Where’s This Beer Really From? Lessons on Deceptive Packaging and Labels from AB InBev Litigation
By Douglas R. Luther on April 25, 2016
Could your beer label cost you a million dollars? In the last few years, Anheuser-Busch InBev (“AB InBev”) has been hit by class action lawsuits alleging that it deceived consumers as to where its beer is brewed. In October 2015, AB InBev agreed to a $20 million dollar settlement of a class-action lawsuit regarding Beck’s beer. Earlier in the year, AB InBev finalized settlement of a similar lawsuit regarding Kirin beer. In both lawsuits, consumers claimed they were deceived as to the beer’s origin.
Beck’s, German Beer but Not Brewed in Germany
In the Beck’s lawsuit, consumers of Beck’s beer alleged that they had been deceived that Beck’s, a historically German beer, is manufactured and imported from Germany. The parties settled after the allegations survived a motion to dismiss. According to the plaintiffs, consumers purchased the beer because they believed they were purchasing German beer, imported from Germany, brewed using German requirements and with German ingredients when in fact they were purchasing beer brewed in St. Louis, Missouri made with American ingredients. The basis for this claim was the beer’s label and packaging. According to the allegations, the Beck’s beer label stated “Originated in Germany” with “Germany Quality” while “Brewed Under the German Purity Law of 1516.”
This wasn’t all the label stated. According to AB InBev, it also included the statement “Product of USA, Brauerei Beck & Co., St. Louis, MO”. Furthermore, the bottom of the beer carton stated the words “BRAUEREI BECK & CO., BECK’S © BEER, ST LOUIS, MO.” AB InBev argued that these statements prevented any reasonable consumer from possibly being deceived. However, the court found otherwise. It noted that these disclaimers were in small print, easily obscured because of a shiny background and generally difficult to read. The problems for AB InBev didn’t end there. The court noted that the disclaimer was not visible until the consumer had emptied the cartons of twelve-pack bottles and twelve-pack cans or lifted the bottles from the carton. And once the consumer finally found this disclaimer, the court questioned whether these disclaimers would lead a consumer to believe the beer is brewed in St. Louis or whether St. Louis was just the place of importation or bottling.
With its disclaimer having been pushed aside, AB InBev argued that the statements “Germany Quality” and “Brewed Under the German Purity Law of 1516” were mere puffery. Puffery is the term often used to express that a statement was just an exaggerated opinion with regard to a product and was not supposed to be taken literally. AB InBev argued that the phrases as such did not denote the place of production or source of ingredients. However, the court noted that these representations could not be viewed in isolation and that they must be considered in the context of the packaging as a whole. The court held that such statements may mislead a reasonable consumer when viewed together with the other statements on the carton, the overall German brand identity and marketing campaign. That a consumer may believe they were factual representations.
The court considered the label and packaging in its entirety as well as how the beer was marketed. While the Court perhaps understood that maybe “German Quality” on its own was mere puffery, when viewed in the context of the brand, label and packaging, it certainly might lead consumers to think this was a beer imported from Germany and not one from Missouri. Thus, the context here worked to AB InBev’s detriment.
Kirin, a Dragon and the Ichiban Shibori Process
In the Kirin litigation , the consumers similarly alleged that AB InBev deceived consumers into thinking that Kirin beer is imported from Japan, when in fact it is brewed in the United States with American ingredients. AB InBev again responded by pointing to the disclaimer on the Kirin label: “Brewed under Kirin’s strict supervision by Anheuser-Busch, Los Angeles, CA and Williamsburg, VA.” The consumers’ rebutted this argument by pointing out that this disclaimer was not only difficult to read but was not readily apparent absent a close examination of a bottle after removing it from the packaging. As this typically would not occur until after purchase, consumers were not aware of the disclaimer until they had been harmed.
The combination of the label, packaging and marketing was also a problem with Kirin. Although the beer itself did not state “imported,” the Kirin website did. Furthermore, the Kirin package and labels prominently showed Japanese characters, a dragon and mentioned the “ichiban shibori process”. Japanese characters were included on the Kirin cartons, bottle labels and bottle caps. On this basis, the consumers alleged that they believed the Kirin beer they bought and had paid a premium for had been imported from Japan. AB InBev’s motion to dismiss the Kirin lawsuit was ultimately denied. The court relied entirely on context and the overall impression given by the label, packaging and marketing rather than any one statement.
Context Matters and So Does the Size of the Disclaimer
Where a brewery includes a proper disclaimer, context can strike the other way. Such a disclaimer or clarifying language may defeat a claim of deception, although it doesn’t necessarily cure all misleading statements. The “significance of a disclaimer depends upon factors such as font size and placement of the disclaimer as well as the relative emphasis placed on the disclaimer and the allegedly misleading statement.” Courts will weigh the disclaimer against the alleged misleading statements in deciding whether as a matter of law consumers were not deceived.
As to other food and beverage products, courts have similarly held that the entirety of the label, packaging and marketing must be examined to determine whether consumers have been misled. See e.g. Williams v. Gerber Prods., Co., 552 F.3d 934, 939 (9th Cir. 2008) (reversing the granting of a motion to dismiss where packaging indicated “fruit juice snacks” and exhibited pictures of fruit); Ackerman v. Coca-Cola Co., 2010 U.S. Dist. LEXIS 73156 (E.D.N.Y. July 21, 2010) (denying a motion to dismiss after reviewing the labeling and marketing of the beverage “vitamin water” and its purported benefits).
The lessons here are many. For one, if a brewery is including disclaimer language such as “Made in the USA” it cannot be hidden. Such language must be readily observable to the consumer. If the consumer has to hunt around for the disclaimer or pull out the magnifying glass, it will be of little value. Secondly, the statements put on the label and packaging cannot be viewed in isolation. When deciding whether a statement or phrase might mislead, the overall label, packaging and marketing campaign must be considered. For example, if “Germany Quality” had existed on its own without the other statements, “Originated in Germany” and “Brewed Under the German Purity Law of 1516” the Court may have come to a different conclusion and dismissed the claims against AB InBev.
Careful thought should be given to beer labeling, packaging and marketing to examine whether a consumer might be deceived. Breweries should analyze the overall impression a consumer would get from viewing the label and packaging, and whether that impression is in line with the facts. As the AB InBev litigation shows, a wrong impression can lead to serious financial repercussions as well as consumers possibly be misled.
This article was prepared by Douglas R. Luther (email@example.com), of the Irvine law firm of Mulcahy LLP. Mulcahy LLP is a boutique litigation firm that provides legal services to franchisors, manufacturers and other companies in the areas of antitrust, trademark, copyright, trade secret, unfair competition, franchise, and distribution laws.
Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice as individual situations will differ and should be discussed with an experienced franchise lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
 Marty v. Anheuser-Busch Cos., LLC, 43 F.Supp.3d 1333 (S.D. Fla. 2014).
 Suarez v. Anheuser-Busch Companies, LLC, Case No. 13-033620-CA-01, Circuit Court of the 11th Judicial Circuit, in and for Miami-Dade County, Florida.
 Stoltz v. Fage Dairy Processing Indus., S.A., 2015 U.S. Dist. LEXIS 126880 *46 (E.D.N.Y. Sept. 22, 2015).