To: Virginia Alcohol Beverage Control Authority

From: Molson Coors Beverage Company Date: June 21, 2023

Subject: Response to Proposed Circular Regarding “so called crossover products”

Molson Coors Beverage Company (MCBC) appreciates the opportunity to offer commentary on the proposals contained in VABC Circular Letter 23-01. In all our endeavors, MCBC is committed to responsible marketing to legal-age consumers, avoiding consumer confusion, and working closely with authorities like the VABC to accomplish those objectives in the best way possible. With specific regard to alcohol variants of non-alcohol beverages (what the VABC considers one of many “so called crossover products”), brewers worked with the Beer Institute to develop industry guidelines for these products, including requirements that brewers differentiate product names, packaging, and labels and include warnings such as “CONTAINS ALCOHOL” in prominent locations. Further, brewers carefully ensure through compliance with the Beer Institute Advertising Code that any advertising and marketing of these products appeal primarily to legal drinking-age consumers and that alcohol variants are not linked to the selling and marketing of any non-alcohol counterparts. A link to the press release on the update to the Beer Institute advertising and marketing code can be found here: Beer Institute Revises Marketing Code to Address Alcohol Variants of Non-Alcohol Products – Beer Institute MCBC remains committed to working with our wholesale and retail partners in Virginia to ensure that all alcohol products in off-premise accounts are sold in appropriate spaces reserved for these products, although we fully agree that suppliers and wholesalers do not control retailers, are prohibited by law from doing so, and retailers alone make the final decision on where products are displayed in their stores. Retailers make the final decision on where products are displayed in their stores and, as such, MCBC supported legislation passed in 2023 to require signage. With that, we respectfully share the following observations for the VABC’s consideration. We welcome any opportunity to follow-up directly should the VABC have any questions or wish to discuss in greater depth.

1. The guidance should only apply to future submissions/products. Commerce depends on transparency and consistency. Suppliers must be able to rely on the Agency’s assessments and approvals. Additionally, wholesalers and retailers should be able to rely on those approvals. The concerns that the proposed Advisory addresses are not new. The VABC weighed the same concerns and advised the brewers, who then relied on the agency’s approval when reworking and producing primary and secondary materials that are now in the market.
2. Honor prior label approvals [if not materially inconsistent with the Advisory] and only apply the Advisory to new products launched after January 1, 2024. Suppliers further relied on that guidance and incorporated the approved standards into other crossover products. The VABC should avoid unnecessarily taxing the State’s limited resources and burdening suppliers whose products already conform to explicit warnings requirements that, in some instances, were even specifically requested by the VABC. Existing in-market products, especially those with explicit VABC approval, should not be reconsidered. Moreover, the VABC should delay the implementation of the standards until the industry has time to apply the new standards.
3. Limit the scope of alcohol-to-alcohol crossover warning requirements to alcohol source trade-downs (spirits to malt-based products), which expand their distribution beyond VABC stores and may cause consumer confusion. The VABC has a legitimate interest in protecting tax revenue and guarding against consumer confusion. The gist of these concerns centers on instances where the original alcohol product shares the same brand name/labeling and involves a trade-down in the source of the alcohol (i.e., the trade-down of a premium spirits product trade to a fermented alcohol product). In a Control State like Virginia, trade down in alcohol sources poses a unique concern—retail expansion. Spirits products should not be able to creep into retail locations where their origin products could not be sold. The same taxation concerns do not exist when a brewer builds on the success of its fermented alcohol products with a new premium spirits product. Therefore, The VABC should limit the scope of the explicit warnings requirement. The agency’s example (“a spirits manufacturer creating a malt-beverage version of the original product”) correctly defines the issue and should serve as the proper scope of the proposed guidance.
4. Please provide additional clarification. The industry needs time and additional clarification before it can apply and incorporate new standards. Although the VABC’s Circular Letter 23-01 intends to provide further guidance for Section 3 VAC 5-2- 20-10 and 3 VAC 5-40-20, it instead creates more questions. MCBC requests clarification of the following points: 3 • Will the VABC require Suppliers to use 16-point font for each and every warning? For primary packaging, having seven (7) explicit warnings is not feasible if every warning must be in 16-point font. The relatively small size of primary packaging, in particular, does not afford a sufficiently large canvas if every warning must be in a 16-point font. • Will the VABC consider “21+ CONTAINS ALCOHOL” as two (2) warnings? Common sense suggests that multipart warnings such as “21+ and Contains Alcohol” are different ideas and should be counted as multiple warnings. The VABC previously approved Brewer’s labels that used these explicit warnings. • How will the VABC treat new-to-the-market products? The requirement that the “Virginia ABC may request a sample label, container, and secondary packaging for additional review” would prove unreasonably burdensome and cost prohibitive for products where packaging is still in design and no physical examples exist.
5. The guidance should allow the use of well-settled warnings for “contains alcohol,” such as “Spiked” and “Hard,” because the public understands them. MCBC shares the VABC’s concern that explicit warnings should be included in crossover products but believes that “Spiked” and “Hard” are long-established and commonly known signifiers for alcohol content. In fact, “Spiked” and “Hard” are better understood than industry technical terms such as percentage alcohol contents (ABV and ABW). The warnings can be found in sources as familiar as the Merriam-Webster dictionary, the definitions of which follow below: • Spiked. Of beverages contains Alcohol • Hard. Of beverages: containing Alcohol. In addition, many States have incorporated the term “Hard” within their own statutes and regulations because the public understands its meaning. The VABC should allow the terms “Spiked” and “Hard” to be counted as explicit warnings.
6.  A single standard should apply to all products whose origins lie in what is commonly known as a soft drink, regardless of whether they have soft drink brands associated with the alcohol version of the beverage. The VABC’s proposed guidance creates inconsistencies, and perhaps a double standard which may be considered arbitrary. Alcohol variants of soft drinks such as teas, lemonades, seltzers, and sodas that have been in the market for many years would be held to a standard consistent with all other malt beverages. At the same time, beverages of the same coming to market in collaboration with a known soft drink manufacturer are held to a different, more stringent standard, when both are, as stated in the proposed guidance from the VABC, “alcoholic versions of beverages already in the market”.
7. Secondary closures are unnecessary, cost prohibitive, and not recommended or required by any state or Federal law.  MCBC is unaware of any Federal or other State law requirements requiring secondary closures (child-proof) such as foil lids, plastic wrapping, lip guards, stickers, or other “child-proof” packaging for any alcohol beverages. The VABC appears to be erroneously conflating other States’ standards about cannabis products and Federal Rules, such as the Poison Prevention Packaging. MCBC asserts the warnings discussed in this response and adopted by The Beer Institute are the best method to address consumer confusion.

Thank you.