Key Takeaways | Alcohol Regulatory Developments in Enforcement, Trade Practices, and Product Claims

The alcoholic beverage industry continues to face heightened scrutiny across federal and state regulatory channels, with enforcement priorities spanning trade practices, labeling and advertising claims, and the conduct of companies and employees during government investigations. Recent activity, including the Southern Glazer’s resolution announced by Department of Justice and the Alcohol and Tobacco Tax and Trade Bureau, underscores the importance of understanding both civil regulatory exposure and the potential criminal dimensions of alcohol industry enforcement. At the same time, “better-for-you” product positioning remains an area of focus as brands seek to promote positive product attributes while navigating limits on nutritional, wellness, and health-related claims. 

Members of McDermott Will & Schulte’s cross-practice team provided a quarterly update on the enforcement and regulatory developments shaping the alcoholic beverage industry.

Top takeaways included:

1. Criminal enforcement remains a major alcohol industry risk. A DOJ-led grand jury investigation involving the Alcohol and Tobacco Tax and Trade Bureau (TTB) and Internal Revenue Service Criminal Investigation focuses on alleged improper trade practices, commercial bribery, and falsification of business records. Public filings indicate the investigation began in 2018 or 2019, and federal agents raided Southern Glazer’s offices in October 2022. The government’s theory involves alleged prepaid gift cards, luxury items and travel provided to alcohol buyers to influence purchasing decisions, with related vendor invoices, supplier bill-backs, and records that allegedly did not accurately describe the underlying expenses.
2. The Southern Glazer’s resolution underscores the cost of enforcement exposure. Southern Glazer’s entered into a non-prosecution agreement that included a $12.5 million fine, cooperation obligations, a detailed statement of facts, and compliance enhancements. The government cited compliance improvements made in 2023 as part of the basis for resolving the matter without criminal charges against the company. The broader criminal investigation remains ongoing, with trial activity expected in 2027.  
3. Compliance programs should focus on vendors, records, and reporting channels. The Southern Glazer’s compliance agreement highlights senior management commitment, written trade practice policies, risk-based reviews, training, monitoring, internal reporting, and discipline. Key controls include vendor onboarding, vendor reviews, bill-back and accounts payable audits, whistleblower processes, record preservation, and reciprocal compliance commitments with business partners. Alcohol companies should also scrutinize third-party conduct because companies cannot do indirectly what they cannot do directly. 
4. Employee training should address government contacts before they happen. Current and former employees may be contacted by federal agents at home or elsewhere. Training should make clear that employees may speak with investigators but are not required to do so, must tell the truth if they choose to speak, and may request counsel. Companies should also prepare search warrant response protocols before any enforcement event occurs.   
5. Health-related alcohol claims remain highly restricted. TTB remains the primary agency for alcohol labeling and advertising, while FDA has a role in assessing whether particular ingredients are healthy. The TTB-FDA memorandum of understanding was last updated effective June 2025. TTB continues to reject health-related alcohol claims involving electrolytes, mineral water, vitamins, replenishment or hydration, even where ingredients may be truthfully listed.