Labeling of Flavored Wine Products (98R-317P)

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 4

[Notice No. 890]

RIN 1512-AB86

Labeling of Flavored Wine Products (98R-317P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of

the Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Alcohol, Tobacco and Firearms (ATF) proposes to

amend the regulations to create a new standard of identity for flavored

wine products. ATF believes that this regulation change is necessary to

avoid consumer confusion between established classes/types of wines

(including varietals, semi-generics, and type designations of varietal

significance) and products that fall outside existing classes because

of the addition of flavoring materials. In general, ATF proposes that

such products must be labeled as ``Flavored Wine Product'' together

with a truthful and adequate statement of composition.

In addition, we are proposing to amend the existing definition of

``brand label'' for wine to be consistent with the definition currently

provided for distilled spirits products. This change would minimize the

likelihood of consumer confusion concerning the identity of the product

by making mandatory information readily visible to the consumer at

retail.

Finally, this document discusses and solicits comments on a

petition we received from the California Association of Winegrape

Growers (CAWG) concerning the labeling of wine specialty products.

DATES: Comments must be received on or before March 29, 2000.

ADDRESSES: Send written comments to: Chief, Regulations Division;

Bureau of Alcohol, Tobacco and Firearms; P.O. Box 50221; Washington, DC

20091-0221; Attention: Notice No. 890. See Public Participation section

of this notice for alternative means of commenting.

FOR FURTHER INFORMATION CONTACT: Edward A. Reisman, Product Compliance

Branch, Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts

Avenue, NW., Washington, DC 20226, (202) 927-8485. You may also write

questions by e-mail to EAR[email protected]. ATF will not

accept comments on the proposal that are submitted to this e-mail

address.

SUPPLEMENTARY INFORMATION:

Background

The Federal Alcohol Administration Act (FAA Act) provides ATF, as

the delegate of the Secretary of the Treasury, with the authority to

promulgate regulations with respect to the bottling, packaging, and

labeling of distilled spirits, wine, and malt beverages. 27 U.S.C.

205(e). The FAA Act provides that these regulations shall prevent

deception of the consumer, and provide the consumer with adequate

information as to the identity and quality of alcohol beverage

products.

The wine labeling regulations require that all wines sold, shipped

or otherwise introduced into interstate commerce must bear labels that

contain certain mandatory information. Among other things, wine labels

must contain a statement relating to the class, type, or other

designation of the wine. 27 CFR 4.32(a)(2). With certain exceptions,

the class of the wine must be stated on the label in conformity with

the standards of identity regulations. However, under certain

circumstances, certain grape wine type designations may appear in lieu

of a class designation, e.g., grape varietal designations (e.g.,

Chardonnay), semi-generic type designations (e.g., Chablis), or type

designations of varietal significance (e.g., Muscatel). If the class of

wine is not defined by the regulations, then a truthful and adequate

statement of composition must appear on the brand label in lieu of the

class designation. 27 CFR 4.34(a).

Subpart C of part 4 sets forth standards of identity for several

classes and types of wine. 27 CFR 4.21. Section 4.21(a) defines ``grape

wine'' as wine produced by the normal alcoholic fermentation of the

juice of sound, ripe grapes. Pure condensed grape must and wine spirits

may be added to grape wine. Section 4.21(a) also provides limitations

on the amelioration of grape wine. Over-ameliorated grape wine may not

be designated as grape wine. Rather, such wine must be designated as

``substandard wine'' or ``other than standard wine.'' 27 CFR 4.21(h).

In general, the name of a grape variety may be used as the type

designation of a grape wine only if the wine is also labeled with an

appellation of origin (e.g., ``California Chardonnay'') and if not less

than 75 percent of the finished wine is derived from grapes of that

variety. 27 CFR 4.23. A semi-generic name of geographic significance

may be used to designate wines of an origin other than that indicated

by such name only if there appears in direct conjunction therewith an

appropriate appellation of origin disclosing the true place of origin

of the wine (e.g., ``California Burgundy''), and if the wine so

designated conforms to the standard of identity for the product or, if

there is no such standard, to the trade understanding of such class or

type. A semi-generic designation is a name of geographic significance

that is also the designation of a class or type of wine found to have

become semi-generic by the Director of ATF. The regulations provide

several examples of semi-generic designations that are also type

designations for grape wines, such as Burgundy and Chablis. 27 CFR

4.24(b)(2). Semi-generic designations are also established by the

Internal Revenue Code (IRC), 26 U.S.C. 5388(c). In the case of still

grape wine there may also appear in lieu of the class designation, a

type designation of varietal significance. This applies to American

wines only. The regulations provide several examples of type

designations of varietal significance, such as Muscatel and

Scuppernong. 27 CFR 4.28.

Also, grape wine may be vintage dated if it is made in accordance

with the standards prescribed in 27 CFR 4.27(a). Vintage wine is wine

labeled with the year of harvest of the grapes, and made in accordance

with classes 1, 2, or 3 of 27 CFR 4.21.

Section 4.21 does not allow for the addition of flavoring

material(s) to wines with a standard of identity under subpart C of

part 4. For example, a class 1, grape wine containing added flavoring

material(s) is not entitled to a standard grape wine designation,

appellation of origin, or vintage date since these statements only

apply to a ``standard'' grape wine. Likewise, ``substandard wine'' or

``other than standard wine'' under Sec. 4.21(h)(2) does not

specifically include wine to which flavoring material(s) have been

added. Substandard wine or other than standard wine typically includes

any wine to which has been added sugar and water solution in an amount

which is in excess of the limitations prescribed in the standards of

identity for these products.

It has been ATF's longstanding policy that wines to which flavoring

material(s) are added do not fall within any of the current standards

of identity set forth in the wine regulations. A truthful and adequate

statement of composition is required on the brand label for such

flavored wine products, pursuant to Sec. 4.34(a).

Flavored wine products may be derived from grape wine or other

wines. They may be derived from citrus wine

[[Page 72613]]

(orange wine, grapefruit wine, etc.), fruit wine (apple wine, berry

wine, pear wine, etc.) or other agricultural products (carrot wine,

dandelion wine, honey wine, etc.).

Flavored Wine Products

Flavored wine product labels have traditionally displayed

statements of composition such as ``Grape Wine With Natural Flavors''

to describe to consumers the composition of these products. Recently,

some domestic wineries have begun using varietal and semi-generic names

in the statement of composition on their product labels to describe the

base wine portion of their flavored wine products. These flavored wine

products most often have an appellation of origin such as

``California'' in conjunction with the grape varietal or semi-generic

name in the statement of composition (e.g., ``California Chardonnay (or

Chablis) With Natural Flavors''). Flavored wine products are composed

differently from existing standard of identity wines. Typically, such

flavored wine products contain additional flavoring material(s). Such

products may contain coloring material(s). Flavored wine products may

also contain sugar and water in excess of that allowed in standard

wine.

ATF is aware that the recent appearance of these grape varietal and

semi-generic names on flavored wine products has caused a great deal of

discussion within the wine industry. On February 26, 1998, ATF wrote to

the Wine Institute to respond to their concerns about this matter. Soon

after the letter was sent to the Wine Institute it was placed on the

ATF internet website as public information.

Consumer Survey

In view of ATF's concerns about the labeling of flavored wine

products, ATF commissioned a consumer survey in July 1998 to determine

consumer interpretations of varietal and semi-generic claims on labels

of flavored wine products. Among other things, the survey was designed

to assess whether wine consumers distinguish between grape wine and

flavored wine products based on information provided on product labels.

The survey involved portraying examples of two flavored wine products:

one product was portrayed as containing a grape wine base that

qualified as a varietal wine and another was portrayed as a product

containing a grape wine base that qualified as a semi-generic wine.

Both products chosen for the survey were depicted in ``bag-in-box''

containers. Consumers were shown labels bearing only varietal or semi-

generic designations and labels bearing a varietal or semi-generic type

designation as part of a statement of composition including the term

``With Natural Flavors.'' Consumers were shown boxes bearing the

statement of composition on the side panel only, and other boxes with

the statement of composition prominently displayed on the front label.

None of the labels was identical to the labels of wines currently

marketed. The brand names, package designs, and label information were

selected by the contractor, U.S. Research Company, in order to best

measure consumer perceptions about the overall label presentations and

were chosen in order to ensure that the results were not specific to

any one particular product or brand of wine.

The survey revealed that even when the ``With Natural Flavors''

disclosure was prominently displayed on the front panel of the product,

a large majority (80%) of the respondents failed to distinguish between

grape wine and flavored wine products. The survey also revealed that

placing the term ``With Natural Flavors'' on the label had no impact on

consumer understanding of the amount of varietal or semi-generic wine

in the product. This is important because over 55 percent of the

consumers surveyed believed that all or almost the entire product was

composed of the varietal or semi-generic wine. Moreover, when asked to

interpret the ``With Natural Flavors'' disclosure, more than one-third

of the consumers surveyed perceived it to convey a positive ``no

chemicals or additives'' message. Seventeen percent indicated that they

thought the ``With Natural Flavors'' disclosure meant that the product

was ``natural,'' and only fourteen percent suggested that it indicated

that flavors had been added to the product.

California Association of Winegrape Growers Petition

ATF received a petition, dated September 15, 1999, filed on behalf

of the California Association of Winegrape Growers (CAWG), requesting

an amendment of the regulations to prohibit the use of any varietal,

semi-generic or geographic name as part of a statement of composition

on wine specialty products. Specifically, CAWG has requested an

amendment of section 4.34(a). This section states that if the class of

wine is not defined in the standards of identity in subpart C of part

4, ``a truthful and adequate statement of composition shall appear upon

the brand label of the product in lieu of a class designation.'' The

petitioner is requesting that the regulation be amended to add the

following wording:

A statement of composition shall include the standard of

identity (class and type designation) of the wine used in the

product, but shall not be permitted to include, in lieu of the class

designation for the wine used in the product, any varietal (grape

type) designation, type designation of varietal significance, or

semigeneric geographic type designation, or geographic distinctive

designation, to which the wine used in the product may otherwise be

entitled.

The petitioner contends that the manner in which flavored wine

products are labeled, packaged, and marketed deceives consumers into

thinking they are consuming varietal wine rather than flavored wine. As

stated in the petition,

Varietal-based specialty products appear on retailers' shelves

next to or intermingled with traditional still wines, in packaging

similar to traditional still wines [750 milliliter or 1.5 liter

glass bottles sealed with a cork, or 5 liter ``bag-in-box''

containers] and with a varietal designation and an appellation of

origin traditionally associated with still wines prominently

displayed.

The petitioner asserts that over the last 20 years, American wine

producers and grape growers have developed an important consumer market

for still grape wines with varietal designations and appellations of

origin. According to the petitioner, these wines represent a large

volume of the domestic wine sold in the United States (64 percent for

the 52 week period ending July 18, 1999). As stated in the petition,

``[v]arietal designations and appellations of origin have earned an

important place in the wine consumer marketplace as indications of

quality wines with certain distinctive tastes and styles.''

In support of its petition, CAWG commissioned a survey to study

consumers' understanding of the current labeling of flavored wine

products that include a varietal name with an appellation of origin in

the statement of composition. A total of 800 telephone interviews were

conducted. According to CAWG, the results of the survey showed that

most respondents believe that wine labels accurately reflect what is in

the container and that label information is important to their buying

decisions. A little more than 48 percent of the respondents expected

that products containing labels with such statements as ``California

Cabernet Sauvignon with natural flavors'' and ``California Chardonnay

with natural flavors'' to be standard grape wines which contain 75

percent wine made from grapes of that variety. The petitioner notes

that flavored wine products which include a varietal name

[[Page 72614]]

in the statement of composition have no minimum varietal content

requirement.

CAWG states that the results of its survey clearly show that the

labeling of flavored wine products that include a variety name along

with an appellation of origin in the statement of composition is

misleading to consumers. The petitioner believes that its proposed

amendment ``is targeted directly at the misleading nature of current

statements of composition on varietal-based specialty products.'' By

prohibiting varietal and semi-generic designations and appellations of

origin in the statement of composition, the petitioner contends that

consumers will not be misled as to the actual identity of the product.

Flavored wine products that have a varietal wine base would have

statements of composition in the form ``grape wine with natural

flavors'' or ``white wine with natural flavors.''

ATF is not proposing the amendment requested by CAWG, however, we

are soliciting comments on the petition. This will be addressed further

in the section titled ``Proposed Regulation.''

Significance of Wine Labeling Terms

ATF believes that consumers have learned to attach significance to

grape wines entitled to varietal/semi-generic designations,

appellations of origin, and vintage dates. This belief is based on the

fact that for many years the grape wine industry has heavily utilized

varietal/semi-generic designations, appellations of origin, and vintage

dating in the marketing of grape wines. Additionally, ATF has conducted

rulemaking projects spanning nearly 14 years identifying American grape

variety names. See e.g., Treasury Decision ATF-370, 61 FR 522 (January

8, 1996). Similarly, Congress has recently amended the Internal Revenue

Code to recognize semi-generic names as being distinctive grape wine

designations. 26 U.S.C. 5388(c), as added by Public Law 105-34,

Sec. 910(a). These efforts illustrate the importance of varietal and

semi-generic grape wine designations to both the wine industry and to

wine consumers. This was also addressed in the CAWG petition.

ATF believes that consumers do not understand that flavored wine

products are composed differently from existing standard of identity

wines. ATF further believes that consumers are confused about the

distinction between an existing standard of identity wine and flavored

wine products, especially when grape varietal or semi-generic terms

appear on the labels of flavored wine products. Flavored wine products

are often located next to varietal wines or semi-generic wines on the

shelves of grocery and liquor stores. Also, the promotional and

advertising materials accompanying these flavored wine products

frequently feature or highlight the varietal or semi-generic component

of the finished wine product, even though the finished flavored wine

product is not entitled to the varietal or semi-generic designation.

Proposed Regulation

ATF has concluded that current statements of composition that

include varietal or semi-generic names tend to mislead consumers to

believe that flavored wine products are the same as wines that meet the

percentage requirements for a varietal or semi-generic designation. ATF

is basing this conclusion on its experience in regulating the labeling

of wine. ATF also believes that the consumer survey it commissioned and

the CAWG consumer survey support that conclusion.

Furthermore, examination of this issue has caused ATF to review its

policy relating to statements of composition for all flavored wine

products, including those that do not include varietal or semi-generic

names, such as those that state ``Grape Wine With Natural Flavors,''

since the finished products are no longer ``Grape Wine'' but are

``Flavored Wine Products'' because of the presence of flavors.

Although we are soliciting comments on the CAWG petition, we are

not proposing the amendment requested by the petitioner. We believe the

regulation change proposed by CAWG is more restrictive and does not

provide the industry with the flexibility in labeling their flavored

wine products. On the other hand, we believe that the proposals made in

this notice provide the consumer with sufficient information as to the

actual identity of the product without imposing an undue burden on the

industry.

Accordingly, ATF is proposing to establish a new class designation

that would be called ``Flavored Wine Product.'' Under this designation,

a flavored wine product would be a wine-based alcohol beverage that

does not qualify for any of the class or type designations listed in

the existing wine regulations because of the addition of flavoring

material(s).

ATF believes that all flavored wine products need to be labeled to

indicate to consumers that such products are composed differently from

existing standard of identity wines. ATF, therefore, proposes to add a

Class 10 to the standards of identity for wine to be called ``Flavored

Wine Product.'' Such product will be required to be designated as

``Flavored Wine Product'' on labels. Furthermore, the designation must

appear together with a truthful and adequate statement of composition.

The designation and the statement of composition must appear in the

same size, style and color typeface on the brand label.

At a minimum, the statement of composition for flavored wine

products must:

1. Identify Class and/or Type

It must identify the class and/or type of each wine used in the

flavored wine product (e.g., ``grape wine,'' ``table wine,'' ``peach

wine,'' ``honey wine''). A single grape variety, type designation of

varietal significance, or semi-generic name may be used if such named

grape variety, type designation of varietal significance, or semi-

generic name appears together with an appellation of origin no smaller

than a country and the named grape variety, type designation of

varietal significance, or semi-generic wine constitutes not less than

75 percent by volume of the finished flavored wine product. For Vitis

labrusca varieties, the named grape variety must constitute not less

than 51 percent by volume of the flavored wine product. An appellation

of origin may not otherwise appear on the label of a product of this

class. Similar provisions are being proposed for specialty products

that do not contain any flavor(s) (Sec. 4.34(c)).

2. Identify Added Flavoring Material(s)

If one flavoring material is used in the production of the flavored

wine product, the flavoring material must be specifically identified

(e.g., ``strawberry flavor''). If two or more flavoring materials are

used in the production of the flavored wine product, each flavoring

material may be specifically identified (e.g., ``peach flavor,'' ``kiwi

flavor,'' or ``peach and kiwi flavors'') or the characterizing flavor

must be specifically identified and the remaining flavoring material(s)

must be generally referenced as ``other flavor(s).''

With regard to the term ``natural'' as used on alcohol beverage

labels to describe a flavor, e.g., ``With Natural Flavors,'' ATF

believes that there is no consensus among consumers as to a meaning for

the term ``natural.'' This belief is based upon ATF's experience in

regulating the wine industry and on its consumer survey noted above,

which supports this conclusion. An example indicated in the survey

reflects that fully one-third of respondents considered the term

``natural'' to indicate that no additives or chemicals are present in

the product. This

[[Page 72615]]

conclusion is clearly erroneous. Therefore, to avoid consumer deception

concerning the identity of flavored wine products, the term ``natural''

may not be used anywhere on the flavored wine product labels to

describe flavoring materials. When artificial flavoring material(s) are

used, they must be so described (e.g., ``artificial raspberry

flavor'').

3. Identify Added Coloring Material(s)

ATF proposes to require that coloring materials(s) be disclosed in

the statement of composition, whether added directly or through

flavoring material(s). The coloring materials may be identified

specifically (e.g., ``caramel,'' ``certified color,'' ``annato,'' etc.)

or as a general statement, such as ``artificially colored,'' to

indicate the presence of any one or a combination of coloring

material(s). However, FD&C Yellow No. 5 requires specific disclosure in

accordance with 27 CFR 4.32(c).

4. Include a Reference to Sugar

ATF proposes to require that sugar be listed in the statement of

composition if sugar is used in the production of the flavored wine

product (not including its use in the production of the base wine

within the range authorized by the regulations).

5. Include a Reference to Water

ATF proposes to require that water be listed in the statement of

composition, if the water addition, whether added directly to the

flavored wine product or by the addition of flavoring material(s),

exceeds 5 percent by volume of the flavored wine product.

6. Include a Reference to Wine Spirits

ATF proposes to require, except for flavored wine products made

from a base of a class 6 wine and imported flavored wine products, a

reference to the addition of wine spirits in the statement of

composition, whether such wine spirits are added in the production of

the wine component of the flavored wine product or added in the

production of the flavored wine product, if the wine spirits are not

derived from the same kind of fruit from which the wine component was

fermented. Section 4.39(a)(7) prohibits the appearance on a wine label

of any statement that the wine contains distilled spirits with one

exception. Accordingly, we are proposing to amend the exception to

cover the reference to distilled spirits in the statements of

composition for flavored wine products.

Miscellaneous--Amended Definition of ``Brand Label''

ATF also proposes to revise the meaning of the term ``brand label''

in 27 CFR 4.10. Under the amended definition, a brand label is the

principal display panel that is most likely to be displayed, presented,

shown, or examined under normal and customary conditions of display for

retail sale, and any other label appearing on the same side of the

container as the principal display panel. The brand label appearing on

a cylindrical surface is that 40 percent of the circumference which is

most likely to be displayed, presented, shown or examined under normal

and customary conditions of display for retail sale.

ATF believes that the existing definition of the term ``brand

label'' allows the mandatory information to be placed on the container

in such a way that it is not readily visible to consumers. ATF also

believes consumers are having difficulty locating important mandatory

product label information necessary to be adequately informed as to the

identity and quality of the wine products, including bag-in-boxes and

other new wine containers.

The amended brand label definition proposal is based on the

definition of ``brand label'' that is currently in the distilled

spirits regulations and is consistent with the principal display panel

approach of the Fair Packaging and Labeling Act. ATF recognizes that

the proposal to amend the definition of the term ``brand label'' was

raised before. On September 12, 1991, ATF published Notice No. 727,

``Definition of 'Brand Label' for Wine, and; Standard Wine Containers''

(56 FR 46393). At that time ATF proposed that the definition of ``brand

label'' be amended, consistent with the definition currently proposed.

This proposal was subsequently withdrawn for further study (58 FR

56801, October 25, 1993).

ATF has re-examined this issue in the context of the wine

regulations for the purpose of ensuring that consumers are not misled

about the identity and quality of wine products. The popularity of

flavored wine products and the potential for consumer confusion between

such products and other wines that fit specific class designations

makes this more specific definition of ``brand label'' necessary. Under

the proposed definition, the mandatory information will be readily

visible to consumers at the point of purchase.

Public Participation

Who May Comment on This Notice?

We are requesting comments on these proposed regulations and the

CAWG petition from all interested persons. We are also requesting

comments on the clarity of this proposed rule and how it may be made

easier to understand. Comments received on or before the closing date

will be carefully considered. Comments received after that date will be

given the same consideration if it is practical to do so, but assurance

of consideration cannot be given except as to comments received on or

before the closing date.

Will ATF Keep My Comment Confidential?

We will not recognize any material in comments as confidential. All

comments and materials received may be disclosed to the public. If you

consider your material to be confidential or inappropriate for

disclosure to the public you should not include it in a comment. We may

also disclose the name of any person who submits a comment.

Disclosure: Who May Review the Comments ATF Receives for This Notice?

Any interested person may inspect copies of this notice and all

comments. You may inspect these documents during normal business hours

in the ATF Reference Library, Room 6480, 650 Massachusetts Avenue, NW,

Washington, DC.

How Do I Send Facsimile Comments?

You may submit comments by facsimile transmission to (202) 927-

8602. Facsimile comments must:

be legible;

reference this notice number;

be 8\1/2\'' x 11'' in size;

contain a legible written signature; and

be not more than three pages long.

We will not acknowledge receipt of facsimile transmissions. We will

treat facsimile transmissions as originals.

How Do I Send Electronic Mail (E-mail) Comments?

You may submit comments by e-mail by sending them to

[email protected].

You must follow these instructions. E-mail comments must:

contain your name, mailing address, and e-mail address;

reference this notice number; and

be legible when printed on not more than three pages 8\1/

2\'' x 11'' in size.

We will not acknowledge receipt of e-mail. We will treat e-mail as

originals.

[[Page 72616]]

How Do I Send Comments to the ATF Internet Web Site?

You may also submit comments using the comment form provided with

the online copy of the proposed rule on the ATF internet web site at

http://www.atf.treas.gov/core/regulations/rules.htm

Can I Request a Public Hearing?

If you desire the opportunity to comment orally at a public hearing

on this proposed regulation, you must submit a request in writing to

the Director within the 90-day comment period. The Director reserves

the right, in light of all circumstances, to determine if a public

hearing is necessary.

Is This a Significant Regulatory Action as Defined by Executive Order

12866?

We have determined that this proposed regulation is not a

significant regulatory action as defined in Executive Order 12866.

Therefore, a Regulatory Assessment is not required.

Does the Paperwork Reduction Act Apply to this Proposed Rule?

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3507, and its

implementing regulations (5 CFR part 1320) apply to this proposed rule.

The collection of information contained in this notice has been

submitted to the Office of Management and Budget (OMB) for review in

accordance with section 3507(d) of the PRA. The estimated average

burden associated with the collection of information is 0 hours per

respondent or recordkeeper because the requirement is usual and

customary for wine producers. The number of respondents/recordkeepers

is 6,060. Comments on the collection of information should be sent to

the Office of Management and Budget, Attention: Desk Officer for the

Bureau of Alcohol, Tobacco and Firearms, Office of Information and

Regulatory Affairs, Washington, DC 20503, with copies to the Chief,

Document Services Branch, Room 3110, Bureau of Alcohol, Tobacco and

Firearms, at the address previously specified.

Comments are specifically requested concerning:

Whether the collection of information is necessary for the proper

performance of the functions of ATF, including whether the information

will have practical utility;

The accuracy of the estimated burden associated with the collection

of information;

How the quality, utility, and clarity of the information to be

collected may be enhanced;

How the burden of complying with the collection of information may

be minimized, including through the application of automated collection

techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation,

maintenance, and purchase of services to provide information.

The collection of information in this proposed regulation is in 27

CFR 4.21(j) and 4.34. This information is required to properly identify

flavored wine products. The collection of information is mandatory. The

likely respondents are businesses.

An agency may not conduct or sponsor, and a person is not required

to respond to, a collection of information unless it displays a valid

control number assigned by the Office of Management and Budget.

Does the Regulatory Flexibility Act Apply to This Proposed Rule?

The Regulatory Flexibility Act (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any rule required to be

issued for notice and comment unless the agency certifies that the rule

will not have a significant economic impact on a substantial number of

small entities. Small entities include small businesses, small not-for-

profit enterprises, and small government jurisdictions. We hereby

certify that this proposed regulation, if adopted, will not have a

significant economic impact on a substantial number of small entities.

Since producers routinely make changes to their labels, we do not

believe that the proposed amendments, if adopted, would result in any

additional burdens on the industry. Accordingly, a regulatory

flexibility analysis is not required.

Drafting information. This document was drafted by Edward A.

Reisman, Product Compliance Branch, Bureau of Alcohol, Tobacco and

Firearms. However, other personnel within ATF also participated in the

development of this document.

List of Subjects in 27 CFR Part 4

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Packaging and containers, Wine.

Authority and Issuance

For the reasons discussed in the preamble, ATF amends 27 CFR part 4

as follows:

PART 4--LABELING AND ADVERTISING OF WINE

Paragraph 1. The authority citation for part 4 continues to read as

follows:

Authority: 27 U.S.C. 205.

Par. 2. Section 4.10 is amended by revising the definition of the

term ``brand label'' to read as follows:

Sec. 4.10 Meaning of terms.

* * * * *

Brand label. The principal display panel that is most likely to be

displayed, presented, shown, or examined under normal and customary

conditions of display for retail sale, and any other label appearing on

the same side of the container as the principal display panel. The

brand label appearing on a cylindrical surface is that 40 percent of

the circumference which is most likely to be displayed, presented,

shown, or examined under normal and customary conditions of display for

retail sale.

* * * * *

Par. 3. Section 4.21 is amended by adding new paragraph (j) to read

as follows:

Sec. 4.21 The standards of identity.

* * * * *

(j) Class 10; flavored wine product. A flavored wine product is a

wine-based alcohol beverage that does not qualify for any of the other

class or type designations listed in this section because of the

addition of flavoring material(s).

(1) Mandatory class and type designation. The designation of such

product is ``flavored wine product,'' together with a truthful and

adequate statement of composition, all of which must appear in the same

size, style and color typeface. At a minimum, the statement of

composition must:

(i) Identify the class and/or type of each wine used in the

flavored wine product (e.g., ``grape wine,'' ``table wine,'' ``peach

wine,'' ``honey wine''). A single grape variety, type designation of

varietal significance, or semi-generic name, as provided in Secs. 4.23,

4.28, and 4.24(b), respectively, may be used if such named grape

variety, type designation of varietal significance, or semi-generic

name appears together with an appellation of origin no smaller than a

country and the named grape variety, type designation of varietal

significance, or semi-generic wine constitutes not less than 75 percent

by volume of the finished flavored wine product: Provided, That for

Vitis labrusca varieties, the named grape variety must constitute not

less than 51 percent by volume of the finished

[[Page 72617]]

flavored wine product. An appellation of origin may not otherwise

appear on the label of a product of this class.

(ii) Identify added flavoring material(s). If one flavoring

material is used in the production of the flavored wine product, the

flavoring material must be specifically identified (e.g., ``peach

flavor'' or ``kiwi flavor''). If two or more flavoring materials are

used in the production of the flavored wine product, each flavoring

material may be specifically identified (e.g., ``peach flavor,'' ``kiwi

flavor,'' or ``peach and kiwi flavors'') or the characterizing flavor

must be specifically identified and the remaining flavoring material(s)

must be generally referenced as ``other flavor(s).'' The term

``natural'' may not be used to describe flavoring materials anywhere on

the product label(s). Artificial flavoring material(s) must be so

described (e.g., ``artificial raspberry flavor'');

(iii) Identify coloring material(s), whether added directly or

through flavoring material(s). The coloring materials may be identified

specifically (e.g., ``caramel,'' ``certified color,'' ``annato,'' etc.)

or the words ``artificially colored'' may be used to indicate the

presence of any one or a combination of coloring material(s), except

that FD&C Yellow No. 5 requires specific disclosure in accordance with

27 CFR 4.32(c);

(iv) Include a reference to sugar, if the sugar is used in the

production of the flavored wine product (not including the use of sugar

in the production of the base wine within the authorized limits);

(v) Include a reference to water, if the water addition, whether

added directly to the flavored wine product or by the addition of

flavoring material(s), exceeds 5 percent by volume of the flavored wine

product;

(vi) Include, except for flavored wine products made from a base of

a class 6 wine and imported flavored wine products, a reference to the

addition of wine spirits, whether added in the production of the wine

component of the flavored wine product or added in the production of

the flavored wine product, if the wine spirits are not derived from the

same kind of fruit from which the wine component was fermented.

(2) Optional statements. In addition to the statement of

composition portion of the mandatory designation, additional statements

regarding the components of the flavored wine product may appear on a

back or side label, but not the brand label. Such statements must

reference all components listed in the mandatory statement of

composition and must include the percentage of each component totaling

100 percent. Furthermore, such additional statements must be truthful,

accurate and specific, within the meaning of Sec. 4.38(f).

Par. 4. Section 4.34 is amended by removing the last two sentences

in paragraph (a) and adding in their place three new sentences and by

adding a new paragraph (c) to read as follows:

Sec. 4.34 Class and type.

(a) * * * Except as provided in paragraph (c) of this section, an

appellation of origin may not appear on the label of the product. If

the statement of composition includes a single grape variety, type

designation of varietal significance, or semi-generic name, as provided

in Secs. 4.23, 4.28, and 4.24(b), respectively, the product must comply

with the provisions of paragraph (c) of this section. In addition to

the mandatory designation for the wine, there may be stated a

distinctive or fanciful name, or a designation in accordance with trade

understanding. All parts of the designation of the wine, whether

mandatory or optional, must appear together in the same size, style and

color typeface.

* * * * *

(c) If the class of wine is not defined in subpart C, and the

statement of composition required by paragraph (a) of this section

includes a single grape variety, type designation of varietal

significance, or semi-generic name, as provided in Secs. 4.23, 4.28,

and 4.24(b), respectively,

(1) An appellation of origin no smaller than a country must appear

together with the named grape variety, type designation of varietal

significance, or semi-generic name; and

(2) The named grape variety, type designation of varietal

significance, or semi-generic type wine must constitute not less than

75 percent by volume of the finished wine product: Provided, That for

Vitis labrusca varieties, the named grape variety must constitute not

less than 51 percent by volume of the finished wine product.

Par. 5. Section 4.39(a) is amended by revising the introductory

text in paragraph (7) to read as follows:

Sec. 4.39 Prohibited practices.

(a) * * *

(7) Any statement, design, device, or representation (other than

the statement of composition required by Sec. 4.21(j)(1) and a

statement of alcohol content in conformity with Sec. 4.36), which tends

to create the impression that a wine:

* * * * *

Signed: October 13, 1999.

John W. Magaw,

Director.

Approved: November 12, 1999.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 99-33574 Filed 12-27-99; 8:45 am]

BILLING CODE 4810-31-P