By: Louis J. Terminello, Esq. and Brad Berkman, Esq.
The COVID-19 pandemic has had a profound impact on the world of beverage alcohol. As the reader knows, e-commerce sales of all alcoholic beverages, and especially wine, have grown exponentially. The reliance by the consumer on their computer is resulting in a war of attrition against the three-tier system, the legal doctrine of Tied-House and trade practice concerns.
One significant and deeply affected business sphere is how marketers are using technology to create brand awareness. Clearly, the beverage alcohol advertising landscape is in a state of flux and change. The internet and social media, in particular, have had a profound impact on virtually all consumer goods but it seems that the boundaries of acceptable alcohol advertising are being expanded outward. More significantly, the impact of the ‘influencer’ in the alcohol sphere has become an important marketing tool for raising brand awareness and driving case sales. A simple search on YouTube will quickly reveal innumerable posts and videos on the effective use of social media and the influencer to promote wine brand awareness.
In the world of wine, there is room for influencers at all levels. Although in different forms, past practice supports this contention. There is little difference to the wine marketer between wine writers of the past and the videographer of the present. Whether it be number of points given by Parker, or the number of followers of an influencer, the goal is to raise brand awareness and ultimately move boxes. Obviously, certain categories of influencers will be used to advertise and market high-priced single varietals or a unique Meritage. Lower priced, broad market and perhaps younger focused labels require a different type of influencer. However, the use of an influencer and the commensurate social media campaign, if not properly designed and executed, could be perilous for the brand owner.
The purpose of this article is to provide the wine marketer who may be considering the use of influencers with the basic guidance for the effective use of the “influencer” and social media in order to withstand the scrutiny of alcohol regulatory authorities.
TTB and the FTC
The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) promulgates rules for compliant labeling, advertising, and related trade practice matters. State(s) alcohol control boards possess the authority to promulgate and enforce their own similar rules within their borders. The regulatory agencies are certainly known to the reader. There is another federal agency, less known to those in the industry, called the Federal Trade Commission (“FTC”), which the wine marketer should be aware of.
The FTC is an independent agency within the federal government that is tasked with, in its own words, “…protecting consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.” The FTC has stated publicly that it has the authority and ability to enforce alcohol advertising rules on various media including the social media and the use of influencers.
Historically, alcohol beverage producers self-regulated their advertising initiatives by adhering to the guidelines of three (3) influential producer associations. Those associations are: 1) The Beer Institute; 2) The Wine Institute and: 3) Distilled Spirts Council of the United States or DISCUS.
All three associations have published guidelines for brand owners of each commodity to follow as minimal industry standards.
The FTC has adopted these rules and advises that alcohol advertisers should comply with these standards. The FTC has openly stated it can file enforcement actions against brand owners that disregard the adopted standards. It is important to note that to date, the FTC has not often enforced these rules through administrative action. Given the changing nature of advertising and the “pushing of the envelope” by young influencers of acceptable standards it is wise to be familiar with them and work to be sure they are complied with.
The main concern of the FTC is advertising that is intentionally or inadvertently directed to underage consumers and where the content of the advertisement may be of particular appeal to the underage drinker. Since this is a wine focused publication, we direct the reader to the short list below taken from the Wine Institute, which outlines best and responsible practices. Note that this is not a complete list, but highlights the most significant factors to bear in mind when constructing advertising content and in particular, overseeing the content of influencers broadcast on social media platforms.
Wine advertising shall not depict or describe in its advertising:
• The consumption of wine for the effects the alcohol may produce.
• Direct or indirect reference to alcohol content or extra strength.
• Excessive drinking or persons who appear to be intoxicated or to be inappropriately uninhibited.
• Any suggestion that excessive drinking or loss of control is amusing or a proper subject for amusement.
• Any persons engaged in activities not normally associated with the moderate and responsible use of wine and a responsible lifestyle. Association of wine use in conjunction with feats of daring or activities requiring high degree of skill is specifically prohibited.
• Wine in quantities inappropriate to the situation or inappropriate for moderate and responsible use.
• Wine advertising should not depict or encourage illegal activity of any kind.
• Wine shall not be presented as being essential to personal performance, social attainment, achievement, success, or wealth.
• The use of wine shall not be directly associated with social, physical, or personal problem solving.
• Wine shall not be presented as vital to social acceptability and popularity.
• It shall not be suggested that wine is crucial for successful entertaining.
• Wine advertisers should not Show models and personalities as wine consumers in advertisements who are or appear to be under the legal drinking age. Such models shall be 25 years of age or older.
• Use music, language, gestures, cartoon characters, or depictions, images, figures, or objects that are popular predominantly with children or otherwise specifically associated with or directed toward those below the legal drinking age, including the use of Santa Claus or the Easter Bunny.
• Be presented as being related to the attainment of adulthood or associated with “rites of passage” to adulthood.
• Wine advertising shall in no way suggest that wine be used in connection with operating motorized vehicles such as automobiles, motorcycles, boats, snowmobiles, or airplanes or any activities that require a high degree of alertness or physical coordination.
• Comparative advertising claims shall be truthful and appropriately substantiated and shall not be disparaging of a competitor’s product.
• Wine advertising shall not degrade, demean, or objectify the human form, image or status of women, men, or of any ethnic, minority, religious or other group or sexual orientation. Advertising shall not exploit the human form, or feature sexually provocative images.
It is important to point out that the three essential elements of brand advertising incorporated into the Wine Institute, Beer Institute and DISCUS rules, which are designed to ensure that a particular brand does not appeal to underage consumers, are:
• No more than 28.4% of an audience for an advertisement is to consist of people under 21 years of age.
• Content of the advertisement should appeal to individuals over 21 years of age-conversely; content should not appeal to individuals under 21 years of age.
• Models and Actors employed should be older than 25 years of age and reasonably appear to be over 21 years of age.
When deciding on whether to partner with an influencer, wine marketers should scrutinize the past content of the influencer as well as thoroughly analyzing the demographics of the influencers target audience.
Although the Wine Institute is silent on this issue, the DISCUS rules state that the 25 year old threshold for models and actors does not apply to athletes, celebrities, spokespersons and influencers of legal drinking purchase age that are generally recognizable to their intended audience (see Code of Responsible Practices Distilled Spirits Council of the United Sates). The influencer does not necessarily have to be older than 25 years of age.
Beverage alcohol manufacturing, production, taxation, Tied-House, and related regulatory matters are complex. Trade practice and advertising rules, standing alone are also detailed and complex. As this article suggests, the internet, social media, and the influencer are acting as disrupters of an orthodox system of doing business. Of course, the new media and the new media stars offer tremendous opportunities to raise brand awareness that translates to more sales. The best advice here is be aware of acceptable and self-imposed industry standards and make them part of an effective social and influencer media driven campaign. The FTC is poised to enforce these regulations and likely will do so the more and more influencers test the acceptable limits of alcohol beverage advertising. As wine brand marketers, strive for compliance to stay off the radar of the regulatory authorities. To do otherwise, could be costly.