establishment considering a decision to opt in, we would be happy to provide legal guidance and clarity. Until next week. Cheers!