JANET M. SCALESE Director,

Advertising, Labeling and Formulation Division

TTB Formula and Label Activities

Agenda

TTB Overview

State of the Industry

Formulas and Labeling

Rulemaking

Guidance

Contacts and Resources

TTB Overview

Bureau within the Department of the Treasury

Created in 2003 when the alcohol and tobacco functions were removed from ATF

Currently about 450 employees

Headquarters in Washington, DC

National Revenue Center in Cincinnati, OH

Field Offices across the country

Laboratories in MD and CA

TTB Overview

MISSION:

COLLECT the taxes on alcohol, tobacco, firearms and ammunition

PROTECT the consumer by ensuring the integrity of alcohol products

PREVENT unfair and unlawful market activity for alcohol and tobacco products.

TTB Budget History

$103,000,000 $100,798,000 $99,878,000 $94,654,000 $99,000,000 $96,000,000

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

FY 2010Enacted

FY 2011Enacted

FY 2012Enacted

FY 2013Enacted

FY 2014Enacted

FY 2015President's

BudgetAppropriation

Request

Industry Growth TTB Staffing Industry Processes Other Governmental Entity

Requirements TTB Internal Processes

What Factors Impact Processing Times?

Number of Alcohol Importers

38% increase

9,318 9,909

10,544

11,237

12,099

12,887

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Number of Distilleries

270% increase

414

492

629

727

1,168

1,501

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Number of Wineries

52% increase

6,264

6,907

7,585

8,160

8,784

9,505

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Number of Breweries

100% increase

1,844 1,932

2,106

2,369

2,960

3,704

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

TTB Staffing History

511

495

471 466

473 473

440

450

460

470

480

490

500

510

520

FY 2010On Board

FY 2011On Board

FY 2012On Board

FY 2013On Board

FY 2014Authorized

FY 2015President's Budget

Request

Industry Processes

Multiple Label Submissions For Single Products

Industry Awareness of TTB Rules and Policy Utilize the 28 allowable revisions that require no label re-

submission for existing approved COLAs

Avoid “Needs Correction”

Other Governmental Requirements

Many State Law Requirements Impact Label

Submissions

Example:

California State Law

Sonoma County Conjunctive Labeling Law

Number of Formulas Received

Returned Formulas 2013 Most common reasons formulas are returned for correction

1099

138

137

137

110

91

68

42

21

19

19

0 200 400 600 800 1000 1200

Additional information required

Discrepancy, ingredients vs. method

Does not require analysis

Requires a formula for flavor

Quantities required

FID Sheets

Requires lab analysis

Incorrect information provided

Agriculutral origin required

Details of method required

Ingredients inconsistent with class/type

Number of COLAs Received

FY 2008 to FY 2013: 5% increase FY 2012 to FY 2013: 8% decrease

133,428 124,966

132,602 145,307

152,741 140,324

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

E-filed Paper

Average Turnaround for COLAs

Avg. days to receive a response from TTB

25

15 14

27

22

30

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Returned Labels 2013 Most common reasons DS labels are sent back for correction

757

442

219

213

194

172

135

120

107

100

0 100 200 300 400 500 600 700 800

Formula

Class/Type

Image

Misleading

Address

Alcohol Content

Brand Label

Net Contents

Clarification

Government Warning

WHAT IS TTB DOING TO ADDRESS COLAS TODAY AND IN THE

FUTURE?

“STATE OF THE BUREAU”

TTB Internal Streamlining

Implemented changes in our expectations for image related issues

Eliminated the Expedite and Informal Label Review Process

Expanded the list of qualifications in order to reduce numbers of “needs correction” and rejected labels.

Updated COLA form to allow additional changes that may be made to labels without TTB approval

Established a virtual file room to process paper applications electronically

IMPROVED GUIDANCE, EDUCATION

AND TARGETED OUTREACH

AUTOMATION

MARKETPLACE REVIEWS

How May TTB Address COLAs In the Future?

Provide Current and Clear Guidance

•Review beverage alcohol labeling regulations.

•What needs to be added, deleted, changed?

Modernize and clarify

existing regulations

Provide Current and Clear Guidance

•Newsletters, Announcements, Rulings, Industry Circulars and FAQs.

Evaluate and

consolidate all

previously-issued

guidance

Create an Automated Label Approval System

Simplified COLA Approval

vs.

Traditional COLA Approval

Labels with lowest risk for noncompliance could be automatically approved

products that have a standard of identity

No claims

Higher risk labels would receive traditional review

Robust Marketplace Sampling Program

The Alcohol Beverage Sampling Program = Targeted Enforcement

Many approved labels never end up in the marketplace

TTB resources would be better spent on labels and products that are actually in the marketplace.

The ABSP takes a statistical sample of products that are in the marketplace, for compliance

Marketplace Compliance Alcohol Beverage Sampling Program

More Change Is Coming

Further Expand List of Allowable Revisions

Continued COLAs Online Enhancements

Continued Coordination Between States and Other Federal Agencies through Industry Liaison and others

Consider joint efforts to analyze Federal and State requirements to determine if they are necessary; how to align, simplify, and make for a seamless process with governmental partners

Continue to study ABSP trends to address recurrent non-compliances

What’s Next?

Continue The Dialogue Toward Solutions

Rulemaking Projects

Revisions to the DSP Reporting Requirements

Modernization of the Labeling and Advertising Regulations

Amendment to the Finished Products Records

Amendment to the Affixing Closures Regulations

Guidance Documents

TTB Ruling 2013–2 outlines TTB’s policy on the Voluntary Use of Nutrient Content Statements (Serving Facts Panels)

TTB Ruling 2014–2, Revised Interim Policy on Gluten Content Statements

Resources and Contacts

Resources

TTB Web site www.ttb.gov

Distilled Spirits Home page http://www.ttb.gov/spirits/index.shtml

Subscribe to receive the weekly TTB Newsletter http://www.ttb.gov/newsletters/ttb-news.shtml

Common Compliance and Tax Issues Found During DSP Audits http://www.ttb.gov/spirits/common_compliance_tax_issues-during-audits-ds.shtml

Resources

Distilled Spirits Beverage Alcohol Labeling Manual http://www.ttb.gov/spirits/bam.shtml

Changes that can be made to approved labels http://www.ttb.gov/labeling/allowable_revisions.shtml

Is a formula required before label approval http://www.ttb.gov/tutorials/ic2007-4_help.shtml

TTB Contacts

Permits, Reports and Taxes

TTB National Revenue Center (Cincinnati, OH)

Toll Free: 877-882-3277

TTBInternetQuestions@ttb.gov

Labels, Formulas and Advertising

Advertising, Labeling and Formulation Division

Toll Free: 866-927-2533

ALFD@ttb.gov

Janet.Scalese@ttb.gov

240-264-1589

Thank you!