CHICAGO -- Phusion Projects LLC, the makers of Four Loko, has reached agreement with the U.S. Federal Trade Commission (FTC) regarding the packaging of its flavored malt beverages, such as Four Loko in 23.5-oz. cans. The consent order, which was approved for public comment Monday by the FTC, resolves allegations made by the commission regarding some of Phusion's marketing practices, the company said.
Phusion Projects has agreed to relabel and repackage the supersized, high-alcohol, fruit-flavored, carbonated malt beverage, to resolve FTC allegations.
The FTC has alleged that Phusion Projects claimed that a 23.5-oz., 11 or 12% alcohol by volume can of Four Loko contains alcohol equivalent to one or two regular 12-oz. beers, and that a consumer could drink one can safely in its entirety on a single occasion; however, according to the FTC, one can of Four Loko contains as much alcohol as four to five 12-oz. cans of regular beer and is not safe to drink on a single occasion.
Starting six months after the settlement takes effect, Phusion Projects is required to use
only resealable containers for flavored malt beverages that have more alcohol than the equivalent of 2.5 regular beers. Also, the settlement bars Phusion Projects from misrepresenting the alcohol content of any beverage, and from depicting people drinking directly from the container of any product containing more alcohol than that found in 2.5 regular beers.
Phusion said that it will develop a new, resealable can for its flavored malt beverage products that contain at least the equivalent of approximately 2.5 regular beers (12-oz., 5% alcohol-by-volume [ABV]), which includes Phusion's current 23.5-oz., 12% ABV Four Loko products.
The new can closure technology, which the company said is the first for any alcoholic beverage worldwide, is expected to be available in stores by late next spring.
"The resealable can will be easy to use, spill-proof, retain carbonation and give consumers more flexibility in the way they choose to enjoy our Four Loko products," said Jaisen Freeman, one of the co-founders of Phusion Projects.
Also, to add further transparency and information to its flavored malt beverage products, such as Four Loko, the cans will have additional label information that compares the contents of a can of Four Loko to 12-oz., 5% ABV beers. The additional label information will affect only Four Loko in 23.5-oz. cans with 12% ABV.
"Our can labels have always clearly conveyed exactly what's in them in bold, capital letters. This new, additional label will give consumers even more information," Freeman said.
The labeling of Phusion products already goes "well beyond" industry standards, Freeman noted, with six different statements in 10 locations regarding the alcohol content and the need for an ID for purchase.
In addition, last fall, Phusion was the first company to voluntarily remove caffeine from its products.
"Even though we reached an agreement, we don't share the FTC's perspective, and we disagree with their allegations. We don't believe there were any violations; however, we take legal compliance very seriously, and we share the FTC's interest in making sure consumers get all the information and tools they need to make smart, informed decisions," said Freeman. "That's why the measures we agreed upon made sense to us and why we worked with the commission to develop and implement them."
He added, "By taking this action, we are again demonstrating leadership, cooperation and responsible corporate citizenship. These new steps are consistent with who we are as a company. From day one, Phusion Projects has been committed to being an industry leader, not just in sales, but also in transparency and corporate responsibility. These actions demonstrate that commitment."
The agreement, which includes no admission of wrongdoing, is subject to a 30-day comment period before it can receive final approval and become effective.
In November, the FTC issued warnings to Four Loko and three other companies saying their caffeinated alcohol drinks can be dangerous, said an Associated Press report. Warning letters were sent to Phusion Projects, Charge Beverages Corp., New Century Brewing Co. and United Brands Co. Inc.
Freeman told the news agency that his company still believes the product was marketed without deception. The label never asserted that one Four Loko equaled one or two beers and always showed the percentage of alcohol that was in a 23.5-oz. can, company spokesperson Caroline Friedman told AP.
Separately, Phusion Projects LLC recently announced the introduction of Poco Loko, a new version of the company's Four Loko, product with unique flavors and in a smaller can size with lower alcohol by volume.
Poco Loko is available in 16-oz. cans at 8% alcohol by volume, and comes in four flavors: Green Apple, Black Cherry, Mango and Lemonade; most of which are not available in 23.5 oz. cans. The company said that it is introducing the product, which will be available in four packs and in single cans, to meet consumer demand for additional products and flavors and to continue diversifying the Phusion Projects line of products.
As with all Phusion Projects products, Poco Loko is a flavored malt beverage that does not contain caffeine, guarana or taurine.
Phusion Projects is a Chicago-based alcoholic beverage company that sells its products--including Four Loko, Poco Loko and Earthquake--nationwide.
Click here to view the full consent order. And click here to read the full FTC complaint against Phusion Projects.
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