It has recently been reported that studies show that younger drinkers of alcohol trend more toward higher price-point categories of alcohol – somewhat regardless of type – rather than the more traditional notion that the populace is composed of “beer drinkers,” “wine drinkers,” and so on.
Whether this is actually true or not is another question, but in terms of legal issues, there are certain things a company can think about if it is wishing to expand its offerings in order to capture this evolving so-called “polymorphous” younger drinking public.
First and foremost, regulatory agencies must be considered. For example, the TTB (the federal body that regulates alcohol) has different regulations as applied to different categories of alcohol. These regulations start with differences in obtaining licenses and label approvals, and continue in the life of the business to include differences in record-keeping, compliance, and labeling requirements. All of these differences are based on the different categories of alcohol being produced (wine, liquor, beer, etc.), with the occasional overlap by design or coincidence.
Additionally, excise taxes that would be paid on different types of alcohol may affect how a company calculates excise tax, treats its bonded areas, and distributes product.
Besides the TTB, one is likely to find similar differences in government regulations at the state level, and they should be studied before making any major changes.
Outside of government regulations, which I like to think of as the “must do” things, there is also another category of considerations that would be “should do” things.
One such consideration is trademark ramifications. If one has already registered trademarks in relation to a particular type of product, for example “wine,” it may be worth considering whether the registration should be amended to include the new product being produced, or possibly new trademarks may be registered, based on whether new marks are being used with the new products.
Even if a company is not choosing to expand the breadth of its alcohol offerings, this expansion of consumer tastes should still be considered through the rubric of trademark. For example, enforcement against other categories of alcohol is probably quite important. This is so, because, even if a winery is small and making only a small portfolio of wines under a strong trademark, that winery should probably pursue enforcement efforts against companies that use a similar trademark even in relation to other non-wine products.
The USPTO has long considered most beverages to be similar to each other for trademark purposes, so failing to enforce a similar trademark – even if being used in relation to a different type of alcoholic beverage – may have negative consequences for long-term protectability due to lack of enforcement. In plain terms, if you sit on your hands too long, sometimes you lose your rights.
As is hopefully apparent, expanding from producing one type of alcoholic beverage to another is not as easy as flipping a switch. However, based on the evolving trends and preferences of younger consumers, this process may become increasing important, and so a functional checklist of how to do it should be made and followed.
(This posting is not to be construed as legal advice. If any of the information in this posting relates to legal issues that you are facing, you should contact an attorney.)
© All rights reserved Kevin Guidry 2014.