DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau

Industry Circular

Number: 2011-01

Date: March 26, 2011

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Application of Alcohol Beverage Advertising Regulations to Media Personality Sponsorships

To:   Proprietors of Beverage Distilled Spirits Plants, Bonded Wineries, Bonded Wine Cellars, Taxpaid Wine Bottling Houses, Breweries, Importers, Wholesalers, and Others Concerned.

1. PURPOSE.

This circular provides guidance on how the Alcohol and Tobacco Tax and Trade Bureau (TTB) interprets the applicability of the Federal Alcohol Administration Act (FAA Act) and TTB alcohol beverage advertising regulations  to sponsored promotional statements made by media personalities during television or radio broadcasts.  

2. AUTHORITY.

Section 105(f) of the FAA Act, 27 U.S.C. 205(f), authorizes the Secretary of the Treasury to prescribe regulations for the advertising of wine, distilled spirits, and malt beverages.  The FAA Act requires that these regulations, among other things, prevent consumer deception, prohibit the use of misleading statements, irrespective of falsity, and provide the consumer with adequate information as to the identity and quality of the product advertised. 

The TTB advertising regulations for wine, distilled spirits and malt beverages, promulgated under the FAA Act are as follows:  27 CFR part 4, subpart G sets forth the regulations for advertising wine; part 5, subpart H sets forth the regulations for advertising distilled spirits; and part 7, subpart F sets forth the regulations for advertising malt beverages.  The regulations set forth in §§ 4.62, 5.63, and 7.52, require certain mandatory statements (e.g., responsible advertiser name and address) to appear in advertisements for wines, distilled spirits, and malt beverages, respectively, and the regulations set forth in §§ 4.64, 5.65, and 7.54 prohibit certain advertising practices and prohibit certain statements from appearing on such advertisements. 

As defined in 27 CFR 4.61, 5.62, and 7.51, an advertisement is, among other things, any written or verbal statement, illustration, or depiction that is in, or is calculated to induce sales in, interstate or foreign commerce.  This definition encompasses a variety of media types, and it specifically includes representations made in radio and television broadcasts.

3.  BACKGROUND.

As part of its advertising program, TTB reviews television and radio advertisements for malt beverages, wine, and distilled spirits. 

TTB is concerned about an advertising practice where an industry member compensates a media personality (e.g., a radio disc jockey) for promoting the industry member’s alcohol beverage product at various times during a television or radio broadcast.  Unlike scripted advertisements, the media personality is provided with a set of general talking points about the product that the industry member wants to be highlighted during the broadcast.  The disc jockey is then free to “ad lib” and add his or her own comments about the product that are consistent with the talking points that were provided by the industry member.   The agreement between the industry member and the media personality generally requires that the media personality mention the product a certain number of times during a broadcast.  That agreement may also require that the personality talk about the product for a specific length of time (e.g., 15, 30 or 60 seconds) each time the product is mentioned. 

TTB has found that the mandatory information for alcohol advertisements is rarely provided by the media personality in the context of unscripted advertisements, and industry members generally fail to inform the media personality of the requirement to include the mandatory information as part of the promotional statement.  Moreover, in several instances, media personalities have made promotional statements that are prohibited under the FAA Act or TTB’s regulations.

4.  TTB’S POLICY REGARDING MANDATORY INFORMATION AND PROHIBITED PRACTICES/STATEMENTS IN MEDIA SPONSORSHIPS.

TTB has determined that the compensated promotional statements made by media personalities during their television or radio broadcasts are advertisements under the TTB regulations when they are required by the industry members’ paid sponsorship agreements with the media personalities.  Accordingly, as advertisements, the compensated promotional statements described above must include the applicable mandatory information as required by the FAA Act and the TTB regulations.  In addition, the TTB regulations that prohibit certain practices and statements in advertisements also apply to the media personality advertising statements, regardless of whether they are scripted or non-scripted, and industry members are ultimately responsible for the content of such statements.  In all advertisements, the mandatory information must be provided.  Any advertisement that fails to provide this information or conveys prohibited information is in violation of the FAA Act and the industry member will be held accountable.

5.  QUESTIONS. 

If you have any questions about these advertising policies, please contact the Advertising, Labeling, and Formulation Division (ALFD).  You can reach ALFD by:

John J. Manfreda
Administrator
Alcohol and Tobacco Tax and Trade Bureau