Lawsuits against premium booze makers may have major impact on spirits labeling

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So-called “premium” spirits, which are made in smaller batches and are traditionally more expensive than ordinary mass-produced spirits, are helping to fuel growth in alcohol sales in the United States and around the world. This coincides with the increase of market share that so-called craft beers have been enjoying in recent years. Higher-quality alcoholic beverages are in demand.

Two of the brands that have been gaining in popularity are Maker’s Mark bourbon and Austin, Texas-based Tito’s vodka. Just last year, Marker’s Mark aficionados complained when the company thought about lowering the alcohol content in order to stretch supplies. Tito’s vodka has seen explosive growth in sales since its founding in 1997, announcing plans for international expansion this year. Both brands also are targets of lawsuits from booze drinkers over how each is marketed and labeled.

Let’s start with Tito’s vodka. It’s distilled in Austin, Texas and comes with a fascinating story. Its founder, Bert “Bertito” Beveridge, started the company after borrowing $90,000 on his credit cards and cobbling together a still of used Dr. Pepper kegs and a turkey-frying rig. Beveridge won the San Francisco World Spirits Competition in 2001 and the company subsequently took off. Today, it has a 26-acre facility that produces 850,000 cases a year. In spite of this growth, the vodka brand still calls itself “Tito’s Handmade Vodka.”

In September, Tito’s was hit with a California lawsuit for false advertising, among other charges. The following month, the company was hit with a similar lawsuit in Florida. Both suits claim the product can no longer be called “handmade” because it’s made in a large factory process with little control by humans. Beveridge released a statement to the media answering the charges:

‘Here at Tito’s Handmade Vodka, we are proud of our process that focuses on the quality of the product and involvement of human beings,’ he said. ‘We distill at the same distillery in Austin, Texas, where I, Tito, started the business in 1995, distilling in batches in pot stills that are customized and hand-built on-site to our proprietary specifications. We hand-connect the hoses and pumps as we taste and qualify the next steps with the distillate. We taste our product to ensure head and tail cuts, all of which are done at our distillery in Austin, Texas, are made to our exacting standards to deliver the highest quality. The artistry involved in knowing when it’s time to make those cuts is something that cannot be duplicated by even the most sophisticated machines. Our proprietary process is designed to bring the very best quality vodka to our friends and fans for a reasonable price.’

Maker’s Mark also has been hit by a lawsuit over its label. Maker’s Mark, which is owned by Beam Suntory — which also owns Jim Beam and many other brands — also calls itself “handmade.” The Maker’s suit was also filed in California and accuses the company of misleading consumers because Maker’s Mark also uses modern manufacturing processes. While Beam Suntory has not commented to the media about the specifics of its planned defense, an attorney and bourbon expert, Chuck Cowdery, explained one potential strategy to the Lexington Herald-Leader:

‘I’m sure somebody noticed ‘handmade’ on the Maker’s Mark label and figured the case is just as good against Maker’s as it is against Tito’s, and Maker’s (i.e., Beam Suntory) has much deeper pockets,’ Cowdery said by e-mail. ‘Maker’s Mark isn’t new to this question. They have always pointed to the fact that every bottle is individually dipped in wax by hand. One might also argue that constant human oversight of all processes is a component of ‘handmade.”

The outcomes of these two lawsuits could go a long way to determine how companies in the premium spirits industry market themselves. The “handmade” label is just a part of how premium-spirits distillers set themselves apart from mass-produced products. A lot of the confusion centers on how to define a “premium spirit” or a small batch maker. Do we apply the terms to companies like Maker’s Mark and others like them who merely produce smaller volumes of alcohol, or do we need a more narrow definition?

The American Craft Spirits Association, which ironically was co-founded by Tito’s Vodka, limits membership to companies that produce less than 315,000 cases a year and are independent licensed distillers. This means that Maker’s Mark and other brands that are owned by larger companies could not join. Are the smaller distillers the only true “craft spirits” and the only true premium spirits on the market?

Ultimately, these questions will be worked out by the courts in how they interpret the false advertising statutes. But American consumers will play their own role in deciding which brands they think provide them with the premium alcohol they’re looking for.

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