Reading labels on various alcohol bottles can be a challenging process, and it looks as though it’s only going to get more difficult in coming years. Last year a federal judge dismissed several claims against Tito’s “Handmade” vodka. Now, craft distillers are taking a stand and voicing their opinion on the authenticity of the market and how “craft” may become a loosely defined term.

Alcohol labels can say “Distilled by,” “Bottled in,” “Manufactured in,” “Produced in,” “Aged in,” and so on. But what does it all mean? According to a distillery based in Traverse City, Michigan, if the label says anything other than “Distilled by,” it means the product was not made by the company, at least when you are talking about whiskey.

There appears to be two camps forming in the world of craft alcohol: “producers” and “merchant producers.” Producers are viewed as being actual distilleries, involved in the whole (or almost the whole) process, from grain to bottle. Merchant producers, on the other hand, purchase their alcohol from a large-scale distillery in bulk and sell it under their own labels. These producers have no part in the creation process of the liquor; they merely act as the storefront for the product while outsourcing its production.

What merchant producers are doing is not a bad thing. In fact, many business-savvy people would view this approach as the way of the world today. Merchant producers often even sell a good-tasting and quality product. The problem arises from how they choose to label their products and the high risk associated with misleading consumers.

Take the case of Tito’s “handmade” vodka. The judge held that one simply cannot “hand make” vodka, or, at least, not in the volume needed to fill a national market. This was viewed by the judge as a fact that should be obvious to the general consumer and, therefore, isn’t misleading. In this particular case, though, a connection was drawn between the term “handmade” and the concept that the vodka is made “in an old fashioned pot still.” This portion of the case was not dismissed by the judge and is allowed to move forward to trial. If Tito’s vodka is not made “in an old fashioned pot still,” the labeling would be considered misleading. This finding could prove detrimental to the brand.

Most authentic distillers recognize that consistency and authenticity in labeling is going to be an uphill battle. Their hope is that in the coming years consumers will come to recognize and distinguish products based on the difference in taste and this will create the divide between authenticity and merchant producers. In the meantime, distilleries will continue to produce in hope that with time, either the merchant producers will change their labeling methods, or that consumers will come to recognize and understand the difference.

For more information about alcohol advertising contact Revision Legal’s Corporate attorneys through the form on this page or by calling 855-473-8474.

Federal Regulation of Alcohol Labeling

Alcohol labeling in the United States is governed primarily by the Alcohol and Tobacco Tax and Trade Bureau (TTB), a division of the Department of the Treasury. The TTB administers the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. § 205, which prohibits misleading statements on labels of wines, distilled spirits, and malt beverages. Under the FAA Act, a label is considered misleading if it creates a false impression about the product’s age, origin, identity, or method of manufacture.

TTB regulations at 27 C.F.R. Parts 4, 5, and 7 set specific standards of identity for different categories of spirits. For whiskey, the regulations are particularly detailed: a product labeled as “straight bourbon whiskey” must be produced in the United States from a grain mixture of at least 51% corn, aged in new charred oak containers, and meet other requirements. A product that does not satisfy these standards cannot legally use the “straight bourbon” designation.

The “Handmade” and “Craft” Problem

The TTB’s label approval process does not comprehensively address marketing terms like “handmade,” “handcrafted,” or “craft.” This regulatory gap has created litigation exposure for producers whose marketing claims outpace their production realities. In addition to the Tito’s litigation, class action plaintiffs have pursued similar claims against other brands, alleging violations of state consumer protection statutes—most frequently California’s Consumers Legal Remedies Act (CLRA), Cal. Civ. Code § 1750 et seq., and Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq.

These lawsuits typically allege that consumers paid a premium price based on a “craft” or “handmade” representation that was false—the product was actually produced using large-scale industrial processes. Plaintiffs seek restitution of the price premium, injunctive relief requiring label changes, and attorney fees.

Merchant Producers and the Regulatory Framework

The TTB’s Standards of Fill and mandatory label statements require producers to disclose certain facts about origin, but they do not require disclosure of all supply chain details. A merchant producer that purchases bulk spirits from a contract distillery and bottles it under its own label is not necessarily violating federal law—provided it does not make affirmative misrepresentations. However, affirmative claims about the production method (“distilled by,” “brewed at”) can create legal exposure if inaccurate.

The TTB’s label approval process (the Certificate of Label Approval, or COLA) provides some protection—an approved COLA indicates TTB reviewed the label and did not object—but COLA approval is not a defense to consumer fraud claims brought under state law. Federal preemption arguments have had limited success in alcohol labeling cases because courts have generally found that state consumer protection claims based on false or misleading statements do not directly conflict with the FAA Act’s labeling requirements.

Steps Producers Should Take

Alcohol producers—whether established distilleries or merchant producers—should take a proactive approach to label compliance:

• Review all label statements against TTB standards of identity to ensure accuracy
• Audit marketing materials, websites, and social media for claims about production methods that may not be defensible
• Consult with a beverage alcohol attorney before submitting a COLA application for any label that uses subjective quality or authenticity claims
• Document the factual basis for any production claims made on the label—if the claim cannot be substantiated, it should not appear on the label

If you are a distillery, winery, brewery, or merchant producer facing questions about your label compliance or a consumer fraud claim, contact Revision Legal at 855-473-8474 or fill out the contact form on this page. Our attorneys can help you evaluate your exposure and develop a label strategy that protects your brand.

The Role of Expert Witnesses in Alcohol Label Litigation

Consumer fraud cases involving alcohol labeling often turn on whether a reasonable consumer would be deceived by the challenged label claim. This is an empirical question that courts and juries evaluate with the help of consumer survey evidence and expert testimony from marketing and consumer behavior experts. A well-designed survey showing that a significant percentage of consumers—typically 15-20% or more, by the standards applied in Lanham Act false advertising cases under Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489 (5th Cir. 2000)—were materially deceived by the label can be outcome-determinative. Producers facing consumer fraud class actions based on labeling should retain expert counsel early in the litigation and begin survey design promptly after a complaint is filed.