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Wives Tales and Sea Lawyers

Wives Tales and Sea Lawyers

 “Sea Lawyer” is a maritime term first used in the US Navy in the 1800s.  A sea lawyer is someone who speaks authoritatively, and gives advice about rules and regulations even if he/she has no idea what they are talking about. Wives tales, folklore and near truths are their stock in trade.  They casually pass along myths, regardless of their factual basis, from one generation to the next.  In today’s beer selling world, the industry equivalent of sea lawyers are still passing along bad scoop just as sailors did in Old Ironsides navy. 

In an industry so highly regulated, one wonders how wives tales and sea lawyers can exist.  But here is the problem. A majority of the people, who now work in the alcohol industry are relatively new to the business. This fact isn’t isolated to any one level of the three-tier system, but is true across all levels of the industry.  It is equally true at both the major brewer and craft brewery level, at the distributor level and at the retail level.  This isn’t to knock new people, but it brings to light the fact that new people don’t have the same body of knowledge as the more experienced and tenured industry members of yesteryear.  The beer industry currently suffers from a lack of “institutional memory.”  Knowledge and understanding take time to acquire while false or erroneous information doesn’t have the same time requirement.

A perfect example is a recent ad in the trade paper Mid Atlantic Brewing News.  A brewer placed an ad that showed a beer label with a character wearing a Santa hat. What’s wrong with that? Well, it clearly violates industry advertising guidelines that alcohol advertising shouldn’t contain a depiction of Santa Claus.  This reference could give children an erroneous impression that a relationship exists between Santa and alcohol, and industry leaders have long agreed this type of advertising was not good for business.  The advertising guideline about Santa was developed within the industry by the Beer Institute, the brewers’ trade group, in an effort to self-regulate, but, it is not law.

A widely held myth about the beer business is that regulations and guidelines governing beer marketing and advertising are codified at both the federal and state level.  The fact is, with the exception of a few broad prohibitions, there is little law at either the state or federal level that regulate beer advertising/marketing in detail.  This is fortunate for the industry as self-policing and self-regulation works best in a free economy.

The intent of federal and state law is to provide an orderly marketplace in which one tier of the system doesn’t control the actions of another tier.  Laws at both levels attempt to protect consumers and promote control over the responsible use and consumption of alcohol and beer in particular.  More detailed and specific guidelines are often provided by industry trade associations.

In a broad sense, the Federal government is concerned with four areas of how alcohol is sold in the United States.  

Federal Basic Trade Regulations

Tied House - addresses the degree to which financial ownership allows one tier to have undue influence over another tier through vertical integration.

Exclusive Outlet - competition and consumer choice are effected when one brewers/wholesalers brands become the only brands offered for sale by a retailer.  This is usually the result of a financial inducement based on direct investment in a business in a different tier, or when a member of one tier provides free goods or equipment to another tier.

Commercial Bribery - occurs when a brewer or wholesaler pays another tier member for exclusive rights to have only its products sold or to receive other favorable treatment.

Consignment Sales - is a practice whereby a supplier tells his customer you are not obligated to pay me until you have sold my product.  This regulation also includes the notion of a false sale in which a supplier agrees to take back unsold products.

The enforcement arm of the federal government is known as the Alcohol and Tobacco Tax and Trade Bureau (TTB).  This agency has long taken an interest in alcohol advertising through measured media i.e. television, radio, billboards, etc.  Recently TTB concluded, that in its view, social media is a new form of advertising.  This past Spring TTB came forth with guidance that says social media including Facebook, Twitter, Instagram, etc. serve the same function as traditional forms of advertising.  Website home pages, blogs, microblogs and links are all included in this communication.  Social media messages must, therefore, conform to established advertising standards such as:

Statements in advertising must be fair and true.

They cannot disparage competition.

Messages must not be obscene or indecent.

Statements about products and graphics should not mislead the consumer.

The consumer should not be misled through false
guarantees.

False health related claims that induce a consumer to purchase are not allowed.

The name and origin of the product must be conspicuously stated, be legible and clearly part of the message.

Blogs, microblogs, email blasts and other communication via the internet must adhere to these standards.

Maryland

The State of Maryland Comptroller’s Office, through the Alcohol and Tobacco Tax Division, (ATT) publishes regulations and bulletins that promulgate how the beer business is to be conducted within the state.  The agency provides guidance to all three tiers of the alcohol industry regarding allowable marketing and trade practices.  In an overall sense, ATT efforts are intended to promote an orderly marketplace in which no tier dominates or has undue influence over another tier.  Monetary payments and other inducements are prohibited that would encourage the discrimination and unequal treatment of a retailer by a supplier.  And, state regulations define the type of involvement a brewer and wholesaler can have with consumers.

The Beer Institute

Located in Washington, DC, the Beer Institute is a trade association of the major brewers.  Over time, it has developed a broad array of marketing and advertising guidelines to keep its members and their customers out of trouble and in compliance with alcohol regulations.  It is the overall philosophy of the Beer Institute that beer is a beverage intended for use by adults in a responsible manner.

Some of the Beer Institute's
most important marketing and advertising guidelines include:

Beer advertising cannot make false claims about the qualities of a specific beer or beer in general.

Advertising can’t boast unsubstantiated health claims.

Beer advertising cannot make false claims that users can attain status in education, athletics, professional or social through its use.

Advertising cannot claim that social and other problems can be solved by drinking beer.

Advertising and marketing materials should not include images of lewd or indecent topics including graphic nudity.

Sexually explicit activity cannot be claimed as a result of consuming beer.

Religious themes or images should not be used.

Beer advertising cannot be used to disparage competing beers.

Claims cannot be made that a competitor’s beers contain additives or objectionable ingredients.

Recycling and anti-littering campaigns should not be disparaged.

There should not be depictions of drinking and driving.

No representations should be made of underage people consuming beer.

Appeals should not be made to underage people to consume beer. 

People portrayed in beer ads must be at least 25 years old.

Beer product shots may be used in media advertising as long as 71.6% of the audience is expected to be of legal age.

Advertising may show beer being consumed but not at a rapid rate or to excess.

Marketing materials and advertising may not show people not in control after consuming beer.

Beer consumption may not show situations where there is a question of personal safety.

A depiction of Santa Claus cannot be used in marketing or advertising materials.

Combining industry guidelines with law has kept the beer industry as a responsible economic entity in this country. It is important, therefore, to know the facts of the law and industry guidelines as they relate to your part in the marketing and sale of beer.  Otherwise, it is easy to put your job and your company at risk to substantial fines or loss of its federal and state permits to operate. Agents at the state and federal level are willing to help you and your company stay out of trouble, as is the Beer Institute and your local trade associations.

The headquarters of TTB is located in Washington, DC.  Their phone is 202-455-2272.  The agency also has a District Field Office which is in Philadelphia, PA.  That phone number is 202-453-3144.

Maryland’s Alcohol and Tobacco Tax Division is located at 110 Carrol Street in Annapolis.  The phone number is 410-260-7388.

The Beer Institute is located in Washington, DC.  202-737-2337.

It is not difficult to comply with either the spirit or the letter of the law if you make the effort to ask questions before you act.  It is also important to have some knowledge about the most important facets of federal, state and local law as they relate to selling and promoting beer.  There is an old legal maxim that says, “Ignorance is no excuse for the law.” If you have doubts about your plan of action, ask questions of qualified experts at TTB or Maryland’s ATT.  There is no benefit to be gained by listening to sea lawyers and their wives tales. 

 

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