ALCOHOL ADVERTISING
William D. Ellerman
Partner
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
214-953-6033
INTRODUCTION
The Three-Tier System
• Manufacturers or “producers”
• Distributors
• Retailers
– On Premise
– Off Premise
– Beer, Wine and/or Liquor
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
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
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
RULES THAT APPLY TO CERTAIN PERMITS
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
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
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”
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”
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
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
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?
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
RULES THAT APPLY TO TYPES OF
BEVERAGES
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
Ads for Distilled Spirits Must Contain
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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
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
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
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
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?)
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
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
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
GENERAL ADVERTISING RULES
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
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”
Prohibited Drink Specials
•
•
•
•
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•
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“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.
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
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
Gifts, Contests, and Promotions
• Severely restricted and generally prohibited
• Some exceptions:
– Sweepstakes
– Gifts
– Lottery
– Co-sponsorship of events
– Tastings
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
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
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
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
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.
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
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
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”
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
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”
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
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
MISCELLANEOUS
Dry Areas
• No public use of alcoholic beverages is
allowed in dry areas
• Broadcast advertising is permissible
• Outdoor advertising is impermissible
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
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
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 preapproval