FR 2025-00955

Summary

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is proposing a regulatory change that would mandate the disclosure of major food allergens in alcoholic beverages. This proposal is aimed at providing essential information to consumers who have food allergies. Under this proposal, labels would need to include a clear and direct statement about the presence of allergens such as milk, eggs, fish, shellfish, various types of nuts, wheat, peanuts, soybeans, and sesame. The TTB has put forward a compliance timeline of five years, intending to lessen the impact on the alcohol industry, particularly small businesses. Until April 17, 2025, the TTB is open to public comments on this proposal.

Significant Issues or Concerns

One notable issue within this extensive document is its complexity and the technical nature of its language, which may present a challenge to the general public in terms of understanding and engagement. Given its detailed references to various regulations and past legislations, the document might overwhelm readers who are not well-versed in legal or regulatory jargon.

The estimated costs associated with these labeling changes, particularly for small businesses, warrant a deeper and more nuanced examination. Although the document suggests that aligning the new allergen disclosures with concurrent labeling changes like the Alcohol Facts rule could offset some costs, it lacks detailed quantification of these potential savings.

Additionally, the document includes references to other regulatory bodies and their guidelines, which might add to the complexity for those unfamiliar with these frameworks.

Broad Impact on the Public

The proposed rule presents substantial benefits to consumers, especially those with food allergies. It aims to provide greater transparency and facilitate informed decision-making, reducing potential health risks from consuming undisclosed allergens present in alcoholic beverages. This move towards transparency aligns alcohol labeling with broader food labeling standards, which could increase consumer confidence in labeling practices across the food and beverage industry.

At the same time, the requirement for allergen labeling could have cost implications, as producers will need time and resources to adjust their labels to meet these new standards. While the extended five-year compliance period is designed to mitigate some of these burdens, additional compliance costs may ultimately be passed down to consumers through potential price increases.

Impact on Specific Stakeholders

For small businesses within the alcohol industry, this proposal represents a mixed bag of challenges and opportunities. On one hand, the measure could raise operational costs, particularly for minor producers who must redesign labels and possibly adjust production processes to avoid allergen cross-contamination. On the other hand, adhering to these regulations could enhance a small business's reputation for safety and consumer care, potentially attracting more allergy-conscious customers.

Larger businesses, while better equipped to absorb the costs and procedural changes, might still face logistical challenges in updating their many products' labels and may anticipate similar disruptions.

Public health advocates and organizations are likely to welcome these changes, viewing them as essential steps in protecting individuals with food allergies, thereby aligning alcohol labeling closer to the standards set for other food products.

Conclusion

The TTB's proposal for mandatory allergen labeling in alcoholic beverages presents a significant but manageable shift in industry practice, seeking to align alcohol beverage labeling with broader food industry standards. The proposal's potential to improve public health safety and provide comprehensive consumer information is likely to be well-received by consumers and public health entities. However, the broader impacts—particularly regarding the cost to both small and large businesses—call for careful consideration, and the proposed regulations will require thoughtful implementation to strike a balance between consumer protection and industry sustainability.

The proposed rule regarding major food allergen labeling for alcohol beverages highlights several significant financial considerations. These financial references primarily focus on the projected costs associated with implementing the new labeling requirements, as well as potential cost savings through coordinated regulatory actions.

Costs Analysis

The document articulates various potential costs related to the proposed allergen labeling rule. An important financial estimate is the present discounted value (PDV) of the labeling costs, which is projected at different compliance periods:

• Approximately $323.4 million (or $161.7 million per year) for a two-year compliance period.
• If extended to three years, the costs would decrease to approximately $258.5 million (or $86.5 million per year).
• For a five-year compliance period, the projected cost drops to $201.2 million (or $40.2 million per year).

This demonstrates that extending the compliance period reduces annual costs by allowing businesses more time to align label redesign with their regular labeling updates.

Coordination with Alcohol Facts Proposal

There is a significant emphasis on coordinating the compliance timeline of the allergen labeling proposal with the related Notice No. 237 concerning "Alcohol Facts" disclosures. The coordination is anticipated to subsume the costs associated with allergen disclosure into the broader costs for updating labels to include nutritional and ingredient information, potentially resulting in negligible additional costs if rules are synchronized. The assumption, however, is questioned in the Issues section of the document due to insufficient detailed quantification and support.

Economic Impact on Small Businesses

The financial implications for small businesses are acknowledged, underscored by the $8.3 billion collected in taxes from the alcohol industry in 2022, and the substantial presence of small-scale producers within this sector. Over 99% of firms in this sector are classified as small entities under the Small Business Administration (SBA) guidelines. The document discusses the potential costs burden on these small entities and recognizes that while most businesses in the industry are small, the new allergen labeling requirements are not anticipated to significantly impact these businesses' economic operations. However, the absence of detailed projections on how these labeling changes specifically affect smaller businesses stands out, as indicated in the Issues section.

Potential Impact Overall

The broader economic context includes a $23.9 billion value of U.S. import trade in alcohol beverages and the extensive economic contribution of the alcohol beverage industry, including $67.9 billion in direct wages. These robust figures convey the industry's significant scale but offer limited clarity on how reallocations or expenditures related to the new labeling requirements might affect these macroeconomic elements.

In summary, the proposed labeling regulations present a nuanced challenge in balancing cost forecasts and savings with the need to provide critical information to consumers. While the document offers substantial data on potential financial impacts, it leaves certain areas, such as cost implications for small entities and the granular effects of coordinated compliance periods, ripe for further detailed analysis and clarification.