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In Closely Watched Case, Tito’s Plans To Contest Lawsuit Against “Handmade” Claim

September 23, 2014

Drinks marketers are likely reevaluating their label claims in the wake of a lawsuit against Tito’s Handmade Vodka for the 1.3-million-case brand’s claim of being “Handmade.” The suit, filed September 15 in San Diego Superior Court by a California real estate broker named Gary Hoffman, aims to force Tito’s owner, Austin, Texas-based Fifth Generation Inc., to drop the term “Handmade” from its name.

“We’re taking a common sense position,” says Hoffman’s attorney John Donboli, a senior partner at San Diego-based law firm Del Mar Law Group LLP. “We don’t see how a product that sells more than 15 million bottles a year, and is made from commercially-manufactured neutral grain spirit that’s trucked into Tito’s industrial facility, can possibly be called ‘Handmade.’ Therefore, we’re seeking a label change that more accurately reflects this product’s attributes.”

Fifth Generation owner Tito Beveridge says he will vigorously contest the lawsuit. “All of our labels have gone through the approval process of the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB),” says Beveridge. “After sending a field agent to Austin to review our processes, the TTB has approved our use of ‘Handmade’ on our label. We think our pot still batch distillation process is one of the key things that differentiates us from a great majority of other vodkas. We disagree with these claims and will defend ourselves against this misguided attack.”

But some industry executives note that the regulatory climate has changed recently. In recent weeks, Templeton Rye Whiskey was forced to admit that its product is not made in Templeton, Iowa—as advertised—but is actually produced at the Indiana factory of contract producer MGP Ingredients Inc. Templeton is now facing a suit in Cook County Chancery Court, Illinois, that’s similar to the Tito’s action. And earlier this year, the U.S. Supreme Court ruled that juice brand Pom Wonderful could sue Coca-Cola over what the court called a misleading label on Coke’s Minute Maid Pomegranate Blueberry Juice product.

The disparity in the Tito’s lawsuit is reflected in the words of a leading distributor who handles Tito’s in several markets. “You never know what will happen in the California courts,” he said. “But what exactly is ‘handmade’ anyway? It’s not easy to define, as hands obviously are involved throughout the process.”

Michael Binstein, owner of 30-store Chicago retail chain Binny’s Beverage Depot, sees the Tito’s “Handmade” claim as a case of “marketing fingerprints, not fraud.” But he thinks Fifth Generation should act before giving the court a chance to do so.

“If I were Tito, I would just take ‘Handmade’ off the label, because I don’t think that’s at the heart of its appeal,” says Binstein, who adds that the brand is Binny’s fastest-growing vodka. “Tito’s is waging a fun, grass-roots marketing campaign and under-pricing the competition while making domestic vodka cool and turning the whole vodka category upside down.”

Tito’s was originally called Tito’s Texas Handmade Vodka, but the word “Texas” was later removed to shorten the name for marketing reasons. A long-running Impact “Hot Brand,” Tito’s sold around 1.3 million cases last year, according to Impact Databank—a 50% jump over the previous year—and its rapid rise is continuing in 2014. The brand was up by 99% in IRI channels for the 52 weeks ending September 7.

 

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