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Last week, the TTB issued an Industry Circular on the issue of tie-in sales, which are illegal under the Federal Alcohol Administration Act (FAA Act) and 27 C.F.R. § 6.72.  Tie-in sales occur when a retailer is forced to purchase a product (which it may or may not want) in order to get the product that it wants.  Tie-in sales include combination sales in which one or more products may only be purchased in combination with other products.

In its Circular, available here, the TTB provides a list of examples of prohibited tie-in sales.  The examples include:

-          A retailer must purchase a certain amount of regular distilled spirits, whether bottled or cased, in order to be allowed to purchase distilled spirits in a special holiday container or packaging.

-          A retailer must purchase ten cases of Winery X’s Merlot from a wholesaler in order to purchase ten cases of Winery X’s Chardonnay.

-          A retailer must purchase an industry member’s pre-mixed alcohol beverage specialty product (for example, strawberry daiquiri) in order to purchase a certain amount of their regular distilled spirits case goods.  In other words, the regular distilled spirits products are not sold separately but only in combination with the specialty product.

-          A retailer is required to purchase a two-bottle package containing one each of a winery’s Merlot and Chardonnay in order to get the Merlot.  The Merlot is not available for purchase separately.

-          A retailer must purchase a slow moving wine in order to purchase a distilled spirit that is in heavy demand.  The distilled spirit is not available for purchase separately.

The take-away point is that each alcoholic beverage item needs to be available for purchase separately.  It is still permissible to package alcohol products together or with other consumer goods, subject to state and federal restrictions, but the alcohol components should also be available separately.  For additional information on the rules applicable to combination packs, contact one of the attorneys at Strike & Techel with any questions.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

The United States is home base for pop culture and advertising. According to a 2007 New York Times article, people living in cities see up to 5,000 advertising messages a day, over twice as many as those living in cities 30 years ago saw. And that figure is four years old. Ever since Andy Warhol’s famous Campbell’s Soup Cans, the lines between art, advertising, entertainment, and social commentary have been continuously blurring. But, as the TTB recently reminded people, nowhere are those lines more defined and regulated than in the alcoholic beverage industry. On March 26^th and April 7^th, the TTB released industry circulars on the application of alcoholic beverage advertising regulations to media personality sponsorships and television advertising. The Code of Federal Regulations requires, among other things, that a responsible advertiser statement containing the name and address of the responsible party, appear in all advertisements for wines, malt beverages, and distilled spirits (See 27 CFR §§ 4.62, 5.63, 7.52). 

The TTB’s Industry Circular 2011-01 cautioned against the practice of media personalities who are compensated by alcoholic beverage companies, such as radio hosts, covering certain advertising talking points within a free form story told by the radio host (referred to as unscripted advertisements) without including the mandatory advertising language. The Circular also reminded the industry that such hosts should not make statements about alcoholic beverage products that are prohibited by the Federal Alcohol Administration Act (FAA Act) or TTB regulations. TTB Industry Circular 2011-02 addressed advertisements that are run by television stations more often than contractually required and in such instances often do not include the mandatory information required by the FAA Act and TTB regulations. On top of all that, there is the Federal Trade Commission, which prohibits deceptive and unfair advertising. Thus, if one is paying someone to say something nice about ones products that must be disclosed.

Which leads us to the question: What is an advertisement? The Code of Federal Regulations defines an advertisement as “any written or verbal statement, illustration, or depiction which is in, or is calculated to induce sales in, interstate or foreign commerce” (See 27 CFR §§ 4.61, 5.62, 7.51). The only exceptions from the definition are labels and things like press releases (“editorial or other reading material … in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any permittee, and which is not written by or at the direction of the permittee.”) That’s a pretty broad definition and it’s hard to see where the line exists in modern society. If Kim Kardashian (who reportedly earns $10,000 per tweet) mentions an alcoholic beverage company, does she need to fit the mandatory advertising language into 144 characters? Was Jay-Z’s “Show Me What You Got” music video an advertisement for Armand de Brignac? Whatever these projects are—Advertainment? Entertisement? (you heard the terms here first, unless you heard them somewhere else first)—marketers should remember they are still subject to the standard alcoholic beverages advertising regulations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·