Sightlines — FDA Menu Labeling Rules Could Cause Big Impact to Brewers

Nate Micklos

THE GIST
The FDA recently unveiled its menu labeling requirements for retail chain operations. In particular, chains with more than 20 locations will need to disclose the caloric values and other nutritional info of their products. This will inherently impact brewers in distribution, as the burden to provide the required info will likely fall on the breweries.

WHY IT MATTERS
For a lot of reasons. We’ll focus on two, first the brewers and second the drinkers. Brewers will be forced to conduct nutritional analyses, and that doesn’t come cheap (estimated at $635-$1000 per beer). This may not seem like a lot, but when you consider the seasonality and frequency of rotation, as well as the financial position of many smaller breweries who are ramping up their business, it could add up quickly and ultimately affect their distribution decisions. It likely won't impact the large players like Lagunitas or Sierra Nevada, and could lead to a more uniform set of tap handles featuring those who can afford the fees to stay in the game. In a more perfect (but unlikely) world, the analysis costs would get passed along to the retailers, thereby creating a level playing field for the brewers, but that still wouldn't make financial sense for rotating handles and one-off kegs.

Now let's look at the drinkers: this change brings a level of nutrition information transparency to craft beer that hasn’t previously existed. It would be easy to disregard this by saying that craft beer drinkers are enjoying a pint for reasons like the taste, ingredient quality, or local connection. But, when consumers are shown a list of beers with their associated calories, ABV, and carbs, it may sub-consciously impact their choice. It’s a classic economic theory that people’s behaviors and decisions are based on cues, and product information is one such cue. Here’s an interesting question: would demand start to shift if consumers knew that 12oz of Blue Moon (often considered a “light” beer) has 164 calories at 5.4% ABV while Guinness Draught (often considered a “heavy” beer) has 126 calories at 4.0% ABV? We know this macro example relates to a drinker with decision criteria different than most GBH readers, but the transparent information could nevertheless provide an interesting experiment in behavioral decision-making for all of us.  
— Nate Micklos