[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Proposed Rules]
[Pages 72612-72617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33574]



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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.

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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

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(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

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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.

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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