Branding Strategies That Support Your Alcohol Licensing

A Brew-Friendly Environment.

Drink up South Carolina. The recent passage of key legislation in South Carolina, known as the Stone Bill, is sure to transform the economic and entrepreneurial landscape for new and existing breweries and brewpubs in the State. The Stone Bill was passed on May 28, 2014, in part, to attract California-based Stone Brewing Co. and possibly other breweries to South Carolina, as well as to ease regulation of South Carolina’s existing beer industry which has lagged behind adjacent states such as North Carolina and Georgia. With the State’s thriving tourism industry and growing economy, the Stone Bill promises to improve the climate in which start-up breweries and brewpubs can form and existing brewers can expand.

Licensing Requirements and Restrictions for Branding and Advertising.

New products, such as a new ale, IPA, or stout, must be developed and launched under a complex licensing framework of Federal and State law. Part of the framework includes restrictions on branding and advertising under the Federal Alcohol Administrative Act (27 U.S.C. § 205(e)) and applicable regulations (27 C.F.R. § 7 et seq.). To qualify for a license to develop, produce, package, or place the new product in commerce, the brewer must develop a branding scheme in conformance with these regulations or face the denial of an application for a license. Generally, the branding requirements include certain mandatory labeling information that identifies:

• a brand name of the beer (cannot be misleading);
• a class of beer (e.g., malt beverage, beer, lager, stout, ale, etc.)
• a name and address of the brewer;
• the net contents; and
• the alcoholic content derived from added flavors or non-beer content; and
• a name and address of importer (if applicable);
• a name and address of bottler (if applicable);
• the alcoholic content of the beer (percent by volume);
• a description of additives; and 10) a declaration regarding sulfite and aspartame content.

The regulations also impose significant limits on advertising, the type of advertising permitted, mandatory advertising statements, and certain prohibited statements.

Early Alignment of Branding with Licensing Requirements.

As part of the licensing framework, the brewer is required to submit the labeling information for approval by the Alcohol, Tobacco Tax, and Trade Bureau (TTB). If approved, the TTB will issue a Certificate of Label Approval. The submission of the label information and approval thereof necessarily occurs early in the commercialization process prior to producing any product or finalizing any labels or packaging. Because of these threshold requirements, the brewer would do well early on to take the time to develop a stable branding and advertising scheme prior to applying for the license. This is particularly important because even relatively minor changes to the label information require an amended license application, which can significantly delay approval of the license and subsequent product development and launch.

Branding and Trademark Rights.

The branding scheme may include developing the name of the product, any logos, artwork for the label, design of the packaging, etc. Once conceived, it is advisable that a trademark search be performed to ensure that the risk of infringement is minimal and that trademark rights are available to the brewer. If available, it is advisable that trademark registration be filed to secure the trademark rights to the branding. Developing the branding scheme and securing the trademark rights thereto may avoid time consuming changes to the license, delays in bringing new product to market label, and expensive changes to poorly conceived branding schemes down the road.