ALCOHOL ADVERTISING

1. ALCOHOL ADVERTISING William D. Ellerman Partner Jackson Walker L.L.P. 901 Main Street, Suite 6000 Dallas, Texas 75202 214-953-6033

2. INTRODUCTION

3. The Three-Tier System • Manufacturers or “producers” • Distributors • Retailers • On Premise • Off Premise • Beer, Wine and/or Liquor

4. The Three-Tier System (cont’d) • Each tier is subject to different regulations, but there is overlap • There are different advertising rules for each tier • The “tiers” are designed to prevent vertical and horizontal monopolies

5. The Texas Alcoholic Beverage Code • Creates the Texas Alcoholic Beverage Commission (“TABC”) • Regulates all aspects of the alcoholic beverage industry in Texas • Generally coextensive with Federal laws • Has NO enforcement authority over the broadcast media • Broadcasters can help customers by knowing the general rules

6. General Categories of Rules • Rules that apply to certain types of permits • Rules that apply to certain types of alcoholic beverages • Rules that apply regardless of the type of permit or beverage • Miscellaneous rules

7. RULES THAT APPLY TO CERTAIN PERMITS

8. Types of Permits • There are 50 different types of permits and licenses in the TABC • “On-premise” and “off-premise” permits • Typical on-premise permit holders: • Restaurants and bars • Private clubs • Typical off-premise permit holders: • Package stores • Other retail stores

9. Types of Permits (cont’d) • Typical categories of permits include: • Off-premise permits for beer, beer & wine, liquor • On-premise permits for beer, beer & wine, liquor • Package stores • Private clubs • Unusual categories of permits include: • Hotel minibar permits • Medicinal alcohol permits

10. The General Rule • A permit holder may advertise what he or she may legally sell • Examples: • A package store may not advertise liquor by the drink • A bar may not advertise drinks “to go”

11. Outdoor Signage • Allowed signage depends on type of permit • A beer retailer may have ONE sign reading “Beer” or “Beer To Go” • A wine and beer retailer may have one sign reading “Beer,” “Beer and Wine,” or “Beer, Wine, and Ale.” • Only an off-premise permit holder may advertise “to go”

12. Outdoor Signage (cont’d) • A licensed package store may have one sign that reads: • “Package Store” • “Liquors”; or • “Wines and Liquors” • The words “to go” may be added as long as there is no on-premise license

13. Private Clubs • Many “bars” are actually permitted private clubs • Private clubs may sell alcoholic beverages even in dry areas • Any advertisements must state that alcoholic beverages are only available to club members

14. Price Advertising • Generally, businesses that do not sell to the public cannot advertise prices • Manufacturers and distributors may not advertise prices • Prohibitions on vertical monopolies • Are price advertising restrictions constitutional?

15. Price Advertising (cont’d) • On-premise retailers may not advertise prices if the advertisement includes a brand name (i.e., “Coors Longnecks for $1.00”) • On-premise retailers may advertise prices if the advertisement does not include a brand name (i.e., “Longnecks for $1.00”) • Off-premise retailers must advertise brand names if prices are advertised

16. RULES THAT APPLY TO TYPES OF BEVERAGES

17. General Rules • An advertisement may include any item that is not specifically prohibited from being advertised • An advertisement must contain certain items • Any item that must be contained in an advertisement must be conspicuous

18. Ads for Distilled Spirits Must Contain • The name and city of the permittee • The class and type of beverage • The alcohol content by proof or percentage • For any permittee other than a retailer, the percentage of “neutral spirits” and the commodity from which they were distilled

19. Ads for Distilled Spirits Must Not Contain • A false, deceptive, misleading, indecent, or obscene statement • A statement disparaging of a competitor • A statement that the spirit complies with any governmental authorization • A statement implying a higher alcoholic content than normal

20. Ads for Distilled Spirits Must Not Contain (cont’d) • A statement that the spirit is “pure,” unless that word is part of the permittee’s name • A statement that the product has therapeutic or curative effects • Flags, seals, insignias, coats of arms, etc., suggesting government affiliation • Anything contrary to information required to be on the product’s label

21. Ads for Wine Must Contain • The name and city of the permittee • If the ad includes price, it must also include the brand name and class and type of product • If the class and type are included, a complete description must be provided

22. Ads for Wine Must Not Contain • A false, deceptive, misleading, indecent, or obscene statement • A statement that disparages a competitor • A statement that the wine complies with any government authorization • A statement that indicates that the intoxicating quality has been increased • The alcoholic content (Is this constitutional?)

23. Ads for Beer Must Not Contain • A false, deceptive, misleading, indecent, or obscene statement • A statement that disparages a competitor • A statement that the beer complies with any government authorization • A statement that the beer has therapeutic or curative effects • Indicia of government affiliation

24. Advertising Alcohol Content for Beer • Cannot be called “beer” if contains less than 0.5% alcohol • Cannot be called “malt liquor” if it contains less than 4.0% alcohol • Cannot state alcohol content, “strong,” or “high proof” (Is this constitutional?) • May be called “low alcohol” or “reduced alcohol” if less than 2.5% alcohol

25. Advertisements for Mixed Drinks • No specific rules • Ads should not include a statement of alcohol content • Ads should not indicate the intoxicating quality of the drink

26. GENERAL ADVERTISING RULES

27. Stamps and Coupons • No stamps or other inducements allowed • No coupons or rebates for purchase or discounts, except: • Coupons for purchase of non-alcoholic products if not tied to purchase of alcohol • Discount or single complimentary drink tied to a meal, hotel package, or airline program • One free drink to customers for special events

28. Happy Hours and Drink Specials • Permissible, but subject to strict regulations • Advertising is permissible, but should follow the regulations • TABC prohibits advertising practices that are “reasonably calculated to result in excessive consumption of alcohol”

29. Prohibited Drink Specials • “Two for the price of one” • Increased alcohol without increased price • More than one free drink per day • “All you can drink” • Reduced price tied to a fixed “buy-in” price • Price based on the amount consumed • No reduced prices after 11:00 p.m.

30. Prohibited Drink Specials (cont’d) • More than two drinks to a customer at a time • An entry fee or cover charge in exchange for reduced drink prices • Contests that are determined by the amount consumed • Contests where alcohol is given as a prize

31. Permitted Drink Specials • Free or reduced-price food, if not tied to the purchase of alcohol • Free or reduced-price alcohol if part of a meal or hotel package • Sale of a bottle of wine during a meal • Reduced price pitchers or buckets to two or more consumers at a time

32. Gifts, Contests, and Promotions • Severely restricted and generally prohibited • Some exceptions: • Sweepstakes • Gifts • Lottery • Co-sponsorship of events • Tastings

33. Sweepstakes • The only contests that are permitted for the manufacturing tier • Must be random, with no purchase necessary • Must not favor one retailer over another • Prizes may not be awarded at retail locations • Entry forms may be advertised as available at retail locations • NO ALCOHOL MAY BE AWARDED AS A PRIZE

34. Sweepstakes (cont’d) • A member of the retail tier may offer a contest based on skill or creativity • Logo or slogan contests • Very fact-specific inquiry • Obtain pre-approval from the TABC

35. Promotional Gifts • Manufacturers and distributors may give consumers items worth less than $1.00 each • Promotional items bearing a manufacturer’s logo may be sold to retailers • Manufacturers and distributors of wine and liquor may give items of low value to consumers to promote specific brands • Manufacturers and distributors may give advertising specials to retailers no more than $101 per brand, per year

36. State Lottery • On-premise retailers can only sell lottery tickets if they only sell beer • Private clubs cannot sell lottery tickets • Off-premise retailers can sell lottery tickets regardless of their inventory

37. Implications for Broadcasters • The above rules would apply to promotions co-sponsored by broadcasters and permittees • A giveaway of alcoholic beverages is not allowed unless the broadcaster purchases the product • If the promotion is advertised, a brand name may not be mentioned if the permittee pays for the ad.

38. Tastings • A tasting permit is required • Wineries can only advertise tastings in on-site communication or by direct mail • Package stores can advertise tastings on-site, by direct mail, by e-mail, and on the store’s website

39. Broadcast Remotes • A broadcaster can do a remote from a permit holder’s place of business • The permit holder may not pay for the remote • Ensure that the remote does not give the impression of encouraging intoxication

40. Events and Concerts • Manufacturers and distributors may sponsor and advertise events, but beverages must be sold by independent concessionaire • Advertising materials may be placed in service areas • TABC specifically defines “public entertainment facilities”

41. Events and Concerts (cont’d) • Public entertainment facilities does not include facilities at which the primary purpose is the sale of food or alcoholic beverages • A manufacturer or distributor may not sponsor an event or concert at a retailer’s location • Only a manufacturer may advertise in association with horse racing • No advertising permitted for Bingo

42. Events and Concerts (cont’d) • Sponsorship of unlicensed civic, religious, or charitable events • Manufacturers and distributors may donate money, services, or other items of value • May not donate alcoholic beverages • Alcohol may be sold by an independent retailer • The charitable organization must receive equal or greater billing • Avoidance of “hidden sales”

43. Cooperative Advertising • Raises vertical and horizontal monopoly issues • Permit holders, regardless of tier, cannot share advertising • There is a small exception for promotions held on a retailer’s premises • Permit holders may share advertising with broadcasters or other non-permittees

44. Signs and Billboards • A distributor may give a retailer one sign per brand to display inside the retailer’s premises • Different products from the same manufacturer may be different “brands” • Billboards must be at least 200 feet from where product is sold

45. MISCELLANEOUS

46. Dry Areas • No public use of alcoholic beverages is allowed in dry areas • Broadcast advertising is permissible • Outdoor advertising is impermissible

47. Age Limits • Disclosure of legal age limits in advertising is not required • TABC appreciates ads encouraging responsible drinking • “BYOB” events sponsored by non-permittees need not be restricted by age

48. Depictions of Alcohol Use • TABC does not prohibit depictions of use in advertisements • Federal law restricts use of athletes • Should not be shown drinking • Should not suggest that drinking enhances athletic ability

49. Conclusion • TABC only governs permit holders, not members of the broadcast media • In general, permit holders may advertise what they can legally sell • Promotions, giveaways, and specials are severely restricted • When in doubt, contact the TABC for pre-approval