Smirnoff on ice over new US drinks classification

Drinks giant Diageo is being forced to come up with a new recipe for its best-selling Smirnoff Ice after an 18-month review into alcopops by the US authorities.

Drinks giant Diageo is being forced to come up with a new recipe for its best-selling Smirnoff Ice after an 18-month review into alcopops by the US authorities.

The Alcohol and Tobacco Tax and Trade Bureau (TTB), part of the US Treasury Department, has been investigating how alcopops are made and whether they are taxed correctly. At the moment, drinks such as Smirnoff Ice are classified as beers. Spirits are normally subject to higher taxation in the US as well as stiffer rules on selling, marketing and distribution.

The industry had been concerned that the bureau would reassign alcopops as spirits but instead it has ruled that producers such as Diageo will have to come up with a new formula.

A Diageo spokesman said the switch would mean higher costs, but was unable to say how much until more research was done. Under the bureau ruling, drinks companies have a year to implement the changes. The spokesman said: "There is a mixture of political and competitive pressures driving this. The flavour won't change, the alcohol content won't change, the packaging won't change. We have been scratching our heads for some time about this - alcohol is alcohol."

Currently, most alcopops have a malt base - the same process used to create beer - and then have spirits such as vodka or rum added, along with flavourings. But under the new rules, 51 per cent of the formula will have to come from a malt beverage base.

Drinks such as Smirnoff Ice and Smirnoff Triple Black are performing well for Diageo in the States, despite a tail-off in popularity for alcopops in other parts of the world. Bacardi is another major US player alcopops, while SABMiller's Skyy Blue is a big seller. Both will be affected by the bureau's ruling.