Diacetyl is a natural by-product of secondary or malolactic fermentation. It is more formally referred to as 2,3-butanedione. It is a vicinal diketone (two C=O groups, side-by-side) with the molecular formula C4H6O2.
At low levels in alcoholic beverages, it contributes a slipperiness to the feel of the beer or wine in the mouth. As levels increase, it imparts a buttery or butterscotch flavor.
Beer sometimes undergoes a diacetyl rest, which entails waiting two or three days after fermentation is complete, to allow the yeast to absorb the diacetyl it produced earlier in the fermentation cycle. The makers of some wines, such as chardonnay, deliberately promote the production of diacetyl because of the feel it imparts.
The United States National Institute for Occupational Safety and Health has suggested that diacetyl, when used in artificial butter flavoring (as used in microwave popcorn), may be hazardous when heated and inhaled over a long period. Workers in several factories that manufacture artificial butter flavoring have been diagnosed with bronchiolitis obliterans , a rare and serious disease of the lungs. After the workers filed a lawsuit against the manufacturers, the Environmental Protection Agency began an investigation into the chemical properties of microwave popcorn butter flavoring. (CNN)