The state of play: alcoholic industry's self-regulatory proposals

3 July 2018



The European Commission is currently considering the alcoholic beverages industry’s self-regulatory proposals, so what are the proposals, how do they differ between sectors and what about the Soft Drinks Industry Levy?


The EU regulation on the provision of label information to consumers became applicable in December 2014. It includes the obligation to provide a list of ingredients and nutrition declaration. Alcoholic beverages containing more than 1.2% by volume of alcohol were exempted from the mandatory listing of ingredients and nutrition declaration. Nonetheless, the regulation requested the Commission adopt a report addressing whether alcoholic beverages should be covered by the requirement and the reasons justifying exemptions. On 13 March 2017 the Commission adopted a report to the European Parliament and the Council regarding the mandatory labelling of the list of ingredients and the nutrition declaration of alcoholic beverages. This report concluded that a further exemption could not be justified and gave the EU alcohol industry a year to come up with a self-regulatory proposal covering all sectors.

The alcohol industry’s labelling proposal

On 12 March 2018, the last day of their deadline, the EU alcoholic beverages industry presented its joint selfregulatory proposal on nutrition information and ingredients listing to Vytenis Andriukaitis, the EU health and food safety commissioner,. The joint proposal outlines general principles of the labelling schemes shared by the alcoholic beverages industry. In addition to the joint proposal, the different sectors – wine, spirits, beer and cider – had developed their own implementation plans for their industries. It is unclear whether the commission will accept the labelling schemes proposed or when it will initiate a legislative process.

In the joint proposal, the four sectors commit to provide nutritional information and the list of ingredients off- and/or on-label, either by a web link, a QR code, a barcode, or another smart technology system. The individual sectors will report to the commission on the roll-out of their sector-specific implementation plans by March 2020, while a steering group made up of industry representatives will report on the implementation of the joint commitments by March 2021. It remains to be seen whether the EU will be able to expeditiously move forward with an EU-wide labelling law as the current European commission’s term of office ends in October 2019. Typically, as the term nears its end, there is a flurry of legislative activity directed towards promulgating laws that are further along the legislative process than this labelling proposal.

Agreeing on labelling

The alcoholic beverage industry faced significant challenges to develop a common regulatory framework for nutrition information and ingredient labelling across different sectors and products, and ultimately decided to take a different approach. Disagreements included whether to label per 100ml or per serving, whether to label the entire nutritional declaration or the energy value alone and whether to label on or off the product. These proved impossible to resolve in the joint proposal. Labelling per 100ml was particularly divisive between the spirits and beer industry, as the spirits industry protested that this unit of measure would represent three standard servings, while a standard glass of beer contains 250ml. The wine industry had concerns about the ingredients listing because the composition of wine changes each year due to climatological conditions. Yearly updates of wine labels would prove to be costly for a sector that is mainly composed of small and medium-sized enterprises.

Wine

In its annex on labelling, the wine industry proposed to limit the nutrition information to the energy value. It also proposed to use symbols such as the international symbol for energy – ‘E’ – in order to simplify the label and translation. Finally, it proposed to use an average energy value of a particular wine or generally established and accepted data made available in a harmonised database for the different wine categories.

The EU’s Single Common Market Organisation regulation sets out a limited list of permitted oenological practices that wine producers may use. It divides the EU into different climatological wine-growing zones and regulates enrichment and de-acidification processes. The wine industry contends that in order to provide information to consumers, several specificities must be considered, such as the characteristics of the harvest changing from year to year, wine composition changing as it ages and the wine legislation foresees the addition of natural substances during the wine-making process. Under the FIC regulation, the indication of food additives or enzymes used as processing aids are not required on the label.

The EU wine industry intends to include reference values for non-EU wines in its database of generally established and accepted data. The FIC regulation covers alcoholic beverages, but does not differentiate between the different sectors. The wine industry would like to see its self-regulatory proposal incorporated into the existing EU wine legislation in the form of an implementing act. However, the Single CMO falls within the competence of the European Commission’s directorate-general for agriculture while the directorategeneral for health and food safety has competence over the FIC regulation. In any case, the EU wine industry favours the timely adoption of EU-harmonised rules to ensure legal certainty and to avoid a legal vacuum where member states would be able to launch national initiatives, such as the Irish Alcohol Bill. The alcoholic beverage industry is united in supporting the EU’s single market and keen to avoid patchwork legislation by the member states.

Proposed timeline of events

The wine industries proposed timeline for future work has three key dates:
March 2019: the Wine in Moderation website will be updated to provide consumers with relevant wine nutrition and a breakdown of ingredients information.
March 2021: the first revision of the Wine in Moderation website to enhance the accessibility and clarity of the information provided.
March 2021: the development and implementation of systems linking the bottle to the online communication platforms.

Spirits

The EU spirits sector is asking the European Commission to allow a more prominent place on the label for the energy value per serving size, as opposed to per 100ml. The annex explains that the alcohol content of a standard 30ml spirits serving is much the same as for a 100ml glass of wine and a 250ml glass of beer. With regards to the list of ingredients, the EU spirits sector will develop a template ingredients list for each category defined in the EU’s spirit drinks regulation. The sector is working closely with the European Travel Retail Confederation regarding the development of a pilot project to make multilingual product information easily accessible to consumers by scanning the barcode on the packaging.

Beer

In March 2015, the EU beer industry announced its commitment to progressively implementing the FIC provisions on nutrition information and ingredients listing. It will support implementation through the development and dissemination of guidance tools on regulatory requirements and a tool kit for the calculation of nutritional values.

Cider

The cider industry is revising its existing labelling guidelines. By July 2018, it will provide technical information for the calculation of energy values and examples of the format for providing food information to consumers.

Next steps

The European Commission is now analysing the EU alcohol industry’s selfregulatory proposal. It is still unclear what the Commission’s reaction is, if The Industry accepts it and what it would do to give it legal force. If it is not happy with the proposal, the Commission may decide to initiate an impact assessment and put forward an EU legislative proposal to amend the FIC regulation. However, under this scenario, it is very unlikely that anything would happen at EU-level before 2020, as a new Commission will decide on priorities when it takes office in November 2019. The wine industry is concerned that the lack of EU-harmonised legislation may inspire certain member states to move forward to adopt national rules, resulting in a proliferation of different schemes, as is now the case for country of origin labelling.

The Soft Drinks Industry Levy

The Soft Drinks Industry Levy came into effect in the UK on 6 April 2018 following its introduction in Part 2 of the Finance Act 2017. It represents the first tax on drink containing high levels of sugar in the country. The tax forms part of renewed efforts by The Government to nudge consumers towards healthier drink choices in an effort to reduce obesity and diabetes in the UK.

The levy imposes a charge on packagers and importers of soft drinks that contain added sugar and have a sugar content of more than 5g per 100ml, with a higher rate levy applied to soft drinks containing more than 8g of sugar per 100ml. For soft drinks falling within the scope of the levy, those satisfying the higher sugar threshold will be subject to a levy rate of £0.24 per litre and those falling beneath the higher sugar threshold will be subject to a levy rate of £0.18 per litre.

The Sugar Content Condition

The levy applies to packagers and importers of drinks that meet the Sugar Content Condition. A drink will satisfy the Sugar Content Condition, if it contains:
a. added sugar ingredients – broadly, the addition of any calorific monosaccharides or di-saccharides other than fruit or vegetable juice.
b. at least 5g of sugars per 100ml.

Chargeable events

A charge will only arise on the occurrence of a chargeable event. Part 2 of FA 2017 sets the scope for two possible chargeable events, being:
a. where chargeable soft drinks are packaged in the UK, on the removal of the chargeable soft drinks from the packaging premises (the packaging event).
b. where chargeable soft drinks have been imported into the UK, on first receipt of the chargeable soft drinks by the first person carrying on a business involving the sale, be it wholesale or retail, of chargeable soft drinks (the first receipt).

The final word

Where the levy applies following a packaging event, the packager will be liable for it. Similarly, where the levy applies following first receipt by a person carrying on a business involving the sale of soft drinks, it will be the liability of the first person to have received the soft drinks.

Part 2 of the FA 2017 provides an exemption for the majority of small producers. However, the scope of this exemption is limited specifically to soft drinks produced by manufacturers producing less than 1 million litres of chargeable soft drinks annually.

The Soft Drinks Industry Levy is set to place a charge on packagers and importers of soft drinks that contain added sugar.


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