Malternatives are still big talk of the biz, tho buzz less positive lately. One reason: BATF recently laid out agency’s new thinking about malternatives that could radically change way these products are sold/marketed in a year or so. Key: BATF may require that spirits "flavoring" can contribute at-most 0.5% of final alcohol volume. Turns out BATF found 90%+ of alcohol comes from flavorings in some of these products. Brands that don’t meet new standard would be considered spirits products and be taxed, regulated as such. That immediately would make ‘em more expensive/less profitable, far less available to consumers and take ‘em off network tv. In effect, BATF doing an about face after years of clearing labels/brands that don’t have much resemblance to beer. Per usual, BATF ain’t exactly barreling down this road tho. First step is "notice of proposed rule-making" by end of 2002. Then a 60-90 day comment period to give everyone from suppliers to CSPI chance to weigh in. Then BATF adopts final rule; it’s talking about Jan 2004. If suppliers don’t like new rules, they can go to court or legislature.
The supplier with most at stake, Diageo, is already trying to head off any BATF move to reclassify malternatives. It sent 6-page, single-spaced letter detailing why BATF shouldn’t change status quo. Diageo’s major points: it has already spent millions based on BATF’s current policy of allowing flavors without limit if alc content under 6%; consumers don’t care if alcohol comes from flavors; there’s no compelling public interest to make change; history and current definitions of beer/malt bevs under FAA Act and internal revenue code give brewers needed flexibility to use flavors. BATF also already received letter signed by 9 Congressmen asking it not to reclassify malternatives. They’re "concerned that ATF’s proposal…will effectively end this category of product, disappointing consumers, destroying jobs, harming the brewing industry and reducing excise tax revenues." Gotta note asst director Art Libertucci’s response to comment that new rules would kill category in Jul 25 conference call. Producers could continue malternative products, Art told industry execs, just not as cheaply or easily. Why is BATF changing its mind? Industry complaints, taxation issues and calls from the states, said Art. Indeed, Tennessee’s alc bev commission not waiting for feds to act. It’s very close to final ruling that malternatives with sprits flavoring are spirits products (urged on by wine & spirits distribs there who want to sell ‘em). Tenn ABC holds hearing Aug 19.
