Alcohol

The history of 'Palcohol': This isn't the first powdered booze

April 23, 2014: 11:12 AM ET

"Palcohol" is far from the first attempt to market powdered liquor, and it won't be the last.

'Palcohol' is nothing new.

'Palcohol' is nothing new.

FORTUNE -- Mark Phillips' plan to market Palcohol, a powdered form of booze, is just the latest in a long string of such efforts. Most previous attempts, like this one, were carried out by somewhat elusive lone entrepreneurs, though General Foods took out the first patent on powdered alcohol in the early 1970s, and there were efforts made well before that. All of them have failed or petered out, either because the resulting products were terrible or because the idea of powdered hooch is just too problematic for both governments and the public.

One misconception must be cleared up from the get-go: The federal government didn't, as has been widely reported, "approve the sale of powdered alcohol." The feds don't have the power to approve or deny the introduction of alcoholic products, at least not technically. That's left to the states, which often don't take too kindly to stunt booze that seems marketed toward alcoholics or irresponsible young partiers. Just look at what happened with Four Loko, which was an unholy concoction that mixed liquor into a Red Bull-like energy drink and was eventually pushed out of business thanks mainly to state government bans or restrictions.

Phillips seems to have been caught off-guard when Bevlaw, a blog produced by the law firm Lehrman Beverage Law, discovered late last week that the federal Alcohol and Tobacco Tax and Trade Bureau had accepted an application from his Arizona-based company, Lipsmark LLC, for approval of the packaging of Palcohol. It was quickly discovered that on cached versions of the Palcohol site (now not reachable) Phillips had extolled what he saw as the product's chief virtue: basically that you can sneak into places where you're not supposed to drink. He cited movie theaters and college sports events as examples. The product's motto: "Take your Pal wherever you go!"

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Lehrman Bevdiscovered late last week that the federal Alcohol and Tobacco Tax and Trade Bureau had accepted an application from his company, Lipsmark LLC, for approval of the packaging of "Palcohol." It was quickly discovered that on cached versions of the Palcohol site (now not reachable) Phillips had extolled what he saw at the product's chief virtue: basically that you can sneak into places where you're not supposed to drink. He cited movie theaters and college sports events as examples. The product's motto: "Take your Pal wherever you go!"

Phillips declined a phone interview, but he did provide a few terse answers via email. The old web pages, he said, were attempts at "us trying out different language" to market Palcohol. He was "trying for an edgy version," but "we clearly stated on the same page to ask any venue ahead of time if it's okay to bring Palcohol in because we don't want it used illegally. And we're still very clear that it should be used responsibly and legally."

Assuming Palcohol is ever brought to market (which seems unlikely), is it even possible to use it "responsibly"? Phillips of course says yes. The product "allows active folks to enjoy a cocktail after an activity when they're out and about as well as making it much easier and safer to transport alcohol in luggage," he wrote. "Those are just two of the features, and I'm sure people will find others."

No doubt. Like mixing up a margarita in a movie theater, perhaps. Much was made of Phillips' somewhat limp warning against snorting Palcohol. On the cached version of the site, he had written:

Let's talk about the elephant in the room ... snorting Palcohol. Yes, you can snort it. And you'll get drunk almost instantly because the alcohol will be absorbed so quickly in your nose. Good idea? No. It will mess you up. Use Palcohol responsibly.

Phillips' bio page describes him as having "had over 80 jobs in his life." One of those jobs was running wine tastings, where he presented himself as an anti-wine-snob. He wrote a book published in 2010 called Swallow This: The Progressive Approach to Wine with a cover bearing a picture of a guy chugging straight from a bottle. Some years earlier, he starred in a video called Enjoying Wine with Mark Phillips that aired on some public television stations.

Phillips would not address questions about anything other than Palcohol, about which he didn't say much. "I still am involved in the wine world," he wrote in an email. "I have no comment about anything else."

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One of his more recent projects is a website called The Savvy Business that offers two services for real estate agents: making door keys embossed with company logos, and creating customized newsletters for agents to stay in touch with their clients.

Though he claims to have worked with "scientists" on Palcohol, Phillips wouldn't identify them, nor say anything about the process he uses. In 1972, General Foods patented a method for encapsulating alcohol molecules within a sugar derivative. It was devised by William A. Mitchell -- the inventor of Tang, Pop Rocks, and other popular food innovations. In its patent application, the company noted that previous efforts to make a powdered form of alcohol yielded products that were too sugary.

General Foods never marketed powdered alcohol, but others using similar methods have since tried. Several years ago, some students in the Netherlands introduced Booz2Go, which reportedly contained just 3% alcohol. Another concoction called Subyou was introduced in Germany. It's unclear whether either product is even still available.

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In 2010, an outfit called Pulver Spirits tried to market powdered alcohol. This seems to be the most serious recent effort, but it, too, went nowhere. Anthony Trujillo, one of the company's founders, is now working full-time as an attorney. He doesn't think much of Phillips' efforts, especially the way Phillips presented the product. "He really jumped the gun," Trujillo said of Phillips putting all that in-your-face marketing babble on his website. "My plan was to stay quiet until we got approval." That might explain the vast difference in the amount of publicity Pulver Spirits got (almost none) compared to how much attention Palcohol has gotten (a media firestorm). Pulver was basically a sideline for Trujillo, and the regulatory hurdles were just too high at the time.

The first step, he said, would be to get past the Alcohol and Tobacco Tax and Trade Bureau, an arm of the Treasury Department that regulates alcohol makers for tax purposes only (at least ostensibly). Alcohol products must adhere to closely scrutinized standards of labeling, packaging, and formulation. Although the bureau, which was part of the Bureau of Alcohol, Tobacco, and Firearms before that agency's enforcement division was moved to the Justice Department in 2003, doesn't approve or deny products based on health considerations or propriety, it can use its power to effectively deny problematic products. "That's where the hell can be," Trujillo said. That could be what happened with Palcohol -- after all the media coverage, the bureau said it had made a mistake in approving the product's label and packaging. Phillips says that's just a technical issue and that he expects to win approval eventually.

And once past that bureau, a producer has 50 state governments to contend with. State legislatures, attorneys general, and various regulatory agencies can make life tough for companies trying to market new forms of alcohol, as Phusion, the maker of Four Loko, recently found out.

A former associate of Trujillo at Pulver, who asked not to be identified, was similarly critical of Phillips' effort. "By being cheeky and putting all that stuff on the web, he was just playing into the stereotype" of a wild party animal, the former Pulver executive said. "It's not the product that's most important -- it's how it's presented."

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