Beverage alcohol industry pushing back against new regulatory pressure, as views shift on moderate drinking

For some 40 years, producers of liquor, wine and beer have been helped by the notion, enshrined in the dietary advice of a number of governments, that a little alcohol can provide modest coronary and other health benefits. But now, according to a new Wall Street Journal story today, that advice is shifting rapidly, as health-policy officials around the world scrutinize previous advice amid new research pointing to possible cancer risks.

WSJ detail August 23 2016“The change is pressuring the alcohol industry in some of its biggest markets, including the U.S., the U.K. and Russia,” the front-page story says. “Its response is as expensive and sprawling as the threat it perceives, including attacking anti-alcohol advocates’ research and working with governments to formulate policy. Alcohol companies are also funding their own research, including a plan by four companies to contribute tens of millions dollars toward the cost of a rigorous study.”

In Louisville, Brown-Forman could be swept up in the shifting regulatory tides. The nearly 150-year-old companies sells its flagship Jack Daniel’s and nearly 20 other brands in about 160 nations around the globe.

A review of its regulatory filings shows the company has grown increasingly concerned about changes in public views about alcohol consumption, including moderate drinking. In its 2015 annual report to the Securities and Exchange Commission, for example, it added a new passage to the business risks section that highlighted the possibility of “significant additional labeling or warning” requirements.

“Our products already raise health and safety concerns for some regulators,” the company warned investors, “and heightened requirements could be imposed. If additional or more severe requirements of this type become applicable to one or more of our major products under current or future health, environmental, or other laws or regulations, they could inhibit sales of such products.”

BenRiach scotchBut Brown-Forman’s rising concerns date to at least 2012, when it flagged the possible consequences of any new health research that could lead to heightened government scrutiny and controls. Its risk warning in that year’s report said: “If future research indicated more widespread serious health risks associated with alcohol consumption, and particularly with moderate consumption, or if for any reason the social acceptability of beverage alcohol were to decline significantly, sales of our products could decrease materially. Our sales could also suffer if governments banned or restricted advertising or promotional activities, limited hours or places of sale or consumption, or took other actions that discouraged alcohol purchase or consumption.”

That advisory appears to have been prudent, given the shifting views on moderate consumption disclosed in today’s Wall Street Journal.

Photo, inset: Brown-Forman added the BenRiach brand when it bought the BenRiach Distillery Co. in June for $405 million; it just launched 15 new whiskies. In photo, top: the company’s Sonoma-Cutrer wines.

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