This blog was last updated on July 3, 2024
I recently had the privilege of speaking on a panel at the National Conference of State Liquor Administrators (NCSLA) Annual Conference, a regular meeting of regulators, attorneys and other members of the beverage alcohol industry to discuss important issues affecting our trade.
Alongside Claire Mitchell, of Stoel Rives, and Erlinda Doherty, of Vinicola Consulting, and moderated by Marbet Lewis, of Shutts & Bowen, we discussed the implications of increased use of artificial intelligence (AI) technology on the alcohol industry.
Broadly, AI refers to a spectrum of developing software services that, utilizing ever faster processors, can analyze vast quantities of data. From the patterns it pulls from its input data, it can respond to a wide variety of prompts from a person, everything from recommending a movie to watch to formulating novel cancer drugs, depending on how it has been programmed.
How AI in beverage alcohol could be a boom — or a bust
As talked about as AI is these days, there is still much about it that remains purely speculative: how it could improve work, what systems it might disrupt, whether it will be the best invention since sliced bread or if it will kill us all. Our panel, then, was also largely about the potential impact of AI in the beverage alcohol industry, how it could affect production, marketing and regulation, without firm conclusions about whether that impact will be positive or negative.
Product development and manufacturing
AI is, above all, a research tool, with the potential to look at millions of data points and provide analysis at the drop of a hat. As such, AI can help:
- Continuously search for market trends for producers to build on
- Analyze complex flavor molecules to develop novel recipes with completely unique profiles
- Track and monitor production in-the-moment for constant quality control
AI is, above all, artificial, meaning it exists outside of the real world and (so far) cannot appreciate what humans do. As such, AI may fail to:
- Get ahead of market trends, always playing catch up
- Develop truly awful products without taste buds to care
- Recognize real-world production conditions and therefore signal a lot of false positive or negative events
AI also uses past searches to develop future prompts. This means that if you input trade secrets or other proprietary formulas into an AI program, the AI may reprint them in future searches, including by your competitors!
Labeling generation and regulation
Among the highest profile uses of AI is image generation. It therefore has broad potential for producers to rapidly produce labels and other marketing material, either entirely from scratch or building on established brand marks.
AI could also revolutionize the regulation of beverage alcohol labels, readily reviewing them for compliance with federal and state laws. If properly adopted by the TTB, COLA approvals could become almost instantaneous, allowing reviewers to focus on more important issues than the proper punctuation of the Government Warning.
AI brings with it an array of copyright concerns, namely:
- AI needs to get better about not using copyrighted material in its work product
- AI produced works are also not eligible for copyright protection, meaning others can freely use your images and designs if they were made by a computer
Even if AI is thoroughly trained in federal and state labeling rules, it can never be relied on as the sole reviewer. A human eye will always need to be involved, especially for more nuanced situations, like health claims or disparagement of other producers.
Shipping and distribution tracking and reporting
Tireless and perceptive, AI could potentially provide continuous, end-to-end tracking of where, when and how beverage alcohol is shipped and distributed across the country. This could be a major benefit to the industry by:
- Instantly reviewing direct-to-consumer shipments for compliance with state laws
- Tracing where individual bottles and cans are on store shelves in case of a recall
- Readily producing required tax returns and shipping reports for producers and wholesalers
AI can also improve things for alcohol regulators by reviewing the reports they receive for legally questionable or problematic occurrences.
There already are services that provide continuous, end-to-end tracking of shipping and distribution of beverage alcohol, including reviewing individual orders for their compliance with state laws and generating necessary tax and shipping reports. While AI could potentially improve those services, is that really the best use of AI?
Similarly, AI could end up being either a far too over- or under-zealous regulator, either wrongly tagging innocent orders for imagined sins or missing obvious errors. As ever, a human will still need to review and check any compliance issues an AI system will flag. If AI ever starts enforcing laws on its own, that could be a scary day.
Legal practice and analysis
The legal field is often brought up as being particularly threatened by AI disruption. However, by all accounts we are still decades away from a robot Perry Mason. Instead, AI could be a valuable tool for attorneys by:
- Rapidly reviewing statutes and regulations to assess the legality of a proposed product, activity or business arrangement
- Helping draft briefs, contracts and other attorney work product, saving time and expense
Despite its prevalence, AI still has much to learn, limiting its ability to assist attorneys at present. Attorneys looking into using AI need use caution and recognize that:
- AI is largely based on miming existing work product, so its analysis may be incomplete or at least rather shallow
- AI hallucinates—a lot. The cases or citations it finds may not even exist. As such, all AI production must be double- and triple-checked at the risk of violating legal ethics laws
AI undoubtedly has a tremendous amount of real-world potential. As a nearly instantaneous research and analysis tool, it could vastly simplify many tedious and complex tasks that humans struggle with. It’s easy to imagine how your own work and life could be improved if AI were to take over the drearier parts.
However, like any system, AI brings with it very real negatives along with the potential positives—and of course, there are always unknown factors that will throw off even the best laid plans. Ultimately, AI is a tool, and like any tool, it will only be as effective as the hands that wield it.
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