Va. eyes regulating crossover alcoholic beverage placement in stores

A pair of bills advancing in the Virginia General Assembly would require Hard Mtn Dew and similar products containing alcohol be kept separate from their regular soft drink counterparts on store shelves.

If successful, the effort would likely represent the first time a state passed a law to regulate the placement of alcoholic and nonalcoholic products carrying similar brand names or logos.

The effort comes as soft drink makers increasingly enter the alcoholic beverage market with so-called crossover beverages that often mimic their legacy nonalcoholic brands. Besides Hard Mtn Dew, examples include Simply Spiked Lemonade, Lipton Hard Iced Tea and Fresca Mixed.

These new entrants into the alcoholic beverage space are blurring the traditional separation between soft drink makers and beer, wine and spirits manufacturers.

“The intent is to make sure that consumers completely understand that the yellow can that has alcohol in it is labeled and the yellow can that does not have alcohol in it that might look similar is apart from that that has the alcohol in it,” state Sen. Barbara Favola (D), the sponsor of the Senate bill and chair of the Rehabilitation and Social Services Committee, said in a recent speech explaining her support for the measure.

The sponsor of the House version is Rep. James “Jay” Leftwich (R).

The Virginia bills, which have cleared each chamber with nearly unanimous votes, have the backing of Anheuser-Busch, Molson Coors and the Virginia Beer Wholesalers Association, whose president and CEO Phil Boykin testified in favor of the measures.

“We’re in transition as these new products come forward, and we want to make sure that our kids aren’t drinking them,” Boykin said during a public hearing.

Boykin told Pluribus News the legislation grew out of a workgroup that met during the legislative interim to discuss updates to Virginia’s liquor regulations.

The arrival of crossover drinks has become a touchy issue in Virginia. Last fall, a pair of Virginia beer wholesalers filed a complaint with the state’s Alcoholic Beverage Control Board over the distribution of Hard Mtn Dew in the state. That matter is scheduled for a hearing in May.

Beer wholesalers around the country have also raised concerns about ready-to-drink alcoholic beverages sharing shelf space or displays with nonalcoholic drinks, and the potential for consumer confusion as well as unfair market advantage.

Under the Virginia measures, alcoholic and nonalcoholic beverages that contain the same or similar brand names, logos or packaging could not be displayed “immediately adjacent” to each other. In addition, alcoholic products placed outside the traditional beer, wine and liquor aisles would have to have special signage.

The soft drink industry has largely remained on the sidelines of the debate in Virginia. But the Virginia Food Industry Association, which represents chain grocery stores, has raised concerns about the signage requirement and questioned the need for the legislation.

“We have strong ID checks at checkout, and this is the No. 1 surefire way to make sure kids are not purchasing these products,” Melissa Assalone, executive director of VFIA, said in testimony to lawmakers.

Supporters of the bills counter that consumers — both youth and adults — are not accustomed to encountering similar-looking products with and without alcohol and that the rules will help avoid confusion and mistakes.

In testimony, John Daniel with Virginia ABC, the state’s liquor regulator, told the story of a 9-year-old girl who was able to purchase a can of Buzzballz, a ready-to-drink cocktail, for her mother for Mother’s Day. The drink, he said, was in a display area that had other Mother’s Day gifts.

“In that instance the product was in fact sold,” said Daniel, who described the incident as an “extraordinary circumstance.”

Favola said the alcoholic beverage market is changing quickly and that regulations need to keep pace.

“This seems to be a trend, so if we don’t nip it in the bud and say, ‘We have to be clear, we have to keep [the products] separate, we have to protect our kids, we have to inform our consumers,’ [then] I think we’re doing a disservice,” Favola told Pluribus News.

In December, the Distilled Spirits Council of the United States issued guidance on the advertising, marketing and merchandising of crossover products that contain alcohol.

Among the recommendations is that the packaging and branding of the products be different from nonalcoholic versions and that stores not display or promote the products in a way that could confuse consumers.

“While spirits suppliers have the responsibility and control over how these products are advertised and marketed, our retail tier partners have the responsibility and control over how products are presented to consumers for sale,” Courtney Armour, the group’s chief legal officer, said in a statement announcing the guidance.