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Washington Report

March 2003

Produced by the Alcohol Policies Project of the Center for Science in the Public Interest, Washington Report provides online information and updates about federal and state alcohol-policy issues, including alcohol advertising and marketing, labeling, product development, taxation, and industry political and commercial initiatives.  Washington Report also provides action alerts to inform advocates of opportunities to promote and influence pro-health alcohol policies.

In this Edition:

Federal Policy Update

Alcohol Policies Project Advocacy News

Industry Watch



Federal Policy Update


Congress Seeks New FTC Report on Alcopops and Booze Advertising

For information related to Federal Policy, please contact Kim Miller, Manager of Federal Relations

Related Links:

H.J. Res 2 (see page 776)

Thanks to Representatives Lucille Roybal-Allard (D-CA) and Frank Wolf (R-VA), in the conference report to the FY 2003 Omnibus Appropriations Bill (H.J. Res 2 - see page 776), Congress directs the Federal Trade Commission (FTC) to examine how liquor-branded alcopop advertising affects underage consumers.  The FTC must report to Congress within six months of the Act's enactment in January.  In addition, Congress, noting the alcoholic-beverage industry's failure to implement the recommendations in the FTC's 1999 Report, "Self Regulation and the Alcohol Industry," instructs the agency to "encourage the industry to adopt stricter advertising placement standards" and "establish an independent third-party review mechanism to limit the appeal and exposure of alcohol advertising to underage consumers."

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TTB Proposes New Regulations for Alcopops, Calls for Public Comment

Related Links:

3/24/03 Federal Register


Due to growing concerns from states, the Department of the Treasury and its Alcohol and Tobacco Tax and Trade Bureau (TTB) issued proposed rules on flavored malt beverages (alcopops) on March 24.  TTB wants to "ensure the proper classification under the Federal Alcohol Administration Act so that [product] labeling and advertising conform to the applicable requirements...and to ensure consumers are adequately informed, and not misled, as to the identity of these products."


TTB studied the contents of 114 malternatives and found that "it is very clear that most of these products' alcohol is derived from distilled spirits contained in added alcohol flavorings."  At the same time, they also found that most malternatives contain "very little beer."  Under the proposed rules, flavored malt beverages at less than 0.5% alcohol-by-volume derived from distilled spirits flavoring would be taxed as malt beverages; if they contain more alcohol from distilled spirits sources, they will be taxed at the higher distilled spirits rate.


Acknowledging that consumers may believe that malternatives contain as much alcohol-by-volume as the distilled spirit brand name on the product label, TTB also seeks to require that producers list the alcohol content on the brand label.  Current regulations do not require such labeling.


The Alcoholic Beverage Commission in Tennessee has already tried to classify liquor-branded malternatives as distilled spirits.  Diageo and Miller Brewing Co. challenged the decision and the issue went to hearing before the Tennessee Alcoholic Beverage Control Board on February 20.  A decision is pending.


CSPI plans to comment on this issue and we will provide guidance for activists in the field at a later date.  We will also post our comments when we submit them.


You may submit written comments by June 23, 2003 to:


Chief, Regulations and Procedures Division

Alcohol and Tobacco Tax and Trade Bureau

P.O. Box 50221

Washington, DC 20091-0221

Attn: Notice No. 4








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TTB Sets Strict Standards for Alcohol Health Claims

Related Links:

TTB T.D.- 1

On March 3, 2003, the Alcohol and Tobacco Tax and Trade Bureau (TTB), formerly the Bureau of Alcohol, Tobacco and Firearms (ATF), announced final regulations regarding health claims on alcoholic-beverage labels and in advertising.  The new rules will take effect on June 2, 2003.


Drawing on testimony from two public hearings in early 2000, TTB's new regulations "prohibit the appearance on labels or in advertisements of any health-related statement, including a specific health claim that is untrue or tends to create a misleading impression."  The rules specify that health claims must:

  1. be truthful, properly detailed, and adequately confirmed by substantial scientific evidence;

  2. indicate the people for whom the health claim applies;

  3. be balanced by information about the risks of moderate and heavier drinking, including defining "moderate consumption" for specific groups of people; and

  4. be qualified by a list of the categories of individuals for whom any levels of alcohol consumption may cause health risks.

In addition, TTB will consult with the federal Food and Drug Administration (FDA) if producers' health claims are found to be drug claims.  Directional statements, such as those that encourage consumers to ask their doctors about the health benefits of alcoholic beverages, must include a brief disclaimer advising that the statement should not encourage beginning or increasing alcohol consumption for health reasons.  Without this disclaimer, such statements will be considered misleading.


TTB defines "health-related claims," as "statements and claims that imply that a physical or psychological sensation results from consuming" any alcoholic beverage "as well as statements and claims of nutritional value," such as vitamin content.  "Specific health claims," on the other hand, comprise statements or claims that connect alcoholic-beverage consumption with diseases or health-related conditions.  This category includes implied specific health claims (vignettes, symbols, or anything else that insinuates a connection between alcoholic beverages and diseases or health-related conditions).


By identifying "health-related claims" and "specific health claims," and by imposing detailed provisions for labels and advertisements that make these claims, TTB has all but shut the door to misleading assertions about the potential health benefits of consuming alcoholic beverages.  We don't expect that many companies will rush to make label or advertising health claims on alcoholic beverages under the new conditions.  If they do, the claims will be adequately balanced.

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TTB Continues Reorganization

Related Links:

TTB Website

The Alcohol and Tobacco Tax and Trade Bureau (TTB) held a meeting of stakeholders in Washington, DC in February to provide an update on its transition from the Bureau of Alcohol Tobacco and Firearms (ATF) under the Homeland Security Act of 2002.


On January 24th, TTB began its work enforcing laws and provisions concerning the production and taxation of alcohol and tobacco products.  According to the agency, industries will see few changes in agency responsibilities: collecting excise taxes; classifying alcohol and tobacco products; managing permits for distilleries, wineries, breweries and tobacco producers; and regulating production, packaging, bottling, labeling, and storage of alcohol and tobacco products.  TTB will also continue to implement the Alcohol Beverage Labeling Act and monitor misleading labeling and advertising of alcoholic beverages.


We do not anticipate that the TTB reorganization will create major changes in the implementation of policies concerning the taxation, labeling, and advertising of alcoholic beverages.  CSPI will continue to monitor the agency and provide information as necessary.

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Oppose Beer Tax Rollback Bills H.R. 52 and H.R. 1305


Related Links:

CSPI Action Alert Updated!

CSPI Tax Resources


H.R. 1305

H.R. 52

Brewers and beer wholesalers garnered considerable Congressional support for legislation to slash federal excise taxes on their products in the last Congress.  A beer-industry-sponsored bill (H.R. 1305) to cut the federal beer tax in half attracted 224 sponsors in the House, and Senator Santorum (R-PA) introduced similar legislation in the Senate.


Just days after the opening of the 108th Congress, Representative Christopher Cox (R-CA-47th) introduced H.R. 52 -- legislation that would reduce the federal excise tax on beer to its 1951 level.  Another bill presents a bigger threat.  Representative Phil English (R-PA) re-introduced H.R. 1305 on March 18, with 122 original co-sponsors.  Brewers and beer wholesalers are now hard at work building support for a beer-tax rollback, lobbying Congress and making generous campaign contributions.  Beer-industry lobbyists claim that the last tax increase on beer destroyed 31,000 jobs, reduced income tax revenues, and burdened states with unemployment costs.  Recently, industry sources have tied beer-tax cuts to the administration's economic stimulus package, suggesting that lower beer taxes will help stimulate the economy.


The liquor lobby had its own tax-cut bill last session (H.R. 2023) and we expect it to be re-introduced soon.


See which members of Congress have supported H.R. 52.

If your member is on this small, but growing list, please take a few moments to write him/her and express your opposition to any reductions in federal excise taxes on alcoholic beverages.  If your member's name is not on this list, he/she still needs to hear your opinion on this issue.  Please pass on this information!!!


Take a few moments to write to your Representative and urge him/her to oppose any reductions in federal excise taxes on alcoholic beverages.  If you have already done so, thank you!  Please encourage friends, family, and colleagues to take action too.

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Alcohol Policies Project Advocacy News


CSPI Asks CBS to Avoid Beer Ads on NCAA Cable Telecasts

For information related to Advocacy News, please contact

Bill England, Manager of Grassroots Advocacy

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Because of the demand for war news coverage, the National Collegiate Athletic Association (NCAA) men's basketball tournament may air on alternate cable channels, including channels devoted to children's programming.  News reports have suggested that CBS will shift some games to ESPN, Nickelodeon, and TV Land.  With this shift, many more young children could be exposed to beer ads that have long been a part of NCAA tournament games.


On March 12, CSPI wrote Sean McManus, president of CBS Sports, urging him to reject beer ads during games aired on youth-oriented cable networks.  CSPI sent copies of the letter to the NCAA's president, Myles Brand of the University of Indiana, and to J. Howard Beales, III, director of the Bureau of Consumer Protection at the Federal Trade Commission (FTC).


Recent studies document that underage youth see more commercials for beer than for other consumer products like juice and gum, and that those advertisements can influence their knowledge of beer brands and preference, not to mention their attitudes towards drinking alcohol.



State Tax Update

Related Links:

State Tax Updates

Governor Mike Leavitt of Utah signed two bills, S.B. 66 and S.B. 153, on March 24, increasing the state's taxes on beer -- from $11.00 to $12.80 per 31-gallon barrel ($0.35 per gallon to $0.41 per gallon) -- and hiking the state's markup on liquor by three and one-half percent (Utah is a control state).  The increase in the markup is the first since 1983 and is part of a major revision of the state's alcohol laws.  Both laws go into effect July 1, 2003.


Efforts to raise alcohol excise taxes are still very much on the front burner in many states.  Several legislatures now have proposals before them, and legislation has made progress.  In some states, notable initiatives have met with defeat.  For a summary of the status of state alcohol excise tax measures across the country, click here.

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State Alcohol Tax Cuts?

Related Links:

H.B. 170

H.B. 154


At the time of writing, 19 states have proposals to increase taxes or implement fees on alcohol.  However, New York and Pennsylvania may have alcohol tax cuts in store.


New York law calls for the reduction of the tax on beer. The present rate in New York, $0.125 per gallon, less than half the average of state rates, will be reduced to $0.11 per gallon this year.  The state budget deficit totals more than $10 billion.


Pennsylvania, facing a budget deficit of $1 billion, has two pieces of legislation that would cut the fees charged by the state Liquor Control Board.  Representative Robert Godshall (R) introduced legislation (H.B. 170) that removes the state's markup on liquor and wine sales to hotels, restaurants, clubs.  Representative Larry Sather (R) introduced a bill (H.B. 154) that cuts the state markup by one-third.  Pennsylvania, as a control state, sells wine and liquor and adds a markup to the wholesale price.

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Global Trade Agreement Threatens State Alcohol Monopolies

Related Links:

Alcohol Policy 13 Resolution


In closed negotiations on the General Agreement on Trade in Services (GATS) taking place within the World Trade Organization, the European Union has asked the United States to dissolve alcohol distribution monopolies in 18 states to give European wine sellers access to tariff-free trade.  Sweden and Finland, two countries that regulate alcohol sales, have been asked to do the same.  U.S. agreement would essentially supercede federal, state, and local regulations on the sale of alcohol; would deny alcohol control states the right to create policy that is based on public safety or health goals; and would eliminate state revenue, which according to the National Alcohol Control States Association, totaled $41.7 million in sales in 1999.


Other GATS market access rules may eliminate limits on the number of service providers, total number of service operations, or total quantity of a service, likely affecting all states.  The Bush administration has until the end of this month to say which changes it may adopt.


Participants at the Alcohol Policy 13 conference discussed GATS issues and adopted a resolution that will be sent to the U.S. Trade Representative.  The resolution asks that alcohol services be excluded from the agreement.

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Industry Watch


Industry Official Warns Producers about Alcohol Ads

For information related to Industry Watch, please contact Bill England, Manager of Grassroots Advocacy.

Marcus Grant, president of the industry-backed International Center for Alcohol Policies (ICAP), called for alcoholic-beverage marketers to ease off of advertising alcoholic-beverage products with sexual or binge drinking images, and instead focus on promoting moderate, responsible drinking practices.  His suggestion, delivered at an industry conference sponsored by Impact Magazine, aims to avoid public opposition to and government regulation of irresponsible advertising practices that have become more common recently among brewers and some distillers.  Grant said, "we're not interested in pushing limits, we're interested in promoting responsible drinking."


Jeff Becker, president of the Beer Institute, defended his industry's advertising, saying, "[w]e know that we have critics, but our consumers love our ads and that for us is very, very important."


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Top Competitive BASS Fisherman Stands Up to Busch Beer


Jimmy Houston, dubbed America's most famous fisherman, maintained his principles and lost an opportunity to compete in this year's Bass Masters Classic fishing tournament.  He can't participate because he lost points for refusing to wear Busch Beer product insignia and display the beer's logo on his boat.  Citing his Christian background, he expressed surprise and disappointment that more fisherman, particularly Christian anglers, have not done the same.


Busch signed on as an official tournament sponsor last year.  Under its sponsorship agreement, players must wear Busch apparel and display the logo or forfeit points to qualify for the BASS tournament.  Although the rules require players to highlight the Busch logos prominently, they also prohibit alcohol consumption on days before and during BASS events.


Houston says that BASS competitors face similar pressure to those felt by NASCAR racers when it comes to alcohol sponsorships.  For instance, Hank Parker, Jr. refused to endorse Seagram's Ice and has been barred from competing in races.

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New Products


Despite declining sales in the alcopop category, Diageo introduced Smirnoff Ice Triple Black in mid-January 2003, airing its first ads during the Super Bowl.  This drink targets young male consumers with its rugged image and less sweet taste.  Diageo hopes that product sales will strengthen plans to create other extensions of Smirnoff Ice in the future and fully secure its place as the number one distributor of alcopops.


With Bacardi USA, Anheuser-Busch launched its newest alcopop, Bacardi Silver O3, in early March 2003.  At 5 percent alcohol-by-volume, this drink targets the same crowd as the multitude of other alcopops enjoyed by young, inexperienced, introductory drinkers who enjoy sweet drinks.  Although the market seems saturated with products, and sales volume has slowed to the point of forcing some products off the market, A-B anticipates that the new drink will succeed because of its unique orange flavor.  According to industry reports, newer liquor-branded alcopops have been more successful lately than the original, lemonade-type malternatives.


Jim Beam Brands Co. will release a new ready-to-drink beverage, Beam and Cola, made with Jim Beam bourbon, in May 2003.  The drink contains 5 percent alcohol-by-volume, like beer and many malternatives, but actually contains hard liquor.  The advertising campaign for this product will begin in April, targeting newspapers, outdoor and spot radio.

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Web Tools for Tracking Booze-Lobby Campaign Contributions


Two sites on the internet track political contributions and provide useful information for activists who keep tabs on the booze lobby and legislators.


The Center for Responsible Politics tracks political contributions to federal candidates.  This site offers a database of federal candidates and all of their contributors, sorted by industry and individual giving.  The web address for this site: www.opensecrets.org.


A site maintained by the National Institute on Money in State Politics monitors political contributions to state-level candidates.  This site also allows sophisticated searches by candidate and contributor category.  The web address is: www.followthemoney.org.

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Check Out the Booze Lobby


The National Beer Wholesalers Association and the Beer Institute have set up a website, www.beerservesamerica.org, that highlights the beer industry's economic and social contributions to communities around America.  It features analyses of the jobs it creates, taxes it pays, and philanthropy it distributes.  The site provides beer lobbyists and their grassroots activists with factual ammunition to oppose efforts to increase state beer taxes and roll back the federal excise tax on beer.  It's worth a look at the exaggerated claims and self-serving arguments.


Anheuser-Busch has created several of its own sites to push the federal beer-tax rollback (see article in this issue) in Congress.  The website, www.rollbackthebeertax.org, includes the claim that the tax on beer accounts for 44 percent of its cost (considering every conceivable tax paid, in addition to excise taxes).  The site also highlights the apparent regressiveness of taxes on beer, and calls the federal beer tax the "ultimate luxury tax."  We wonder whether the company considered the effects of its own price increases -- several in the past few years -- on poor people and those of moderate means....

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What the Industry Says About...Job Losses

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In states proposing higher alcohol taxes or fees, alcoholic-beverage lobbyists often argue that even the smallest increase will result in job losses.  Apparently no increase is too small.  In response to Oklahoma's effort to raise the beer license fee from $10 to $100 per year, convenience-store lobbyist Clayton Thomas warned, "It will result in the loss of jobs."  We didn't know that retail wages in Oklahoma were that low!




Contact Information:

For more information, please send us an email.

Center for Science in the Public Interest
Alcohol Policies Project
1220 L St. NW, Suite 300
Washington, DC  20009
Phone: (202) 332-9110
Fax: (202) 265-4954

Washington Report has been produced with the generous support of the Robert Wood Johnson Foundation.

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