Brands need to be extra vigilant over the health claims they put on their labels. A simple phrase like “Supports immunity,” “Aids respiratory health” or “Full of natural flavors” could result in a lawsuit from the Food and Drug Administration (FDA), Federal Trade Commission (FTC) or a state attorney general.

“The FDA is able to set very broad and very narrow regulations in terms of what our labels can look like, what can be included in the products, what kind of claims we can make for the products, who the products can be distributed too, how they can be imported and exported and the like,” says Claudia Lewis, partner at Venable LLP, a Washington D.C.-based law firm.

Complying with these sometimes archaic laws can be challenging. The FDA, which ensures food safety, has a large jurisdictional footprint, regulating about 30 cents of every dollar Americans spend. The FTC is the authority on advertising and marketing claims for food, beverage and supplement products, and it may challenge a food brand if its marketing is deemed false, deceptive and/or misleading.

“Typically, if you’re in an FTC investigation, you’re going to have at least $300,000 in legal fees by the time you’re finished, if not over half a million dollars,” says Todd Harrison, partner at Venable. “The FTC is a very expensive regulatory agency to deal with. They can make your life pretty miserable.”

Harrison and Lewis specialize in representing functional food brands at their law firm and spoke at Expo East on the topic of Legal and Regulatory State of the Natural Products Industry. [The Fermentation Association’s virtual conference, FERMENTATION 2021 will also cover this and related topics — please check our Agenda for the latest sessions and speakers.]

Harrison and Lewis reviewed two main areas where improper labeling can get a food brand into trouble with regulators.

Using Covid-19 as a Marketing Tool

Shortly after the Covid-19 pandemic started, the FDA offered a unique relaxation of their rules and regulations for food products. Brands were challenged with supply chain disruptions and ingredient shortages. The FDA allowed temporary ingredient and formulation changes without a label overhaul, as long as the new ingredient was non-allergenic, 2% or less of the weight of the finished product, not a main or characterizing ingredient and not affecting health claims.

Though the temporary rule allows for flexibility, Harrison advises it still leaves room for litigation. Plaintiff attorneys can still sue for changes in a product’s flavor. 

“Minor changes are fine from an FDA perspective, but not necessarily good from a plaintiff perspective,” he adds. 

Covid-19 has also spurred a gray area in food marketing claims. Labels claiming the product prevents, treats or mitigates Covid-19 are illegal and being “aggressively pursued.”

“Anytime you mention the word coronavirus or Covid, the FDA is not going to agree with what you say because everyone will think you’re somehow implying something,” Harrison says. 

Context is critical, as the agency is cracking down on any brands making health claims implying their product could prevent Covid. Brands using the phrases “immunity support” or “immune boosting” on their labels — or even on their social media pages — could be targeted by the FDA.

“The FDA has historically not liked (brands to use the term) immunity, but it was always low risk (pre-pandemic), you’d likely get a warning letter,” Harrison says. “However, in the world we live in today, the word immunity is persona non grata to the agency. Especially if you add the word respiratory on it. If you put the words ‘immunity’ and ‘respiratory’ on a label, the agency is saying ‘It’s Covid.’”

Harrison also cautions against connecting science-backed supplements and vitamins to treating a Covid infection. He uses the example of vitamin D — plentiful scientific research proves vitamin D boosts immunity, but a food brand cannot legally make that association, and doing so can set it up for litigation. Though vitamin D “is a cheap way of helping reduce your risk of (Covid-19) severity, it’s not going to keep you from getting Covid,” Harrison explains. “The way the paradigm is set up, even if you have really good science in your favor, you can’t make the claim unless you have approval by the FDA.” 

“Natural” and “Health Food” Still Debatable Terms

Because there is no FDA or FTC definition of “natural,” lawsuits against brands claiming their product is natural or similar claims are prevalent. (The FDA requested public comments on the term “natural” in 2016, but no rule was issued on the policy.)

And these lawsuits don’t always come from the federal agencies. Class action lawsuits are “still alive and well,” Lewis adds. A formal definition would help protect brands because plaintiffs are filling in the holes and filing costly lawsuits. She uses the example of Welch’s Fruit Snacks, which was sued for being “more candy than fruit.”

“The plaintiffs bar has seized on that and taken these companies to task,” she says. “This wording about ‘healthy’ and this wording of ‘natural’ is also taking on a different dynamic because of consumer perception. How consumers perceive these words and how consumers’ expectations are not keeping with FDA regulations, but the plaintiff bar is using that as an opening and getting pretty good settlements in connection with consumer perception.”

Making a health inference is a slippery slope. The FDA deems a healthy food as one that suggests the product can help maintain “healthy dietary practices.” Health foods are required to be low in fat, saturated fat, cholesterol and sodium.One or more qualifying nutrients must also make up at least 10% of their weight..

For example, IZZE, makers of sparkling juices, was sued for misleading marketing because, though the drink advertised “no sugar added,” it failed to disclose it was not low in calories — a requirement under FDA regulations. Harrison takes issue with the FDA defining healthy in these confusing terms. 

“I’d say it’s unconstitutional and I think I’d win that case because healthy is now low fat, low saturated food and a certain amount of macronutrients. It’s a much more complex question than that. But yet this is what plaintiff attorneys seize on,” Harrison says.

Though a new food product may be utilizing health ingredients on the cutting edge of scientific research, Harrison warns the FDA is “notoriously behind nutrition science” and brands need to be careful. He says don’t trust the government agency to keep up.

“Nutrition has evolved and continues to evolve,” he says, noting the FDA regulation to put “low fat” as a nutrient content claim just stripped fat out of food (including beneficial fat) and replaced it with simple carbohydrates. Most members of Congress “don’t know a damn thing” about health food. “We know what’s good for us. We’re not stupid people.” 

Kombucha producers across the U.S. have organized an awareness campaign for the KOMBUCHA Act. The legislation — which was reintroduced into Congress this year for the 5th year in a row — would exempt kombucha  from excise taxes intended for alcoholic beverages.

The KOMBUCHA ACT Days of Action, organized by the trade organization Kombucha Brewers International (KBI), is from September 14 to 18. The act would raise the alcohol by volume (ABV) threshold for kombucha from its current level of 0.5% to 1.25%. Producers plan to lobby, emailing representatives, posting on social media and encouraging the public to sign a petition in support of the bipartisan bill. 

In a statement from KBI President Hannah Crum, she points out that kombucha is not an alcoholic beverage. The fermented tea rarely exceeds 0.5% ABV, while light lager beers contain about 3.2% ABV and most craft beers are 5% or higher. (Note: hard kombucha, an increasingly popular drink option, is specifically brewed to have higher alcoholic content and is labeled accordingly.). Here are some of the key paragraphs from her statement:

“Today, most kombucha sold in the United States contains trace amounts of alcohol due to the fermentation that occurs during production. The alcohol, a natural preservative, acts to protect kombucha’s live cultures, as well as the safety of consumers, from unwanted pathogens,” Crum says. “Traditionally made kombucha seldom tests above 1 percent ABV, as kombucha cultures are not suited to high levels of alcohol, so this level allows kombucha brewers to feel confident distributing their products by providing ample buffer room to shield them from the threat of this tax.”

“Nevertheless, for the purpose of assessing federal excise taxes on beer for its alcohol content, the Internal Revenue Code defines the term ‘beer’ in a way that encompasses kombucha, if the kombucha contains 0.5 percent or more of ABV.”

“For kombucha brewers, this federal law presents a real dilemma. While their kombucha may be leaving the facility below the 0.5 percent ABV threshold, trace alcohol can increase slightly – in some cases above 0.5 percent ABV – if the product is exposed to temperature fluctuations on distribution trucks or grocery store shelves after it has left the kombucha brewery.”

“Under the current law as written, kombucha brewers have a Damocles sword hanging over their heads. That is, their kombucha can leave the brewery untaxed, only for its ABV level to rise slightly above 0.5 percent once out of their control, thus becoming subject to the federal excise taxes.”

Hard cider makers waged a similar battle in 2015. Federal law had limited hard cider to under 7% ABV, but cider makers (particularly smaller producers) found it difficult to control alcohol levels because of  apple varieties and cultures. Congress passed a bill increasing the allowable alcohol content in hard cider to 8.5%.

Crum continues: “While hard cider is an alcoholic beverage and kombucha is not, the two products nonetheless share a similar issue: the alcohol level in each can vary naturally due to fermentation.”

“As with cider makers in 2015, this dilemma and the anxiety it causes kombucha brewers would be easily remedied through the enactment of a similar common-sense update: the bipartisan KOMBUCHA Act (H.R. 2124/S. 892) now being considered in Congress. The bill – sponsored by House Representative Earl Blumenauer (D-Oregon) and Senate Finance Committee Chairman Ron Wyden (D-Oregon) – creates an exemption in the tax code for kombucha, so long as the ABV level of the product is 1.25 percent ABV or lower.”

Crum says many kombucha producers limit growing their business “in order to protect themselves from this risk, as well as facing burdensome costs of testing to comply with the arbitrarily restrictive limit.” There are over 600 kombucha producers in the U.S. Kombucha has “garnered a cult following in the last 20 years for its unique taste and probiotic benefits,” she says, adding:

“We are hopeful that Senator Ron Wyden (D-OR) and Congressman Earl Blumenauer (D-OR) and their colleagues on both sides of the aisle (multiple Republicans in various states have co-sponsored the bill) can succeed in getting this legislation enacted into law this year. If they do succeed, they’ll pave the so-far rocky path for a new and rapidly growing industry that promises to add thousands of jobs with benefits to the economy at a time when they are desperately needed.”

For the fifth year in a row, the KOMBUCHA Act was reintroduced to Congress. If the legislation passes, kombucha beverages would be exempt from excise taxes intended for alcoholic beverages. The act proposes to raise the alcohol by volume (ABV) threshold for kombucha from its current level of 0.5% to 1.25%.

“The past year has been incredibly hard on businesses in Oregon and across the country, especially as supply chains have been disrupted. Still, kombucha is one the fastest growing beverage industries in the world,” says U.S. Rep. Earl Blumenauer (D-OR). “There’s no reason why kombucha brewers and sellers should get taxed like beer. Our common sense legislation would eliminate this burden and support a burgeoning industry that has a major impact on Oregon’s food and beverage economy.”
U.S. retail sales of kombucha sales grew 2.4% over the twelve months though mid-July 2020, to $703.2 million, according to SPINS.

“Modernize Taxes & Regulations”

Blumenauer first introduced the bill in 2017 — and has reintroduced it every year since. Senator Ron Wyden (D-OR), the Senate Finance Chair, is the bill’s co-sponsor.

The word “KOMBUCHA” also has a double meaning — it is an acronym for Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act. The legislators understand kombucha is a fast-growing beverage category, especially in their home state of Oregon, home to many kombucha brands.

“The growth of kombucha production in Oregon and nationwide creates jobs and a beverage folks enjoy,” Wyden said. “It’s been a particularly difficult year for small businesses, and our bill would modernize taxes and regulations so these businesses can continue to grow and sell their products in stores across the country.”

Kombucha Brewers Lobby

Commercial kombucha brewers are especially concerned with the regulation. In 2010, Whole Foods and other retailers pulled kombucha off shelves as the Alcohol and Tobacco Tax and Trade Bureau investigated whether alcohol levels in kombucha were higher than what was printed on the label. And since then, consumers — and even other brands — have filed lawsuits against various kombucha brands, alleging alcohol levels higher than indicated.

Kombucha can keep fermenting after it’s made, as the yeasts continue to eat sugars. Under current law, if kombucha leaves a processing facility at 0.4% ABV, but increases to over 0.5% by the time it’s placed on grocery store shelves, the brewer would have to pay federal alcohol taxes like a beer brand.

Hannah Crum, co-founder and president of Kombucha Brewers International (KBI), the trade organization for kombucha brewers, emphasizes that kombucha producers fear constant repercussions from the law.

“These numbers were created over 100 years ago during prohibition,” says Crum, and notes there are no scientific studies on these ABV values. “Kombucha labels say ‘Alcohol is present’ — no one is trying to trick the consumer.”

Reads a statement from KBI: “ These laws were never intended to make kombucha subject to taxes designated for beer. Passing the KOMBUCHA Act under the next appropriations bill will relieve this unnecessary burden on kombucha brewers. Only kombucha above that level (1.25%) will be subject to federal excise taxes when this Act becomes law.”

KBI has actively lobbied for the bill’s passage. Big kombucha brands (GT’s and Health-Ade) have supported the bill actively. KBI — for the first time — is asking consumers to write to their government representatives (via a form on their website) to urge them to support the bill. 

By August, any manufacturer labeling their fermented or hydrolyzed foods or ingredients “gluten-free” must prove that they contain no gluten, have never been through a process to remove gluten, all gluten cross-contact has been eliminated and there are measures in place to prevent gluten contamination in production.

The FDA list includes these foods: cheese, yogurt, vinegar, sauerkraut, pickles, green olives, beers, wine and hydrolyzed plant proteins. This category would also include food derived from fermented or hydrolyzed ingredients, such as chocolate made from fermented cocoa beans or a snack using olives.

Read more (JD Supra Legal News

Every year, the nation’s 50 state legislatures pass dozens of new laws that have an impact on fermenters. For example, some states amended alcohol laws to allow drink sampling for craft wineries, while others repealed outdated cottage food laws to help small producers operate and more loosened take-out restrictions to help small restaurants survive the pandemic. 

Indicative of this year’s focus on the pandemic, laws were introduced but never debated  as lawmakers focused on more pressing issues surrounding the coronavirus. The most common new laws passed in 2020 revolved around helping businesses survive — states called special sessions to aid restaurants, stop price gouging of high-demand products and provide emergency grants to small businesses. 

Read on for key food, beverage and food service laws passed this year, most taking effect in 2021.

California 

AB82 — Prohibits an establishment with an alcohol license from employing an alcohol server without a valid alcohol server certification.

AB3139 — Establishments with alcoholic beverages licenses who had premises destroyed by fire or “any act of God or other force beyond the control of the licensee” can still carry on business at a location within 1,000 feet of the destroyed premise for up to 180 days.

Delaware 

HB 237 — Eliminates old requirements that movie theaters selling alcohol must have video cameras in each theater, and that an employee must pass through each theater during a movie showing.

HB275 — Permits beer gardens to allow leashed dogs on licensed outdoor patios.

HB349 — Permits any restaurant, brewpub, tavern or taproom with a valid on-premise license to sell alcoholic beverages for take-out or drive through food service, so long as the cost for the alcohol did not exceed 40% of the establishment’s total sales transactions. 

Hawaii

SR84 — Creates a Restaurant Reopening Task Force to help restaurants in Hawaii safely reopen that were closed during the COVID-19 pandemic. 

SR94 — Urges restaurants to adopt recommended best practices and safety guidelines developed by the United States Food and Drug Administration and National Restaurant Association in response to the COVID-19 pandemic.

Idaho

HB343 — Amends existing law to require licensing to store and handle wine as a  wine warehouse.

HB575 — Allows sampling of alcohol products at liquor stores, which was formerly forbidden under law.

SB1223 — Eliminates obsolete restrictions on food products, to match federal standards. It repeals requiring extra labels on some imported food products, and repeals using enriched flour in bread baking. 

Illinois

HB2682 — Amends Liquor Control Act of 1934. Allows a cocktail or mixed drink placed in a sealed container at the retail location to be sold for off-premises consumption if specified requirements are met. Prohibits third-party delivery services from delivering cocktails or mixed drinks. 

HB4623 — Amends Food Handling Regulation Enforcement Act, regulating that public health departments provide a certificate for cottage food operations, which must be displayed at all events where the licensee’s food is being sold.

Iowa

HB2238 — Amends code regarding food stands operated by a minor. Bans a municipality from enforcing a license permit or fee for a minor under the age of 18 to sell or distribute food at a food stand.

Kentucky

HB420 — Implements Food Safety Modernization Act, authorizing a department representative to enter a covered farm or farm eligible for inspection.

SB99 — Amends alcohol laws for state’s distillers, brewers and small wineries. Eliminates the sunset on local precinct elections to grant distilleries, and allows distillers to sell other distiller’s products.

Louisiana

HR17 — Allows third-party delivery services to deliver alcohol. 

HB136 — Makes adulterating a food product by intentional contamination a crime.

SB455 — Increases the size of containers of high-alcoholic beverages.

SB508 — Gives restaurants protection from lawsuits involving COVID-19. The public will be unable to sue restaurants for COVID-19-related deaths or injuries, as long as the restaurant complies with state, federal and local regulations about the virus. 

Maine

LD1167 — Encourages state institutions to serve Maine food and Maine food products, increasing the visibility of the state’s local food producers. 

LD1884 — Amends current laws regarding businesses that hold dual liquor licenses, which authorized retailers to sell wine for consumption both on- and off-premise. Retailers with the dual license can now sell with just one employee at least 21 years of age present, and adds that wine can be sold for take-out if food is part of the transaction.

Maryland

HB1017 — Allows cottage food businesses to put their phone number and business ID on their food label, rather than their address as currently required by the Maryland Department of Health.

SB118 — Expands definition of “alcohol production” and “agricultural alcohol production.” The new definitions aim to give Maryland farmers and producers the ability to sell beer, wine and spirits to increase agritourism.

Massachusetts

SB2812 — Expands alcohol take-out and delivery options during COVID-19 pandemic. Allows restaurants to sell mixed drinks in sealed containers alongside other take-out and delivery food orders.

Michigan

HB5343 — Revises regulations on brewpubs and microbreweries, increasing the quantity of beer a microbrewer is permitted to deliver to a retailer during a year from 1,000 barrels to 2,000 barrels. 

HB5345 — Amends the Michigan Liquor Control Code to delete the Michigan Liquor Control Commission (MLCC) $6.30 tax levied on each barrel of beer manufactured and sold in Michigan.

HB5354 — Amends the Michigan Liquor Control Code to delete the requirement that a brewpub cannot sell beer in Michigan unless it provides for each brand or type of beer sold a label that truthfully describes the content of each container.

SB711 — Establishes new limited production brewer license for microbreweries at cost of $1,000 for license.

HB5356 — Amends the Michigan Liquor Control Code to ban the required $13.50 cent-per-liter tax on all wine containing 16% or less of alcohol by volume sold in Michigan.

Minnesota

HB5 — Authorizes emergency, small-business grants and loan funding for businesses affected by COVID-19.

HB4599 — Extends period of mediation for Minnesota farmers suffering economic difficulties to keep their farm.

Mississippi

HB326 — Amends outdated code to increase the maximum annual gross sales for a cottage food operation (from $20,000 to $35,000) before the producer would need to pay food establishment permit fees. Authorizes a cottage food operation to advertise products over the internet. 

New Jersey

AB2371 — Requires large generators of food waste (like restaurants and supermarkets) to recycle food garbage rather than send it to incinerators or landfills. 

AB3865 — Limits return of food from retail food stores during a public emergency.

SB864 — Prohibits sale of single-use plastic carryout bags, single-use paper carryout bags and polystyrene foam food service products, and limits single-use plastic straws. 

SB1591 — Allows alcoholic beverages to be consumed from open containers in the Atlantic City Tourism District. 

SB2437 — Limits service fees charged to restaurants by third-party food takeout and delivery applications during COVID-19 pandemic.

New Mexico

SB3 — Enacts the Small Business Recovery Act of 2020, which provides loans for small businesses suffering during the coronavirus pandemic. 

New York

SB8225 — Authorizes issuing a retail license for on-premise consumption of food and beverage within 200 feet of a church, synagogue or other place of worship. 

AB8956 — Allows a licensed brewery or farm brewery to provide no more than four beer samples not exceeding four fluid ounces each. 

SB1472 — Requires hospitals to offer plant-based food options to patients upon request.

SB7013 — Authorizes the manufacture and sale of ice cream or other frozen desserts made with liquor.

North Carolina

SB290 — The Alcoholic Beverage Control Regulatory Reform Bills, it allows distilleries the same serving privileges as wineries and craft breweries and reduces regulation on out-of-state sales.

Ohio

HB160 — Aid for the restaurant industry to recover from COVID-19 pandemic, the bill doubles the maximum number of Designated Outdoor Refreshment Areas (DORAs) that can be created in a municipality or township. Also allows Ohio’s small wineries to sell prepackaged food without regulation from the Ohio Department of Agriculture, creates bottle limits for micro-distilleries and permits license holders to sell alcoholic ice cream.

South Carolina

HB4963 — Amends state alcohol code, allows licensed retailers to give wine samples in excess of 16% alcohol, cordials or distilled spirits, as long as they don’t exceed a total of three liters a year.

SB993 — Amends state alcohol code to allow a permitted winery to be eligible for a special permit to sell wine at off-premise events. Also increases the amount of beer a brewery can sell to an individual per day for off-premise consumption.

South Dakota

HB1073 — Authorize special event alcohol licenses for full-service restaurant licensees.

HB1081 — Allows colleges to teach brewing beer and wine classes on South Dakota campuses to students age 21 or older. Brewing must be held off campus as the education institution is not deemed a licensed manufacturer.  Any distilled spirits, malt beverage, or wine produced under this section may only be consumed for classroom instruction or research and may not be donated or sold. 

Tennessee

SB2423 — Allows alcohol sales at the Memphis Zoo.

SB1123 — Encourages farmers who produce raw milk to complete a safe milk-handling course. 

Utah

HB134 — Legalizes the sale of raw butter and raw cream in Utah;

HB232 — An agri-tourism bill that allows farms and ranches to host events that include food that would not need to be prepared in a commercial kitchen. Farmers must apply for a food establishment permit to use their private home kitchen.

HB399 — Changes to the Alcohol Beverage Control Act, prohibits advertising that promotes the intoxicating effects of alcohol or emphasizes the high alcohol content of an alcoholic product.

HB5010 — The COVID-19 Cultural Assistance Grant Program, which appropriates $62 million for struggling arts, cultural and recreational organizations and businesses across the state. 

HB6006 — In response to the coronavirus pandemic, the bill amends the Alcohol Beverage Control Act, delaying the expiration date of the retail licenses set to expire in 2020 for places selling alcohol. Also permits alcoholic beverage licensees at international airports to change locations if needed.  

Vermont

SB351 —  A coronavirus relief bill which authorizes $36 million for agriculture and forestry sectors.  

Washington

HB2217 — An update to Cottage Food Law eliminates the requirement that a home address must be put on a food label. 

HB2412 — Increases amount of additional retail licenses for a domestic brewery or microbrewery from two to four, and directs health department to adopt rules allowing brewery owners to allow dogs on brewery premise

SB5006 — Allows sale of wine by microbrewery license holders.

SB5323 — A bill eliminating single-use, plastic carry-out bags

SB5549 — Modernizing resident distillery marketing and sales restrictions. Allows distilleries to sell products off-premise, similar to breweries and wineries. 

SB6091 — Continues work on the Washington Food Policy Forum, including support for small farms and increasing the availability of food grown in the state.

West Virginia

HB4388 — Removes outdated restrictions on alcohol advertising, limiting the Alcohol Beverage Control Commissioner’s authority to restrict advertising in certain advertising mediums, such as at sporting events and highway billboards. 

HB4524 — Making the entire state “wet,” permitting the off-premises sale of alcoholic liquors in every county and municipality in the state.

HB4560 — Permits licensed wine specialty shops to sell wine with a gift basket by telephonic, electronic, mobile or web-based wine ordering. Establishes requirements for lawful delivery.

HB 4697 — Removes restriction that a mini-distillery use raw agricultural products originating on the same premises

HB4882 — Allows unlicensed wineries not currently licensed or located in West Virginia to provide limited sampling and temporary, limited sales for off-premise consumption at fairs, festivals and one-day nonprofit events “in hopes that such wineries would eventually obtain a permanent winery or farm winery license in West Virginia.”

Wisconsin

HB1038 — Bans customers from returning food items during a health pandemic or emergency, dissuading people from stocking up on too many supplies.

SB83 — Increases sales volume of alcohol by retail stores from four liters per transaction to any quantity.  

SB170 — Allows minors to operate temporary food stands without a permit or license.

Wyoming

HB82 — Authorizes a microbrewery to operate at more than one location. The local licensing authority may require the payment of an additional permit fee not to exceed $100.00.

HB84 — Authorizes the sale of certain homemade food items that do not require time or temperature control. These include but are not limited to: 

but is not limited to, jams, uncut fruits and vegetables, pickled vegetables, hard candies, fudge, nut mixes, granola, dry soup mixes excluding meat based soup mixes, coffee beans, popcorn and baked goods that do not include dairy or meat frosting or filling or other potentially hazardous frosting or filling;

“non-potentially hazardous” (no dairy, quiches, pizzas, frozen doughs, foods that require refrigeration and cooked meat, cooked vegetables and cooked beans). Allows someone other than the producer to sell the food, as long as food is not sold in a retail location or grocery store where similar food items are displayed or sold. Food must be labeled with “food was made in a home kitchen, is not regulated or inspected and may contain allergens.”

HB158 — Allows microbreweries to make malt beverages at multiple locations rather than one as deemed in current law.

Restaurants in Crisis

A new restaurant survey shows 1 in 6 restaurants have closed during the pandemic. And 40% of restaurants say that ”it is unlikely their restaurant will still be in business six months from now if there are no additional relief packages from the federal government,” according to the survey by the National Restaurant Association. The association called the results “startling” and asked Congress for more help.

“For an industry built on service and hospitality, the last six months have challenged the core understanding of our business,” said Tom Bené, president and CEO of the NRA, in a statement. “Across the board, from independent owners to multi-unit franchise operators, restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees.”

The NRA also found consumer spending in restaurants is down an average of 34%, the good service industry lost $165 billion in revenue from March to July and 60% of restaurant owners say their restaurant’s operational costs are higher prior to the COVID-19 outbreak.

Read more (Nation’s Restaurant News)

Stopping “Sourfaux” in the UK

Artisan bread bakers in the UK are banding together for Sourdough September, pushing for new government legislation to stop the rise of “sourfaux” bread. Laws in the UK allow retailers to sell unwrapped bread loaves without displaying an ingredient list.

Writes the Real Bread Campaign organizer Chris Young: “In the hands of skilled Real Bread bakers, this longer, slower fermentation, allows lactic acid bacteria in the starter to cause changes in the dough that result in bread with a glossy crust and crumb, and a greater complexity of flavour and aroma.”

The UK government promised in 2018 to protect consumers from buying products erroneously label led as “sourdough.” But no action has been made. More than 50 UK bread bakeries have launched their own labeling promise, signing The Sourdough Loaf Mark scheme last month, urging all bread makers to display a full ingredient list.

Read more (Food Navigator)

An alcohol policy expert calls for an end to antiquated alcohol excise tax laws, which are unfairly penalizing kombucha producers across the country. Though kombucha only has trace amounts of alcohol (generally below the 0.5% alcoholic beverage threshold), it is “nearly impossible for kombucha producers to control the entire supply chain,” writes Jarrett Dieterle, Director of Commercial Freedom for R Street Institute and the author of forthcoming book “Drink For Your Country.” If not properly refrigerated once it’s left the manufacturer for distribution, kombucha will continue to ferment and raise the alcohol level. Dieterle said it’s unfair to make kombucha makers pay fines of more than $10,000 when they can’t control how the drink is stored once it enters the supply chain. Protecting kombucha, he says, should be a priority for federal lawmakers.

Read more (Washington Examiner

The yogurt Los Angeles Times calls “the best yogurt in America” was forced out of California in 2011. White Moustache, which sells Greek and Persian yogurts with seasonal fruit common in Iranian cuisine added, moved to Brooklyn in 2012 after California Department of Food & Agriculture shut them down. According to California state law, making a milk-based product in a facility separate from the facility where the milk was pasteurized is illegal. Though White Moustache founder Homa Dashtaki produces her famous yogurt in New York, she now sells it in California — Manhattan’s brand of Eataly opened a Los Angeles store, and Dashtaki’s family members oversee production for the West Coast store.

Read more (The Los Angeles Times) 

Brewers may finally get a break on a costly tax levied against them since 1791. Bipartisan lawmakers in both the U.S. House and Senate are backing legislation that would permanently reform taxes on brewers, winemakers, distillers and alcohol importers.

The bill – called the Craft Beverage Modernization and Tax Reform Act (CBMTRA) – reduces the federal excise tax on alcoholic beverages. It lowers tax rates for beer, wine and other fermented spirits, like cider. Small brewers save on average $80 million a year without the extra tax.

“Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined,” writes the Beer Institute, a trade organization. “If all the taxes levied on the production, distribution and retailing of beer are added up, they amount to more than 40 percent of the retail price.”

Alcohol excise taxes were the first tax on a domestic product by the U.S. government, and one of the government’s first revenue sources. First collected in 1791, the taxes led to the infamous Whiskey Rebellion tax protest. The purpose of the tax was to help war debt from the Revolutionary War.

Today, though, the government still taxes goods like alcohol and tobacco as part of the “sin tax” logic. Such goods are considered harmful, as alcohol and tobacco consumption is linked to heavy healthcare costs, some paid by taxpayers. Excessive alcohol consumption causes 88,000 deaths a year, an estimated economic impact of $249 billion.

In 2017, the first version of the CBMTRA was passed, under a two-year provision that will expire at the end of 2019. That legislation amended tax law, including:

  • For smaller domestic brewers producing fewer than 2 million barrels a year: Reduce federal excise tax from $7 per barrel to $3.50 per barrel for the first 60,000 barrels.
  • For all other brewers and beer imports: Reduce federal excise tax from $18 a barrel to $16 a barrel on the first 6 million barrels
  • For large brewers with a barrelage over 6 million: Federal excise tax kept at current $18 a barrel.

Brewers, lobbyists and trade associations are pushing for the tax reduction to remain permanent. They point to the huge economic impact the alcohol industry has on the U.S. economy. The U.S. beer industry alone created more than 2.19 million jobs that paid more than $101 billion in wages and benefits in 2018. And, with the increasing popularity of craft brewing, those numbers are rising.

“The craft brewing industry can be found in nearly every Congressional District in the U.S. and contributes more than 500,000 jobs, including an additional 15,000 directly added at small breweries just last year, showcasing the positive momentum supported by temporary provisions,” said Bob Pease, president and CEO of the Brewers Association. “The industry is responsible for contributing more than $76.2 billion to the U.S. economy and is a success story for American industry.”

The wine industry, meanwhile, supported 1.73 million jobs that paid more than $75.7 billion in wages in 2017. Though the cider industry doesn’t have specific numbers on jobs, the cider market grew faster in 2018 than the beer, wine or spirits industry.

“Many of our members are small producers with direct investment in agriculture here in the United States,” said Paul Vander Heide, president of the United States Association of Cider Makers. “This will provide them additional security for their families and capital to invest in growth opportunities for their business.”

After the CBMTRA enactment in 2017, 99 percent of small brewers saw a 50 percent reduction of their federal excise tax. A survey by the Brewers Association found those savings sparked a variety of economic gains for the craft brewing industry:

  • 73% of breweries are purchasing new equipment, upgrading their tasting rooms and breweries, moving to new buildings, etc.
  • 53% of breweries are hiring new employees
  • 39% are increasing their employee benefits by raising pay, offering insurance and expanding vacation time
  • 21% are increasing their charitable contributions
  • 58% are doing two or more of the above-mentioned actions

Added Bobby Koch, president and CEO of Wine Institute:The savings will allow wineries across America – most of which are small, family-owned businesses – to hire new employees, upgrade equipment, and invest in the future growth of their wineries.”

Information and updates on the bill can be found on the Congress website. The bill was introduced by Rep. Ron Kind, D-Wisconsin, Mike Kelly, R-Pennsylvania, Sen. Ron Wyden, D-Oregon and Roy Blunt, R-Missouri.