A recent trend in the beer industry has seen large brewers purchasing overseas brands and then shifting production domestically to the U.S. to lower expenses. These companies seek to retain the price premium associated with the beer’s former place of production by maintaining the brand’s advertising, labeling and marketing efforts. If the old Special K ad campaign promised to “Keep the muscle, lose the fat,” these brewers’ motto might be “Keep the cultural authenticity, lose the transportation and logistics costs.”

But when a company continues to market a beer brand as if it were still brewed overseas, it must navigate the perils of state consumer protection and false advertising laws. Companies may run into trouble when their origin-related branding goes too far and morphs from puffery[1] to an actual representation of fact regarding the place of production. Recently, several class actions have sprung up alleging consumers were deceived as to where the beer was produced. These complaints are uniformly met with a motion to dismiss; in the opinions there are branding insights that all marketers, not just beer makers, can use.

Geographic Origin-Related Branding Must Be Balanced by Valid Disclaimer

Nelson v. MillerCoors LLC (E.D.N.Y., 2017), involved the labeling and advertising of Fosters, an Australian brand dating back to 1887. Fosters began exporting to the U.S. in 1972. Since 2012, however, all Fosters beer sold in the U.S. has been brewed domestically by MillerCoors in Fort Worth, Texas. The key elements of the marketing campaign were its brand slogan, “Foster’s: Australian for Beer,” the “How to Speak Australian” TV ads using Australian accents and scenery, and its website extolling the benefits of Australian hops and other references to Australian culture. The packaging contains multiple references to Australian culture and symbols, including an image of a red kangaroo, and the Southern Cross constellation, which is a symbol found on the Australian flag.

The plaintiffs claimed that Fosters’ overall marketing campaign misled consumers to believe that Fosters was brewed in Australia. They alleged violations of New York’s consumer protection and false advertising laws. According to MillerCoors, however, none of the symbols or advertising amounted to any express claim that the beer was brewed in or imported from Australia. In fact, each Foster’s Beer can included a disclaimer as to the place of production: “BREWED AND PACKAGED UNDER THE SUPERVISION OF FOSTER’S AUSTRALIA LTD, MELBOURNE, AUSTRALIA BY OIL CAN BREWERIES, ALBANY GA AND FORT WORTH TX”.[2]

The district court was incredulous that a reasonably astute consumer could be misled in light of this disclaimer: “The idea that consumers purchase products based on certain of a label’s statements or images (e.g., pictures of a constellation and a kangaroo) but are blind to others (e.g., a statement in plain English of where Foster’s Beer is brewed) in close proximity on that label strains credibility.”[3] The court rejected the plaintiffs’ argument that the disclaimer was inadequate in light of the surrounding symbols and general marketing campaign: the “general rule” is that “disclaimers fail to cure allegedly misleading representations on the front of packaging only where the alleged misrepresentation is clearly stated and the disclaimer is exceedingly vague or requires consumers to make inferences.”[4] That simply was not the case here. “Rather, every single representation Plaintiff pleaded reliance on, across every medium, is accompanied by language indicating the beer is brewed in the United States.” In sum, the images of a kangaroo and a constellation “and allusion to the company’s historic roots in [Australia] are eclipsed by the accurate disclosure statement.”[5] The court dismissed the complaint.

Bowring v. Sapporo U.S.A. Inc., 234 F.Supp.3d 386, 388 (E.D.N.Y., 2017), involved the Japanese brand Sapporo, which styled itself as a Japanese brand even though it had not been brewed or imported from Japan for many years. The theory in Bowring was that Sapporo was misleading consumers by labeling its beers as “imported” along with Japanese imagery — when in fact the beer was imported from Canada where it was brewed. The plaintiffs sued under New York’s consumer protection and false advertising laws. Sapporo countered that the Japanese imagery and North Star symbol were merely a tribute to the history and heritage of the company, that none of the labels included the word “Japan,” and that each label contained the following disclosure: “Imported by Sapporo U.S.A. Inc., New York, NY” followed by, “Brewed and canned [or bottled] by Sapporo Brewing Company, Guelph, Ontario, Canada.”

As in Nelson, the court held this disclaimer to be sufficient to preclude a finding that a reasonable consumer would be deceived whether the beer was brewed in Japan. Sapporo “discloses its product origin in a standalone statement” and its use of the term “imported” was truthful because it was imported — from Canada. Thus, “Sapporo’s marketing and slogans allude to the company’s actual Japanese heritage and are clearly qualified by the disclaimer.”[6] The court dismissed the complaint.

Disclaimer Must Be Conveyed Before the Consumer Buys the Product

Marty v. Anheuser-Busch Companies LLC, 43 F.Supp.3d 1333, 1336 (S.D.Fla. 2014), involved Beck’s beer, which had been brewed in Germany for 225 years until A-B started brewing it in St. Louis. The plaintiffs contended that A-B marketed Becks in ways that misled consumers into believing that Becks was still brewed in Germany. The plaintiffs specifically challenged the labeling on Beck’s six- and 12-packs, which stated that Beck’s beer “Originated in Germany” with “German Quality” while “Brewed Under the German Purity Law of 1516”.[7] A-B countered that its disclaimers prevented any such mistaken belief. The disclaimers were included on the labels of the actual bottles: “Product of USA, Brauerei Beck & Co., St. Louis, MO.” Further, on the bottom of the six-pack cartons displayed the words, “BRAUERIE BECK & CO. BECK’S (c) ST. LOUIS MO.

The court held these disclaimers were insufficient in light of the other German-related branding efforts. First, the disclaimers were included not on the face of the six- and 12-pack cartons, but only on the bottles. This was no help to A-B because “the ‘Product of USA’ disclaimer was blocked by the carton. A consumer would have to either open the cartons of 12-pack bottles and 12-pack cans or lift the bottle from the six-pack carton in order to see the “Product of USA” disclaimer. But this is more effort than a reasonable consumer is required to make.[8] So too with the disclaimer on the bottom of the carton: A reasonable consumer is not required to flip the product upside down before he or she buys it.

Second, the disclaimer font on the labels of the beer bottles (seen only after the consumer has already purchased the product) were too small and blended in too much with the background. Thus, the “print on the label is ambiguous and difficult, if not impossible, to read.”[9]

The court went on to find the representation regarding the “German Purity Act” was misleading as was the “German Quality” tagline. Moreover, the reference to the entity “Brauerei Beck & Co.” was “pure fiction” because no such company existed. This was “just another example of [A-B’s] deceptive tactics used to maintain the brand identity of Beck’s as a German beer.”[10]

In Broomfield v. Craft Brew Alliance Inc., at *1 (N.D.Calif., Sept. 1, 2017), the Kona Brewing Company was a craft brewer on the sunny coast of the Big Island of Hawaii in 1994. In 2010, it was acquired by the publicly-traded CBA. All of Kona beers sold outside of Hawaii are brewed in Oregon, Washington, New Hampshire or Tennessee. A plaintiff class of consumers sued CBA alleging that the packaging on six- and 12-packs led consumers to believe the beer was brewed in Hawaii. The district court aptly summarized the issue:

Hawaii is a state as well as a state of mind. When adults want to escape the mainland, they can go to their local grocery store, purchase a package of Kona Brewing Company beer, and feel as though they are transported to the beaches of Hawaii. This case is about the importance of where that beer actually is brewed.

Id. at *1.

The court analyzed the packaging and construed the pictures of surfboards, palm trees, waves and the phrase “Liquid Aloha” to be mere puffery, and if there were nothing else, plaintiffs would lose.[11] But three specific features of the packaging were problematic from the perspective: (1) the only listed address on the outer packaging is “75-5629 Kuakini Highway, Kailua-Kona, Hawaii, 96740”; (2) the image of the map of Hawaii identifies Kona Brewing Company’s brewery on the Big Island; and (3) the statement “[w]e invite you to visit our brewery and pubs whenever you are in Hawaii.”

These, the court held, were “specific and measurable representations of fact that could deceive a reasonable consumer into believing that the six- and twelve-packs of Kona beer were brewed in Hawaii.”[12]

The court also rejected CBA’s disclaimer argument. There was no disclaimer on the cartons, which was all that plaintiffs were attacking. Moreover, the disclaimer on the bottle itself was ambiguous: Each bottle and can of Kona beer stated each location of where CBA brewed Kona. The problem was, the original Kona location was listed among the mainland breweries, thereby totally undermining any disclosure that the beer was not actually brewed in Hawaii.[13]

General, Vague Language Allows Marketers to Puff with No Need for Disclaimer

Dumas v. Diageo PLC, at *1 (S.D.Cal., 2016). In 1993 the predecessor to Diageo bought D&G, the Jamaican brewer of Red Stripe beer. In 2012, Diageo moved production of Red Stripe from Jamaica to Latrobe, Pennsylvania. The plaintiff consumers alleged the statements on Red Stripe six-packs and bottles lead consumers to believe the beer was brewed in Jamaica. The packing contained the language “Jamaican Style Lager” and “The Taste of Jamaica.” The court held that this language did not create confusion as to source: “[A] reasonable consumer would not be misled by the visible packaging into believing that Red Stripe is brewed in Jamaica with Jamaican ingredients. The mere fact that the word “Jamaica” and “Jamaican” appear on the packaging is not sufficient to support a conclusion that consumers would be confused regarding the origin and ingredients of the beer.” Id. at *3.

Jamaican style, the court held, inherently meant the product is not from Jamaica, but rather “reminiscent or imitative of” it. The court further explained the phrase, “The Taste of Jamaica,” is “vague and meaningless phrase — who can say what Jamaica “tastes” like?” In total, the challenged representations were meant to do nothing more than “evokes the spirit or feeling of Jamaica,” and could not be construed to represent the beer was actually brewed in Jamaica. Id. at *4.

Finally, the court held Diageo was under no special duty to alert those hypothetical consumers who had previously bought Red Stripe when it was brewed in Jamaica, and still believed that to be the case.

Conclusion

With sufficient disclaimers that are visible to consumers before they purchase the product, beer producers may continue to indulge in that most classic past time of beer marketers — puffery.

For further information about this or related matters, please contact Christian P. Foote at 650-342-9600 or cfoote@carr-mcclellan.com.