Wine Label ABV - Not to be Trusted?

In one of the first weeks of class, we talked about how the taxes imposed on a bottle of wine jumps when the wine's alcohol by volume (ABV) hits 14%. The US Alcohol and Tobacco Tax and Trade Bureau (a subsidiary of the US Department of the Treasury) sets forth the taxes on wine as follows:

If ½ of 1% to not over 14% alcohol	$1.07 per gallon
If more than 14% and not over 21% alcohol	$1.57 per gallon
If more than 21% and not over 24% alcohol	$3.15 per gallon
Artificially Carbonated	$3.30 per gallon
Sparkling	$3.40 per gallon

As you can see, the tax on wine jumps by nearly 50% when the ABV exceeds 14%. My initial reaction to this was assuming that wine producers probably try really hard to make sub-14% wines to avoid the higher tax. An interesting twist is added when you consider, in the US at least, that wine producers are afforded a wide tolerance - from 1% to 1.5% - when it comes to the ABV reported on the wine label. A study out of UC Davis in 2015 shows that US wine producers do tend to under-report ABV on the label by an average of 0.23%. In fact, the following figure shows a pretty interesting trend in ABV reported on wine labels:

The histogram shows a significant number of wines reporting ABVs just under 14% on their labels, as we might expect based on the jump in taxes above the 14% level. Beyond that, it shows another interesting trend. While actual, tested ABVs are fairly normally distributed, wine label ABVs are much more concentrated at certain levels. This shows that wine producers are using the 1-1.5% tolerance they're afforded to hit certain "target" ABVs on their labels.

So, the next time you're picking out a bottle of wine at the store, remember that the label might be stretching the truth when it comes to ABV.

Sources:
https://www.ttb.gov/tax_audit/taxguide.shtml
http://www.wine-economics.org/aawe/wp-content/uploads/2015/12/Vol.10-Issue03-Splendide-Mendax-False-Label-Claims-About-High-and-Rising-Alcohol-Content-of-Wine-by-Julian-M.-Alston.pdf