FTC Staff Comment Before the Bureau of Alcohol, Tobacco, and Firearms Concerning Use of the Word Light in the Labeling and Advertising of Wine, Distilled Spirits, and Malt Beverages

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COMMISSION 	AUTHORIZED
Comments of the Bureau of Economics
of the Federal Trade Commission·
on
Use of the Word "Light" (Lite)
in the Labeling and Advertising of Wine,
Distilled Spirits, and Malt Beverages
Notice No. 659
Bureau of Alcohol, Tobacco and Firearms
November 15, 1988
• 	These 	comments 	are 	the 	viev.,ts 	of 	the 	staff 	of 	the 	Bureau 	of
Economics of the Federal Trade Commission. 	They are 	not necessarily 	the
views of the Commission or of any 	individual Commissioner. 	Questions or
comments concerning this document may be addressed to Curtis Wagner (202-
326-3348), staff economist, Federal Trade Commission.

Comments on the Use of the Word "Light" (Lite)
in the Labeling and Advertising of Wine,
Distilled Spirits, and Malt Beverages
Notice No. 659, BA TF
The Bureau of Alcohol, Tobacco and Firearms (BATF) proposes to revise
its 	regulations 	governing 	the 	advertising 	and 	labeling 	of 	"light" 	Or 	"lite"
alcoholic beverages. 	BA TF's first 	notice of proposed rulemaking was issued
on 	August 	12, 	1986. 1 	The 	staff 	of 	the 	Federal 	Trade 	Commission 	(FTC)
submitted comments on December 31, 1986. 2 	On June 12, 1988, BATF, noting
that 	its 	previous 	proposals 	are 	still 	under 	consideration, 	advanced 	two
additional 	proposals, and 	requested 	additional 	comment. s 	The 	staff of 	the
FTC's Bureau of Economics is pleased to respond.
Under 	BATF's 	first 	new 	proposal, "Alternative No. 	I," 	any 	light 	malt
beverage, 	wine 	or 	distilled 	spirit 	of 	less 	than 	80 	proof 	that 	is 	labeled 	or
advertised as a "light" beverage must have 20 percent fewer calories than its
producer's regular product." 	Under BATF's second proposal, "Alternative No.
lUse 	of 'the 	Word 	"Light" 	(Lite) 	in 	the 	Labeling 	and 	Advertising 	of
Wine, 	Distilled 	Spirits, 	and 	Malt 	Beverages, 51 	Fed. 	Reg. 	28836-40 (August
12, 1986).
2The FTC has jurisdiction over the advertising and labeling of alcoholic
beverages under Sections 5 and 12 of the Federal Trade Commission Act (15
U.S.c. 	45 	et 	seq.). 	BA TF 	has 	jurisdiction 	over 	alcoholic 	beverage
advertising 	and 	labeling 	under 	the 	Federal 	Alcohol 	Administration 	Act 	of
1935 	(FAA 	Act), 	27 	U.S.c. 	201 	et 	seq. 	Section 	5(f) 	of 	the 	FAA 	Act, 	27
U.S.c. 	205(f), 	prohibits 	"false," 	"misleading," 	"obscene," 	or 	"indecent"
statements in distilled spirits, wine, or malt beverage advertisements. 	Even
more 	broadly, Section 	5(f) 	prohibits any 	statements 	relating 	to 	"irrelevant"
matters, "irrespective of falsity," that the Secretary of the Treasury finds 	to
be 	likely 	to 	mislead 	the 	consumer. 	Additionally, 	Section 	5(f) 	confers 	the
authority 	to 	require 	mandatory 	information 	"as 	will 	provide 	the 	consumer
with adequate information as to the identity and Quality of the products advertised."
3.Use of 	the 	WOld 	"Light" 	(Lite) 	in 	the 	Labeling 	and 	Advertising 	of
• Wine, Distilled Spirits, and 	Malt Beverages, 53 Fed. Reg. 22678-80 (June 	17,
1988).
4IiL at 22678. 	If the producer does not m:lke a 	regular 	product, 	then
the regular product of a competitor is to be selected as the standard.

2," 	the 	brand 	or 	front 	label 	of 	the 	light 	product 	must 	include 	a 	caloric
comparison between the light and regular products of the same brand. s
We suggest that neither of these rules is necessary in the absence of a
showing 	that 	consumers 	are 	deceived 	by 	current 	advertising 	and 	labeling.
The new proposals are likely to add to the costs of marketing, and it is not
clear 	that 	they 	will 	offer 	sufficient 	benefits 	to 	consumers 	to 	justify 	the
costs. 	Before implementing 	these 	proposals, 	BA TF 	may 	wish 	to 	determine
through copy testing 6 or market research if any consumer misunderstandings
exist. 	Even 	if 	BATF 	believes 	that 	current 	light 	beverage 	labeling 	does
deceive 	consumers. 	market 	research 	is 	still 	desirable 	to 	tailor 	the 	remedy
proposed by BA TF to the discovered deception.
Experience of the Federal Trade Commission
The mission of the FTC is to foster a competitive marketplace, free of
unfair and deceptive 	practices. 	Our statutory standard 	is Section 5 of 	the
Federal Trade Commission Act, which prohibits "unfair or deceptive acts or
practices 	in 	or 	affecting 	commerce: 7 	As 	part 	of 	this 	mandate 	we 	have
SIlL. at 	22679. 	If 	the 	brand 	does 	not 	have a 	regular 	product, 	then 	a
competitor's regular product is to be selected for the comparison.
6Copy testing involves showing an advertisement or a label to a sample
of 	consumers 	and 	then 	asking 	the 	consumers 	how 	they 	interpret 	the
advertisement or label.
715 U.S.c. 45.
2

acquired 	substantial 	experience 	on 	issues 	relating 	to 	food 	and 	beverage
advertising and labeling. 8
Prior FTC Staff Comments before BATF
In 	offering 	its 	1986 	proposals, BATF stated 	that "[t]hese 	proposals, 	if
adopted, will 	provide a concise meaning to 'light' (lite). 	This, in turn, will
provide industry with guidelines on the use of these terms and will minimize
consumer confusion in this complex area."g
In 	its 	1986 	com men t, 	the 	FTC 	staff 	noted 	tha t 	terms 	often 	ha ve
multiple 	meanings 	(such 	as 	a 	light 	color 	as 	opposed 	to 	lower 	in 	calories)
which 	depend 	upon 	context, and 	yet, 	in 	many 	cases 	little 	or 	no 	consumer
confusion 	has 	resulted. 	Absent 	such 	confusion, 	regulatory 	standards 	are
8The 	FTC staff 	has 	filed 	numerous 	comments 	before 	federal 	agencies
concerning standards and disclosures in the advertising and labeling of food
products. 	ill the Comments of the Staff of the Bureau of Economics of the
Federal 	Trade 	Commission 	before 	the 	U.S. 	Department 	of 	Agriculture,
Labeling of Meat Food Products. Under Certain Circumstances, That Contain
Mechanicallv 	Separated 	(Species), 	Docket 	No. 	86-049P, 	November 	8, 	1988;
Comments 	of 	the 	Federal 	Trade 	Commission's 	Bureaus 	of 	Competition,
. Consumer 	Protection 	and 	Economics 	before 	the 	Food 	and 	Drug
Administration, Proposal to Amend the Rules Governing Health Messages on
Food Labels and Labeling, Docket No. 85N-0061, December 3, 1987; Comments
of 	the 	Federal 	Trade 	Commission's 	Bureaus 	of 	Economics, 	Consumer
Protection, and 	Competition 	before the 	Food Safety and 	Inspection Service,
U.S. 	Department 	of 	Agricult1.;lre, 	Standards 	for 	Frankfurters 	and 	Similar
Cooked 	Sausages, 	Docket 	No. 	85-009F, 	June 	22, 	1987; 	Comments 	of 	the
Federal Trade Commission's Bureaus of Consumer Protection, Economics, and
Competition before the Bureau of Alcohol, Tobacco and Firearms, Use of the
Terms "Cereal Beverage," "Near Beer," "Alcohol-Free," and "Non-Alcoholic" In
the Labeling and Advertising of Malt Beverages, Notice No. 610, January 28,
1987; 	and 	Comments 	of 	the 	Federal 	Trade 	Commission's 	Bureaus 	of
Competition, 	Consumer 	Protection 	and 	Economics 	before 	the 	Burea u 	of
Alcohol, 	Tobacco 	and 	Firearms, 	Use 	of 	the 	Word 	"Light" 	(Lite) 	in 	the
Labeling 	ard 	Advertising 	of 	Wine. Distilled 	Spirits. 	and 	Malt 	Beverages,
• Notice No. 600, December 31, 1986.
951 Fed. Reg. at 28836.
3

often 	not 	necessary. 	The 	FTC 	staff 	also 	noted 	that 	manufacturers 	of
products 	with 	desirable 	characteristics 	(such 	as 	reduced 	caloric 	content)
often have a sufficient incentive to provide voluntarily information that is
valued 	by 	consumers. lO 	For 	these 	reasons, 	the 	FTC 	staff 	suggested 	tha t
appropriate 	government 	intervention 	generally 	requires 	a 	showing 	that
deception 	has 	occurred. ll 	In 	addition, 	where 	government 	action 	is
appropriate, 	remedies should 	be designed 	to ensure 	that 	consumers 	benefit.
This also generally requires information about the nature of the deceptive or
misleading impressions. 12
l°lt 	is 	not 	difficult 	to 	find 	examples 	of 	the 	profitability 	of 	such
voluntary disclosure. 	One may cite the proliferation of lower calorie foods
and 	beverages. 	The 	development 	of 	the 	"light" 	label 	for 	malt 	and 	other
alcoholic 	beverages 	is 	itself 	an 	example 	of 	how 	desirable 	product
characteristics can be communicated through voluntary disclosure.
llIn some cases, there are legitimate reasons for 	the government to act
without 	such evict:nce. 	For example, 	potential 	threats 	to 	consumer 	health
may 	warrant 	immediate 	regulatory 	action. 	In 	these 	cases, 	however, 	the
regulations should clearly 	protect the health of consumers. 	The new BA TF
proposals do not meet this condition. 	As noted below, these regulations may
not 	provide 	adequate 	protection 	to 	consumers 	if 	deception 	exists 	in 	this
market. 	Moreover, evidence of any deception or confusion should be readi! y
obtainable through market research or copy testing. 	BA TF staff has stated
to us that it still possesses no such evidence, nor is any contained in any of
the comments received by BA TF in response to its 1986 proposals.
12The FTC staff applied 	the above principles in 	its evaluation of 	the
1986 	BA TF 	proposals. 	We 	urged 	BA TF 	not 	to 	implemen' 	its 	proposed
mandatory calorie disclosure for "light" products in the absence of evidence
indicating its necessity. 	The staff also noted that BATF had not shown that
this 	requirement 	would 	be' more 	effective 	than 	current 	practices 	in
communicating 	calorie 	information 	to 	consumers. 	In 	the 	absence 	of 	any
indication of consumer deception, the FTC staff opposed 	the elimination of
"light wine" as a distinct product category denoting lower alcoholic content.
The FTC staff supported BA TF's decision not to require caloric labeling for
all alcoholic beverages. 	BATF also asked for comment on the desirability of
both a maximum threshold level of calories for 	products bearing the "light"
designation 	as 	well 	as 	a 	maximum 	caloric 	content 	for 	a 	light 	product
relative 	to 	its 	regular 	product. 	lt 	did 	not 	at 	that 	time 	propose
• implementation 	of 	either 	standard. 	The 	FTC 	staff 	suggested 	that 	both
standards would be unnecessary and costly, 	The present comment reiterates
our position in light of the two specific proposals now being considered t~.
4

BATF's Current Proposals
BA TF states the rationale for its new proposals in the following terms:
"Since 	A TF 	determined 	in 	Notice 	No. 	600 	that 	an 	upper 	limit 	on 	caloric
content 	is 	unnecessary. 	a 	definite 	fractional 	standard 	on 	caloric 	content
should 	be 	considered 	to 	prevent 	any 	misleading 	impressions 	that 	may 	be
conveyed 	by 	the 	use 	or 	that 	term."IS 	BATF staff 	have 	informed 	us 	that
they are concerned about possible deception in the present and, even if none
currently exists, possible deception in the future.
BA TF 	may 	wish 	to 	determine 	by 	copy 	testing 	whether 	consumer
misperceptions 	exist 	before 	imposing 	further 	restrictions on 	the 	use 	of 	the
term 	"light" 	(lite). 	This 	will 	not 	only 	ensure 	against 	unnecessary
regulation, 	but 	will 	also 	ensure 	that 	necessary 	regulation 	is 	effective. 	At
prt~ent, the 	ex.istence 	of 	consumer 	deception 	has 	not 	been 	established 	by
empirical research.
Mandating a Fractional Caloric Standard (Alternative No. J)
Alternative NO.1 	requires each light beverage to have 20 percent fewer
calories 	than 	its 	regular counterpart. 	In 	:~s 1986 comment, 	the 	FTC staff
articulated concerns about possible manufacturing distortions from imposing a
maximum level of calories for any "light" product. 14 	V:hile Alternative 	I 	is
BATF.
13 53 Fed. Reg. at 22679.
1-4S ee 1986 Comment at 13.
5

somewhat different from the earlier proposal because it proposes a separate
threshold 	for 	each 	product, 	Alternative 	No. 	1 nevertheless 	fails 	to 	remove
the risk of manufacturing distortions.
For example, a 	producer of a 	regular 	beverage 	with 	a 	below average
caloric content may be deterred from offering a light product, even though
the 	light 	counterpart 	would 	have 	fewer 	calories 	than 	most 	of 	the 	existing
light 	brands. 	Because 	the 	regular 	product 	has 	relatively 	few 	calories, 	its
producer would be penalized with a relatively more demanding standard in
order to manufacture a light counterpart.
Alternative 	1 may 	also 	risk 	manufacturing 	distortions 	by 	firms 	that
produce 	both 	a 	regular 	and 	a 	light 	product. 	For 	example, 	firms 	may 	be
induced 	to increase the calories of their 	regular products 	in order 	to meet
the "20 percent less" standard for their light products.
BATF believes that alcoholic beverage consumers have come to associate
the term "light" with a 	product that is lower in calories than 	a comparable
"regular" 	product. IS 	However, 	"comparable" 	appears 	ambiguous 	In 	this
general context. 	It may mean the regular product of each manufacturer in
relation to its own light product. 	It may mean the average regular product,
Dr simply the brand with the highest calories. 	It is difficult to kn0w what
the 	prevalent 	meaning 	of 	"light" 	actually 	is 	among 	alcoholic 	beverage
consumers without having und'ertaken empirical research. 	Indeed, there may
not 	be 	a 	prevalent 	meaning 	at 	all; 	rather, 	the 	understanding 	of 	the
designation 	may 	vary 	markedly 	with 	the 	context. 16 	Thus, contrary 	to 	the
1S53 Fed. Reg. at 22679.
16 Moreover, 	the meanin[ of 	the 	word "light" in
market may undc;go shifts in meaning over time, and
determining in advance how its meaning will evolve.
6
the alcoholic 	beverage
there is no method for
An appropriate policy

intention of BATF, it is possible that any rule that restricts the use of the
word "light" may mislead rather than inform most consumers.
For 	example, 	in 	some 	segments 	of 	the 	alcoholic 	beverage 	market, 	a
significant 	number 	of 	consumers 	may 	not 	even 	associate 	the 	term 	"light"
with caloric content. 	Rather, the connotation in this context may refer to
low 	alcoholic 	content 	or 	a 	clearer 	color. 	Therefore, 	Alternative 	No. 	1
appears 	to 	be 	especially 	costly 	for 	wine 	(where 	the 	term 	"light" 	has 	been
used 	to indicate low alcoholic content) and beer (where "light" has referred
to 	color). 	As 	BATF 	notes, 	"[t]o 	prohibit 	products 	which 	are 	currently
Labelled as 'light' from bearing such a designation could result in substantial
consumer confusion."17
In sum, we suggest that BA TF undertake consumer perception testing to
determine what consumer understanding of "light" is in 	its various contexts.
Only 	then 	can 	BATF 	evaluate 	whether 	deception 	exists. 	If 	it 	does, 	then
BATF should also consider 	testing various 	remedies to find 	the 	best 	means
of curing the deception.
Mandated Ca'Qric Comparisons (AlternatiH No.2)
As 	an 	alterna ti ve 	to 	esta blishing 	a 	maximu m 	(rela ti ve 	to 	a 	si m: '1 r
regular product) caloric standard for light alcoholic beverages, BA TF is also
considering a mandated caloric comparison on the product's brand label. 	The
concerns 	in 	our 	1986 comm~:nt about 	mandated 	information 	disclosure 	also
for one period may be highly inappropriate for another.
17Fed. Reg, at 22679.
7

apply 	to 	Alternative 	No. 	2. 18 	Moreover, 	BATF 	has 	already 	decided 	that
caloric disclosures on regular alcoholic products are unnecessary.19
In addition to the relabeling costs to manufacturers, Alternative NO.2
may impose unnecessary costs that impede the flow of information. 	Products
often do not have a single quality dimension, and mandated disclosure may
provide information that is not deemed important by consumers. 	This could
reduce the space available for information that consumers do value.
Moreover, if some type of mandated disclosure is necessary on a light
product, 	it 	is 	unclear 	whether 	the 	appropriate 	disclosure 	is 	that 	of 	the
regular 	product's 	calories. 	Depending 	on 	the 	nature 	of 	the 	deception, 	a
disclosure 	of 	the 	average 	calories 	for 	all 	regular 	products 	may 	be 	more
useful. 	Again, we suggest market research to determine the appropriateness
of the proposed remedy. 	If market research 	indicates a 	problem, it should
also indicate the appropriate remedy for this problem.
Conclusion
BATF may be better able to increase consumer information and promote
competition 	by 	allowing 	all 	advertising 	that 	is 	neither 	false 	nor 	deceptive.
We 	suggest 	that 	BATF 	refrain 	from 	adopting 	either 	one 	of 	these 	two
proposals, 	unless 	consumer 	testing 	first 	indicates 	their 	desirability. 	This
research is needed not only to determine whether a problem exists, but also
to discover the nature of the problem. 	Without such empirical foundations,
18See 1986 Comment at 6-10.
19 51 Fed. Reg. at 28836. 	BATF staff has informed us that all alcoholic
beverages currently disclose 	their 	own 	calorie content on 	the 	label 	if 	they
are marketed as being reduced or lower in calories.
8

consumer protection policies may be ineffective or even counterproductive.
9