Among the numerous rules and regulations that suppliers of beverage alcohol have to deal with, those governing the advertising and marketing of their products may not always be top of mind. However, both federal and various state regulators have signaled their intent to ramp up policing of this area of alcohol regulation, particularly when it comes to advertising on the internet.
Indeed, as suppliers increasingly move online, both in terms of direct-to-consumer (DtC) shipping and using social media to get their message out, it is critical for them to remember that these rules do matter and need to be followed.
We look here then at some of the basic rules that dictate how suppliers can advertise their products and the various trade practice rules that restrict how they can advertise sales made through third parties.
Advertising your own products
Advertising and marketing beverage alcohol products is primarily regulated at the federal level. The Federal Alcohol Administration Act (FAAA) sets out that advertising of alcohol may not be misleading or otherwise deceptive to consumers, but also must include adequate information as to the brand and contents of the alcohol being advertised.
Through the FAAA, the Tax and Trade Bureau (TTB) is enabled to propose and establish further regulations restricting advertising of alcohol advertising on a more minute level. These regulations can be found in chapter 27 of the Code of Federal Regulations: part 4 (for wine), part 5 (for distilled spirits), and part 7 (for malt beverages).
These regulations articulate what the TTB considers to be necessary information and what is deemed inappropriate. Alcohol advertisements must clearly display the name, city and state of the advertiser along with the class or type of product, and, for distilled spirits, the alcohol content at bottling.
There are also items that the TTB prohibits from appearing in advertising, including:
- Any statement that is false or otherwise tends to create a misleading impression, including those regarding the contents of the product or its geographical origin.
- Any statement that disparages competitors.
- Any statement that is obscene or indecent.
- Any statement that made might lead a consumer to believe the product was endorsed, made or used by the U.S. government or the armed forces.
- Any health statements that are untruthful, misleading and/or unsubstantiated by clear scientific or medical research.
In 2013, the TTB issued an Industry Circular that makes it very clear that these restrictions apply to more or less all forms of social media.
This can seem daunting to manage, but support is available through the TTB’s Market Compliance Office, which provides helpful resources and guides for the industry. While advertisements are not required to be approved, the TTB does provide an optional pre-clearance review to ensure compliance.
Beyond these legal restrictions on advertising, there are a variety of conventions within the industry limiting when, where and how alcoholic products are marketed. These include strictly avoiding markets and media targeted to minors and not depicting people consuming alcohol (though fun times are always to be had).
Advertising and trade practice law
Beyond the restrictions on what can appear in ads, there are rules governing how suppliers and manufacturers can reference retail locations and other places consumers can find their products. These rules are not really about advertising per se, but instead come from trade practice laws at both the federal and state levels that prevent suppliers from providing retailers with anything of value.
As such, it can be illegal for a supplier to share the costs of advertising with a retailer or note anything more than a basic reference to available retail locations. Suppliers should also refrain from listing only one retailer in their advertising, as that can be evidence of an exclusive deal.
One perhaps unexpected area where these rules can catch suppliers unaware is on social media when advertising of festivals or other tasting events. While it can be permissible to provide very basic pertinent information, such as time and place, anything lavish or laudatory of the event could bring scrutiny by regulators.
These trade practice restrictions should also apply to certain online sales, particularly so-called “three-tier DtC” sales where a supplier advertises their own products but then directs customers to a select retailer to fulfill the sale. If it is illegal for a supplier to privilege a single retailer in their advertisements, it seems a clear provision of something of value for them to offer “nationwide” availability by a select retail partner.
That these restrictions apply to online advertising is not an idle or toothless thought. Earlier this year, the Texas Alcoholic Beverage Control (TABC) circulated a draft advisory on marketing practices related to online marketplaces. While this is just a draft so far, the TABC was clear that it considers the online environment to be well within its jurisdiction and that it intends to police ecommerce as vigilantly as it does brick and mortar stores.
This is all a good reminder to beverage alcohol suppliers that many things that might seem like “normal” behavior online may not be permitted for them. From selling merchandise online to using social media, caution must be paid. A good rule of thumb for the alcohol industry is that “because internet” is no excuse for breaking the law.
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