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Bud as “America” Raises Approval Questions

By DCBeer contributor Gregory Parnas

As some (understatement) of you have heard by now, Belgian-owned and Brazilian-run Anheuser-Busch InBev has decided to temporarily rebrand the company's flagship American market beer from Budweiser to "America." Now through the November election, you, too, can get "America in your Hands," in either can or bottle form. This wrapping of the flag around Budweiser is not a new marketing strategy, but it is the farthest that InBev has gone in such efforts to date. These appeals to the patriotism of American beer drinkers is meant to coincide not just with the presidential election, but also with the upcoming Rio de Janeiro Olympics Games, the Copa America tournament (which is ongoing in America right now (Ed. Note: I believe that we will win)), and of course, the nation’s Fourth of July festivities.

This change in the packaging of Budweiser raises interesting legal and business questions. While some have analyzed the wisdom of changing the label from a customer-recognition standpoint, others have looked at the trademark implications of the new label. (Hint: AB InBev won't be able to trademark the name "America," and it is unlikely that the overall trade dress, i.e. design of the cans/bottles, would be protected.) However, there was another outstanding issue that could have created a stumbling block for Budweiser (but ultimately did not): label approval.

The main governing authority at the federal level for alcohol manufacturing and distribution is a little-known agency within the U.S. Department of the Treasury called the the Alcohol, Tobacco, Tax and Trade Bureau (TTB). Among other things, the TTB  has the statutory authority to govern the labeling of alcoholic beverages, and every beer manufacturer or importer/wholesaler in the United States must receive a certificate of label approval (COLA) prior to being able to sell beer under that label (27 USC §205).

On May 10th, AB InBev confirmed that they had applied to the TTB for label approval. In an e-mail correspondence on May 23rd, Thomas Hogue of the TTB, confirmed that the new "America" label had already been approved for both cans and bottles. Where things get a bit interesting is that under the TTB's own regulations, AB InBev could have been, and perhaps should have been, denied a COLA for their new marketing campaign.

Title 27 part 7.29 of the Code of Federal Regulations (27 CFR §7.29) establishes certain prohibited practices in the labeling and advertising of malt beverages. These regulations were propagated by the TTB, under authority derived from the Federal Alcohol Administration Act. Under §7.29(d), beer labels are prohibited from :

"contain[ing], in the brand name or otherwise, any statement, design, device, or pictorial representation which the appropriate TTB officer finds relates to, or is capable of being construed as relating to, the armed forces of the United States, or the American flag, or any emblem, seal, insignia, or decoration associated with such flag or armed forces; nor shall any label contain any statement, design, device, or pictorial representation of or concerning any flag, seal, coat of arms, crest or other insignia, likely to mislead the consumer to believe that the product has been endorsed, made, or used by, or produced for, or under the supervision of, or in accordance with the specifications of the government, organization, family, or individual with whom such flag, seal, coat of arms, crest, or insignia is associated."

(See the full label approvals here and here)

As can be seen above, the new AB InBev label contains the brand name "America."  It also features the phrase E Pluribus Unum, which is inscribed on the official seal of the United States. The actual AB seal has been switched to say US. Additionally, the label includes the words “Liberty and Justice of All” that are pulled from the Pledge of Allegiance (4 U.S.C. §4 (2014)), and there is language from other official songs or documents tied to the USA. The label therefore contains elements that are statements, designs, and pictorial representations relating to the American flag, and the emblems, seals, insignias, and decorations associated with said flag. Additionally, there is the question of whether these design elements "are likely to misled the consumer to believe that the product has been endorsed, made, or used by, or produced for…or in accordance with the specifications of the government." Both of these clauses require value judgments on the part of the reviewing TTB official. It is possible that, because of Budweiser's near-universal recognition, the risk of consumer confusion was deemed to be low. However, in my estimation, the elements of the label taken as whole did provide the TTB a lawful basis to deny AB InBev label approval on the grounds that it violated 27 CFR §7.29, or otherwise the agnecy could have required the label to be modified in some way. The question is, why didn’t the TTB do so?  

Under the purview of the infamous (and recently retired) label official Kent "Battle" Martin, breweries all over the country were routinely denied label approval by the TTB for far less clear conflicts with the regulatory guidelines. Some especially nitpicky examples include denying a label for a beer called Bad Elf because the accompanying ‘elf warning’ was deemed to be confusing to consumers and rejecting a beer called "St. Paula’s Liquid Wisdom” because it “contained a medical claim—that the beer would grant wisdom." When asked if this new, seemingly more lenient, stance in regards to AB InBev's “America” label signified a shift in TTB policy, their spokesman explained that:    "These approvals do not reflect any change in the applicable regulations or how TTB enforces them.  All applications for certificates of label approval are reviewed individually, taking the entirety of the label into account, for compliance with the applicable regulations."

Given the hurdles that smaller craft breweries often face with receiving label approval, one wonders if AB InBev didn't face less scrutiny simple as a matter of its size, financial and legal resources, and name recognition? Alternatively, this could simply be a matter of what having expensive legal counsel can provide for you: the ability to skirt just along the edge of applicable laws without getting dinged for it. As InBev moves to finalize its merger with SABMiller and continues to buy both distributors and independent craft breweries, it is important for both the TTB and consumers to remain more, not less, vigilant over the activites of the largest beer conglomerate in the world. If you’re a beer fan, or just someone who feels that it is decidely un-American for one company to have such significant control over a major industry, then you should care about how much review InBev recieves from federal (and state) officials.

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