Diageo-Guinness USA, Inc. filed a lawsuit Friday seeking to overturn an Oregon state rule that would ban the sale of its popular malt beverages in grocery stores as of Dec. 31.
The company asked the court to invalidate an Oregon Liquor Control Commission rule that would ban the sale of its flavored malt beverages (FMB) including Smirnoff Ice, Smirnoff Ice Triple Black and Smirnoff Twisted V in 3,500 Oregon grocery and convenience stores, the company said.
Under the OLCC rule, drinks with more than one-half of 1% distilled alcohol are not permitted to be sold in grocery stores but must be offered in state liquor stores only. Malternatives begin as brewed malt beverages but are then flavored with distilled spirits.
Diageo said that such changes would result in “significant price increases” as of Jan. 1 and would limit consumer choices and access.
“This action is no different that a tax increase on consumers and is an unnecessary manipulation of the marketplace by a government agency,” said Diageo Executive VP Guy Smith, in a statement. “It is a classic example of a government agency who mission is to protect consumers—but is actually working against consumers—while protecting other large, influential producers from competition.”
Diageo, which said the alcohol in its malternatives is “chemically identical” to regular beer, argued that the rule by the OLCC was enacted in violation of the Oregon Administrative Procedure Act and is therefore subject to review by the Oregon courts.
FMBs have been sold alongside beer on store shelves for decades nationwide.
“I know of no other place in America where FMBs are taxed or regulated as distilled spirits. Why? Because it makes no sense to do that,” Smith said.
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