Malternatives: beer? cocktails? both? (Up Front).

If it's flavored with liquor and labeled with a well-known liquor name, then is it liquor? That's the central question in a growing hubbub over malternatives, flavored alcoholic malt drinks from Anheuser-Busch, Bacardi, Smirnoff, and other brands.

The debate stems from the way these brisk-selling drinks are made, marketed, and taxed: Malternatives typically have the same alcohol content as beer; in many cases, the alcohol comes not from fermented grain but from flavorings made of distilled spirits, which are normally taxed at much higher rates. The malternatives that our sensory testers sampled were generally sweet. Some tasted lemony while others tasted like a whiskey sour or vodka and tonic.

Yet, as malt beverages, they are advertised on network television, and they're easy to find--especially easy for teens, say some critics. These drinks generated $373 million in supermarket sales in 2002. up more than 38 percent from 2001.

The issue may be settled in a few months. Federal agencies are close to formulating new rules that will affect the tax status of malternatives and are finishing research to determine whether they contribute to underage drinking.

Public-interest groups contend that malternatives give liquor companies a backdoor way to reach a wider audience of underage drinkers. Two national surveys of 1,100 teens and adults altogether by the Center for Science in the Public Interest found that 64 percent of the teens had seen, heard of, or read about malternatives, compared with only 21 percent of adults. About 40 percent of teens had actually tried a malternative, compared with 24 percent of adults. Studies by the nonprofit ...