BEVERAGE MARKETING. Provided by Elizabeth DeConti of Holland & Knight LLP TABLE OF CONTENTS

Transcription

1 BEVERAGE MARKETING Provided by Elizabeth DeConti of Holland & Knight LLP TABLE OF CONTENTS I. SCOPE OF ARTICLE: INTRODUCTION TO BEVERAGE MARKETING...2 II. LEGAL FRAMEWORK...2 A. The Three Tier System and Tied House Evil...3 B. Federal Law Regarding Content...5 C. Alcohol Advertisements As Commercial Speech Protected By The First Amendment...5 III. ADVERTISEMENTS IN PRINT MEDIA, TELEVISION, AND RADIO...7 A. PRINT MEDIA...7 B. TELEVISION AND RADIO...8 IV. COUPONS AND DISCOUNTS...9 V. POINT OF SALE MATERIALS AND CONSUMER ADVERTISING SPECIALTIES...10 VI. CONCLUSION

2 I. SCOPE OF ARTICLE: INTRODUCTION TO BEVERAGE MARKETING Beverage marketing is a huge topic, and indeed it has been the subject of entire books. This presentation will narrow the field by focusing primarily on alcohol beverages, although certainly this paper will not be able to cover that entire realm, either. 1 For example, all of the following could be described as beverage marketing: (1) highway billboards containing alcohol beverage supplier advertisements; (2) television commercials; (3) coasters on restaurants tables containing manufacturer logos; (4) grocery store coupons; (5) restaurant wine tastings; (6) shelf space allocations; (7) contests sponsored by alcohol beverage suppliers; (8) radio spots; (9) direct mail pieces; and (10) two for one drinks. Alcohol beverages are a regulated product, and consequently all of these marketing activities are regulated also. Clients phone with a variety of questions. Are there regulations about who pays? Are there legal limitations as to the cost? Are there restrictions as to the content? Are there restrictions as to the manner and location of distribution? The answer to all of these questions is a resounding yes! Sorting through the myriad of laws and regulations affecting the marketing of alcohol beverages can be an arduous task, and so this paper endeavors to provide a general legal framework that can be used to identify issues. As discussed further below, each state has its own regulatory scheme for governing the sale, marketing, and distribution of alcohol beverages, and so it is always best to consult individual state statutes and regulations when designing a marketing program. Because reviewing the permissibility of the enumerated items above under federal law and under the laws of all of the fifty states would result in a book, this paper will instead begin with a general overview of the laws related to beverage marketing. Tied house, content, and constitutional issues are just a few of the legal issues that often arise for our clients alcohol beverage suppliers and wholesalers, hoteliers, restaurants, bars, grocery stores, and marketing companies who seek our help in this area. Due to time and space limitations, the selection of issues for this paper is limited to: these legal issue as applied in alcohol advertisements in print media and on television and radio, coupons and discounts, and Point of Sale materials and consumer advertising specialties. II. LEGAL FRAMEWORK Analysis of any advertisement involving alcohol beverages must include review of both federal and state laws. On the federal level, most issues discussed in this paper are governed by the Federal Alcohol Administration Act ( the Act ), codified at 27 U.S.C. 201 et seq. the Twenty-First Amendment to the United States Constitution gives the states the power to regulate the sale, distribution, and marketing of alcohol beverages within their borders. 2 Most every state exercises this power via a legislated statutory scheme and corresponding administrative regulations related to alcohol beverages. Depending upon the issue and the jurisdiction, local ordinances may also apply. An analysis of a proposed alcohol advertisement (or one existing in the marketplace that has come under regulatory scrutiny) generally involves tied house concerns (whom does the advertisement benefit and who paid for it), content, and/or constitutional/free speech issues. A background summary of the law in each are follows below. 1 It should be noted that there are many additional beverage marketing topics worthy of study which do not involve alcohol beverages, and which will not be covered here due to space limitation. For example, dairy products, like alcohol beverages, are regulated products, and advertising related to milk, particularly in reference to pricing structures, is governed by rather complicated statutory schemes that differ on a state by state basis. 2 Section 2 of the Twenty-first Amendment provides: The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited. 2

3 A. The Three Tier System and Tied House Evil The three tier system is industry parlance for the manner in which alcohol beverages are sold, marketed, and distributed in America. The three tier system is in play for all segments within the industry (beer, wine and distilled spirits). The top tier is the manufacturing tier, and consists of brewers, vintners, and distillers. The middle tier is the wholesale or distribution tier, and the third tier is the retail tier. Manufacturers enter exclusive distribution agreements with distributors, who are assigned to specific geographic territories, where they may sell to retailers. 3 In most states, all of these industry members are private entities, however, in control states the state government owns and operates retail outlets. 4 Rarely, the control state performs the wholesale, rather than the retail function. Nonetheless, regardless of whether a state is a control state or an open state, retailers may only purchase alcohol beverage products from duly licensed distributions, and cannot buy directly from the manufacturer. The reason for this is a perfect segue into the concept of tied house evil. Almost every state has a tied house statute that regulates the manner in which the three tiers may interact. The term originated in the days of Prohibition, when a tied house referred to a retailer that was bound to a manufacturing house via a kickback scheme and was precluded by the manufacturer from making independent purchasing decisions. Today, state tied house statutes prohibit this activity, and serve as the enabling authority for administrative regulations promulgated by state agencies regarding restrictions on industry activities, including advertising. The majority of the state tied house statutes are patterned after the federal tied house statute, codified at 27 USC 205. Section 205 prohibits exclusive outlets (e.g., a manufacturer requiring a retailer to purchase its products to the exclusion of others), tied house violations, commercial bribery, and consignment sales. It also establishes requirements and restrictions for labeling and advertising. The tied house and commercial bribery provision are those most frequently cited by regulators reviewing an advertisement or marketing campaign. It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate (b) Tied house To induce through any of the following means, any retailer, engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or 3 Once again, as a result of space limitations, my description here of the relationship between manufacturers and wholesalers is an oversimplification. In many jurisdictions, and most commonly for beer, and secondarily for wine, legislation generally referred to as franchise laws governs the relationships of manufacturers and distributors. Explanation of the many franchise laws on the books in the U.S. could be the subject of an entire presentation; however, for our purposes here it is worth noting that the provisions of these laws often relate to territories, sales and marketing, and termination. 4 The control states are Alabama, Idaho, Iowa, Maine, Montgomery County, Maryland (the rest of Maryland is open), Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, Washington, West Virginia, and Wyoming. Though it is not true in every case, advertising restrictions tend to be more stringent in control states than in open states. 3

4 in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his business; or (3) by furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary of the Treasury shall by regulation prescribe, having due regard for public health, the quantity and value of articles involved, established trade customers not contrary to the public interest and the purposes of this subsection; or (4) by paying or crediting the retailer for any advertising, display, or distribution service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer credit for a period in excess of the credit period usual and customary to the industry fro the particular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him; or (7) by requiring the retailer to take and dispose of a certain quota in any of such products; or (c) Commercial bribery To induce through any of the following means, any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such a person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any products to such trade buyer in interstate or foreign commerce: (1) By commercial bribery; or (2) by offering or giving any bonus, premium, or compensation to any officer, or employees, or representative of the trade buyer; or Tied house laws, both federal and state, arise in a variety of contexts. Normally, the issue is whether manufacturer advertising used by a retailer is a thing of value or impermissible premium not governed by a legislated exception. For example, in State X, may manufacturer Y issue instantly redeemable coupons on its products on the premises of retailer Z? Or, may manufacturer Y give away printed T-shirts on the premises of retailer Z? These issues are addressed in more detailed in section III below. 4

5 B. Federal Law Regarding Content The Act restricts the content of alcohol beverage advertisements. Such advertisements may not contain any matter which is (1) false, deceptive, or misleading; (2) disparaging of the products of a competitor; (3) obscene or indecent; (4) related to the product s age or manufacturing process; (5) related to any guaranty; (6) inconsistent with product labeling; (7) directed to minors; (8) inconsistent with the spirit of safety or safe driving programs; or (9) a representation of athletic powers or of curative or therapeutic effects. See 27 U.S.C. 205(f). These restrictions apply to all alcohol beverage advertisements, regardless of format or means of transmission. C. Alcohol Advertisements As Commercial Speech Protected By The First Amendment State laws regarding alcohol advertising can be quite restrictive, and therefore there is often a tension between these laws and constitutional free speech protections. Many alcohol advertisements can be classified as commercial speech to First Amendment protection if they are truthful and not misleading, they provide consumers with information about a specific product, and they serve the economic interest of the speaker. State regulators often seek to restrict alcohol advertisements based on a concern that the advertisements are inducements to consume alcohol beverage products. This concern arises out of temperance, which is a substantial state interest. See 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 491 (1996) (Twenty-first Amendment could not save freedom of speech violation caused by state ban on liquor price advertising); see generally, Bad Frog Brewery, Inc. v. New York State Liquor Authority, 134 F.3d 87 (2d Cir. 1998). Bad Frog was a landmark case in this area. The Bad Frog brewery sued the New York State Liquor Authority ( NYSLA ) after the agency refused to approve its product labels, which depicted an animated frog raising his middle finger in a commonly known offensive insult. Bad Frog submitted several versions of the label to the NYSLA for approval, including one with the slogan [h]e just don t care.: The NYSLA s two primary reasons for rejecting the label were (1) the gesture, combined with the slogan, would encourage consumers to ignore the health warnings on the labels, and (2) the presence of the label in grocery and convenience stores where it would be seen by children would have an adverse impact on them. One of the facts which made Bad Frog a unique case unlike its predecessors was that the commercial advertising, i.e. the label, lacked precise informational content. Bad Frog contended that because the label did not convey any commercial information and rather was meant to be a joke and a social commentary, the label should be treated as pure speech not subject to the limitations of the commercial speech doctrine. The Second Circuit disagreed, and held that the label should be examined as commercial speech because it identified the product and proposed a commercial transaction. Id. At If a state seeks to restrict an advertisement based on its Twenty-first Amendment powers, then its restrictions must satisfy the commercial speech test articulated in Central Hudson Gas & Elec. Corp. v. Public Svc. Comm n, 447 U.S. 557, 100 S. Ct. 2343, 65 L. Ed. 2d 341 (1980). A reviewing court would consider the following four criteria: (1) whether the speech at issue concerns lawful activity and is not misleading; (2) whether the government interest asserted to justify restricting the speech is substantial; (3) whether the restriction directly advances the government interest asserted; and (4) whether the restriction is more extensive than necessary to serve the government interest. Central Hudson at 566. Most alcohol advertisers are able to satisfy the first prong of the test; i.e., the consumption of alcohol by consumers of legal drinking age is a lawful activity. Furthermore, most advertisements are not misleading as long as they advertise real products available for sale or events scheduled to be held. As for the second 5

6 prong, the state can usually demonstrate that its interest in temperance is substantial based on existing case law precedents. The third prong of Central Hudson is more often the focus of litigation. State regulators are forced to argue that restricting the advertisements at issue directly advances the promotion of temperance. In order for the messages to materially impact the state s interest, the state must demonstrate at a minimum that the messages influenced people who otherwise would not purchase alcohol to do so. This burden of proof will be difficult if the advertisement is qualified or limited in any way, or if it is directed at a targeted group of consumers. If restricting the advertisements at issue would provide only ineffective or remote support for the government s purpose, the state will not be able to satisfy the third prong of the Central Hudson test. Bad Frog, supra, 134 F.3d at 98, citing Central Hudson, 447 U.S. at 564. This was the case in Bad Frog. The Bad Frog court applied Central Hudson in its analysis. Bad Frog s labels passed muster under the first prong of the test: they concern lawful activity and are not misleading. Drinking is legal in New York and the labels, though they may be offensive, do not contain any information that would mislead consumers. The court agreed that the government s interests in regulating alcohol consumption and temperance were substantial state interests, thus satisfying the second prong. New York had a more difficult time satisfying the third prong of the test, also known as the direct advancement requirements. The state did not succeed on its argument regarding the protection of children; the court found the NYSLA s effort to insulate children from vulgarity in such an isolated sphere, by rejecting a label on a product children cannot legally purchase, did not advance the state s interest to a material degree. Id. at 100. The fourth prong of the Central Hudson test considers whether the prohibition the state seeks to impose is more extensive than necessary to serve the asserted interest. The court held that the NYSLA s rejection of the Bad Frog Labels did not directly advance the state s interest in temperance. The Court found that the NYSLA s arguments that the image and slogan would encourage disregard of health warnings and drinking by minors were mere assumptions. Id. The principles articulated in Bad Frog and Central Hudson continue to be applied in other cases. In 2001, the United States Court of Appeals for the Tenth Circuit was faced with the issue of whether Utah s near ban on advertising of liquor was constitutional. In Utah Licensed Beverage Ass n v. Leavitt, 256 F.3d 1061 (10 th Cir. 2001), an alcohol beverage trade association, the Utah Licensed Beverage Association ( ULBA ) sued the state and sought to overturn Utah Code 32A (2), which prohibited the advertising or use of any means or media to induce persons to buy liquor except under a few very narrowly drawn exceptions, most of which would only allow the advertiser to announce itself as a licensee of the state or to advertise the mere availability of alcohol in informational materials. Utah had no similar statute or regulation restricting advertisements of beer. Utah s advertising restrictions passed the first and second prongs of the Central Hudson test. However, the court found that Utah could not establish that prevention of the harm that underlies the state s two main asserted substantial state interest, temperance and the operation of a public business, was directly advanced by the laws restricting the liquor advertisements. Because the court determined that the state could present no reason why advertising restrictions on wine and liquor confer more temperance benefit than nonexistent restrictions on beer would, the court concluded that the restrictions were irrational, and consequently unconstitutional. Id. at The court was equally unconvinced by the state s argument that liquor advertising harms its substantial interest in operating a business (as a control state) in alcohol sales, when the state has set up a host of regulations to monitor violations by alcohol licensees. As a result, this argument failed under the third prong of Central Hudson. 6

7 III. ADVERTISEMENTS IN PRINT MEDIA, TELEVISION, AND RADIO A. Print Media As noted in section I, B above, print advertisements in newspapers, magazines, and other publications are subject to federal law restricting their content. However, state and federal tied house laws also govern these advertisements if they combine manufacturer and retailer advertising. In other words, manufacturerfunded ads which make no reference to a retail outlet do not raise tied house concerns. Retailer ads which are entirely paid for by the retailer and which advertise the availability of alcohol beverages on the retail premises do not raise tied house concerns. Tied house laws do apply, however, when a manufacturer and a retailer are both participating in some way in the same advertisement. Cooperative advertising, wherein the manufacturer pays the retailer to place an advertisement, is absolutely prohibited. 5 Federal law, and some states laws, allow limited exceptions to these prohibitions. For example, manufacturer-funded advertising may list the names of two or more unaffiliated retailers that sell the featured product, unless the retailer is a state entity, in which case the listing of two retailers is not required. See 27 C.F.R. 6.98, which provides: Advertising service. The listing of the names and addresses of two or more unaffiliated retailers selling the products of an industry member in an advertisement of the industry member does not constitute a means to induce within the meaning of section 105(b)(3) of the Act, provided: (a) The advertisement does not also contain the retail price of the product (except where the exclusive retailer in the jurisdiction is a State or a political subdivision of a State), and (b) The listing is the only reference to the retailers in the advertisement and is relatively inconspicuous in relation to the advertisement as a whole, and (c) The advertisements does not refer only to one retailer or only to retail establishments controlled directly or indirectly by the same retailer, except where the retailer is an agency of a State or a political subdivision of a State. By containing the names of two or more unaffiliated retailers, the advertisement does not work any exclusion among retailers. Another exception allows manufacturers and retailers to jointly participate in newspaper advertisements Newspaper cuts. Newspaper cuts, mats, or engraved blocks for use in retailers advertisements may be given or sold by an industry member to a retailer selling the industry member s products. 5 See 27 C.F.R

8 27 C.F.R This exception is commonly used to advertise weekly specials in retailer circulars. B. Television and Radio Many states place content-specific restrictions on alcohol beverage advertisements that are transmitted via television and radio which are more far-reaching than those imposed by federal law. For example, some states have legislated that ads may not show people actually consuming wine (e.g., Alabama), some may not make any reference to free drinks (e.g., Arkansas), some may not picture children (e.g., Connecticut). However, depending upon the circumstances, the degree to which individual states may regulate alcohol advertisements over the airways is limited by the doctrine of federal preemption per the now famous case of Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 104 S. Ct. 2694, 81 L. Ed. 2d 580 (1984). In Capital Cities, the U.S. Supreme Court reviewed the constitutionality of Oklahoma laws prohibiting the advertisement of alcohol beverages on television. The restrictions were challenged by cable broadcasters who were physically situated in Oklahoma and regularly aired programming and advertising that originated in other jurisdictions where alcohol beverage advertising was not similarly prohibited. The broadcasters were obligated to out-of-state parties, and by Federal Communications Commission ( FCC ) regulations, to air such broadcast advertising. The Oklahoma statute under review in Capital Cities provided in pertinent part: It shall be unlawful for any person, firm or corporation to advertise any alcoholic beverages or the sale of same within the state of Oklahoma Okla. Stat. Tit. 37, 516 (1981). The broadcasters challenged the Oklahoma restrictions chiefly on First Amendment grounds, but the Court focused on preemption issues raised by the FCC in an amicus curiae brief. 6 The FCC s (and consequently the broadcasters ) argument was that the doctrine of federal preemption should invalidate application of Oklahoma s advertising ban because the state statute created a direct conflict with federal regulations, i.e., the Oklahoma statute forced the cable broadcasters to either violate the state law and face criminal prosecution, or violate the federal regulations; compliance with both would be impossible. Oklahoma argued that its state law should not be preempted notwithstanding any conflict because it was adopted pursuant to the state s broad power to regulate alcohol beverages pursuant to the Twenty-first Amendment. The court confirmed that the state law conflicted with the federal regulations in several material ways. First, the FCC s must-carry rules require Oklahoma cable operators to transmit the broadcast signals of any television station within a specified zone, including signals originating in other states, where the same advertising restrictions do not exist. Second, the FCC s nondeletion rules prohibit the broadcasters from 6 Under the Supremacy Clause of the U.S. Constitutions, enforcement of a state law may be preempted by federal law in several circumstances: (1) when Congress, in enacting a federal statute, has expressed a clear intent to preempt state law; (2) when it is clear, despite the absence of explicit preemptive language, that Congress has intended, by legislating comprehensively, to occupy an entire field of regulation and has thereby left no room for the states to supplement federal law; and (3) when compliance with both state and federal law is impossible, or when the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Citations omitted, internal quotation marks omitted, Capital Cities at

9 deleting any of the content from the broadcasts from these stations. Third, cable operators are engaged to broadcast channels known as pay cable (e.g., CNN, ESPN), and although pay cable is not subject to the must-carry and nondeletion rules, state regulation of these services is precluded by federal law. Id. at Based upon these conflicts, and other authorities indicating that the FCC has occupied the field of cable regulation, the court specifically held that Oklahoma s alcohol beverage advertising ban could not be applied constitutionally to out-of-state television signals that were carried by local cable operators physically situation in Oklahoma as part of an interstate television broadcast. Id. at 716. The court explained that the federal law should prevail over the state law, notwithstanding the state s powers under the Twenty-first Amendment, in a situation where the state law does not involved the time, place, and manner in which liquor may be imported and sold. Id. Because the case was resolved on the preemption issue, the court did not opine on the First Amendment issues. Capital Cities arguably requires state and federal courts to invalidate the application of any state law restricting interstate television broadcasts, as long as those broadcasts originate outside of the state and are aired by in-state broadcasters to whom the FCC rules examined in Capital Cities apply. It is unclear whether the arguments which prevailed in Capital Cities would apply to network advertising. Certainly some of the same rationale would apply: (1) if the network broadcasts, like the cable broadcasts, originate from outside of the regulation state, and (2) because federal law likely still would preempt any state restriction as the FCC regulates network television advertising also. IV. COUPONS AND DISCOUNTS Coupons are a very popular form of alcohol beverage advertising used by both manufacturers and retailers to sell alcohol beverage products. They are found as cut outs in newspapers, on product packages, at the point of sale, and are even sent via and direct mail. There are two types of coupons in common use: the instantly redeemable or cents off manufacturer. As the names imply, the first variety allows the consumer to receive the discount at the cash register on the retail premises. Because tied house laws prevent the retailer from giving money directly to the retailer, normally the retailer is reimbursed by the manufacturer via an independent clearing house. Rebate coupons require mail in to the manufacturer for redemption, and therefore they allow the manufacturer to deal directly with the consumer to refund the discount offered. Federal law permits manufacturer coupons under certain conditions. First, all retailers in the market where the coupon offer is made must be able to redeem the coupon. Second, manufacturers may not reimburse the retailer for more than the face value of the redeemed coupons, plus a standard handling feel. Finally, direct offers of premiums and discounts may be made directly to consumers, and officers, employees, and representatives of wholesalers and retailers may not participate. See 27 C.F.R The majority of states in the U.S. have a statute or regulation governing the use of alcohol beverage coupons. Many states which prohibit the use of alcohol beverage coupons link the prohibition directly to the state tied house law. Regulators raise several tied house-related issues in connection with coupons, including those related to a redemption (e.g., potential for funds to be improperly transmitted from a manufacturer to a retailer), exclusion (e.g., if the coupon is not offered to all retailers) and cooperative advertising (e.g., if the manufacturer pays the retailer for the production of the coupon). Coupon rules vary from state to state, and the rules for beer, wine, and liquor coupons may differ within the same state. In some jurisdictions, only rebate coupons are allowed under the theory that because the coupons are redeemed as between the manufacturer and the consumer, the opportunity for a tied house violation is not present. 9

10 Regardless of such safeguards, some states prohibit the use of coupons altogether based on tied house principles. Texas is an example. See Tex. Al. Bev (d). Section , Prohibited Dealings with Retailer or Consumer is Texas tied house law. In addition to the prohibition on coupons, the law establishes restrictions on advertising specialties and consumer focused contests. This kind of advertising, as explained further below, is also heavily regulated. V. POINT OF SALE MATERIALS AND CONSUMER ADVERTISING SPECIALTIES Both federal and state laws govern the use of so-called Point of Sale Materials and Consumer Advertising Specialties. Point of Sale materials, or POS, are referred to in some states as Manufacturer Advertising Specialties. POS consist of any items given or sold by the manufacturer to the retailer for the purpose of attracting consumers to the manufacturer s products. These items are designed to remain on the retail premises and include, among other things, posters, inside signs, coasters, menu cards, napkins, and wine lists. See 27 C.F.R. 6.84(b)(1). Consumer advertising specialties are similar in that they too are given or sold to the retailer by the manufacturer; however, they are designed as take-away gifts for the consumer. They include ashtrays, corkscrews, matches, recipe cards, T-shirts, and hats. See 27 C.F.R. 6.84(b)(2). Both POS and consumer advertising specialties are subject to restrictions as a result of the tied house laws. Both must contain conspicuous and substantial advertising matter about the product or its manufacturer. Furthermore, the manufacturer may not pay or credit the retailer for using these items. See 27 C.F.R. 6.84(c). Individual states impose their own additional restrictions. The most common restriction is the cost of the POS and consumer specialty items; most states limit the cost with a specified dollar amount. For example, the state of Connecticut limits manufacturer advertising materials to five hundred dollars per distributor of the items per retail outlet per year, with the exception of wine lists, which may be given without limitation. Consumer novelties, which must be unconditionally distributed, and must be of nominal value, must not have an aggregate cost of more than five hundred dollars per distributor per retail outlet per calendar year. See Conn. Agencies Regs A32a. VI. CONCLUSION Alcohol beverage marketing is a highly complicated and heavily regulated area. Industry members should be mindful of any tied house, content, and/or constitutional issues that may exist prior to investing in and launching any marketing promotions involving alcohol beverages. This is true whether the proposed promotion is a national television advertisement, or a T-shirt giveaway in one restaurant. Federal laws on the subject are plentiful, but numerous more detailed state laws and regulations may also impact the proposed program. Free speech does not equal free rein! 10