California lawsuit targets flavored malt beverages.

A lawsuit filed in California by former San Francisco City Attorney Louise Renne asks the 1st District Court of Appeal to require flavored malt beverages to be taxed and sold as distilled spirits.

Plaintiffs include the Alcohol Policy Network, the California Council on Alcohol Policy, the California Council on Alcohol Problems and the California Prevention Collaborative.

At least two California state senators have joined the activist groups in the attack on flavored malt beverages (FMBs). Migden is co-author of a bill, SB 1180, that targets advertising of alcohol products to minors. The law would lower the bar for determining when advertising encourages minors to drink. Such ads are illegal under California law.

"We're seeking to prevent manufacturers and producers of this product from purposely, illegally targeting teenagers to use these products," Sen. Migden said. "[These] Alcopops are fruity, sweet and fizzy drinks that look and taste like soda pop but have the alcohol content of beer," she added.

Flavored malt beverages have the same alcohol content as beer, 4 percent to 6 percent, but a portion of their alcohol comes from flavorings containing elements of distilled spirits. This has triggered debate in California whether the FMBs should be taxed as beer, at 20 cents per gallon, or be reclassified as distilled spirits taxable at a much higher rate--$3.30 per gallon.

Gov. Arnold Schwarzenegger last year vetoed legislation that would have ensured that flavored malt beverages continue to be taxed at the lower rate.

Federal regulators allow flavored malt beverages to be taxed as beer if more than 50 percent of their alcohol comes from brewing.

The California Department of Alcoholic Beverage Control has said it will accept the federal formula pending final action by the Legislature and courts.

State Attorney General Bill Lockyer has said that products containing any amount of distilled spirits, or flavor from distilled spirits, must be taxed as distilled spirits.

The Flavored Malt Beverage Coalition of Greens Farms, CT, an advocacy group sponsored by producers of FMBs, has come to the defense of the FMB segment. "Reclassifying flavored malt beverages as distilled spirits will not advance the goal [of reducing underage drinking]," said attorney Marc Sorini in a statement. "What it will do is raise taxes and increase the price of a legitimate product enjoyed by many adult consumers, hurt over 35,000 small retailers in the state who will no longer be able to carry these beverages, and limit consumer choice."

"Reclassifying flavored malt beverages as spirits makes no sense," Sorini added. "FMBs are beer, not spirits, and represent only 2.6% of the entire beer market. These products contain the same amount of alcohol as typical beers, and are packaged and sold alongside beer. The Federal agency that regulates alcohol conducted an exhaustive public review of FMBs over a 2-year period and created a standard for these beverages to be classified as beer. That standard guarantees that the majority of the alcohol in these products must come from beer. The only meaningful difference between FMBs and typical beers is taste, and we see no reason why adult consumers should be penalized for their preference of a flavored product over other types of beer."

The Flavored Malt Beverage Coalition includes as members City Brewing Co., Diageo North America, Inc., High Falls Brewery, Mark Anthony Brands Inc., Pernod-Ricard USA, and United States Beverage LLC.