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Alcohol Marketing

and Advertising

A Report to Congress

September 2003

Federal Trade Commission, 2003

Timothy J. Muris

Mozelle W. Thompson

Orson Swindle

Thomas B. Leary

Pamela Jones Harbour

Chairman

Commissioner

Report Contributors

Janet M. Evans, Bureau of Consumer Protection, Division of Advertising Practices

Jill F. Dash, Bureau of Consumer Protection, Division of Advertising Practices

Neil Blickman, Bureau of Consumer Protection, Division of Enforcement

C. Lee Peeler, Deputy Director, Bureau of Consumer Protection

Mary K. Engle, Associate Director, Bureau of Consumer Protection, Division of Advertising

Practices

Joseph Mulholland, Bureau of Economics

Assistants

Dawne E. Holz, Bureau of Consumer Protection, Office of Consumer and Business Education

Michelle T. Meade, Law Clerk, Bureau of Consumer Protection, Division of Advertising

Practices

Chadwick Crutchfield, Intern, Bureau of Consumer Protection, Division of Advertising Practices

Executive Summary

The Conferees of the House and Senate Appropriations Committees directed the Federal

Trade Commission to study the impact on underage consumers of ads for new flavored malt

beverages, and whether the beverage alcohol industry has implemented the recommendations

contained in the Commission’s 1999 report to Congress regarding alcohol industry selfregulation. This report sets forth the Commission’s findings on these subjects.

The Commission’s investigation of flavored malt beverages (FMBs) indicates that adults

appear to be the intended target of FMB marketing, and that the products have established a

niche in the adult market. The investigation found no evidence of targeting underage consumers

in the FMB market. FMB marketers placed advertisements in conformance with the industry

standard that at least 50% of the advertisement’s audience consists of adults age 21 and over.

Nevertheless, the 50% placement standard in effect in 2001 and 2002 permitted the ads to reach

a substantial youth audience. This is particularly significant where the products and some ad

themes may be attractive to minors. Although it is probable that some teens drink FMBs, teen

drinking continued to decline during the period when these beverages were being aggressively

marketed.

Self-regulation practices in the alcohol industry have shown improvement since issuance of

the 1999 Report. The 1999 Report recommended that the industry adopt a third-party review

system as an external check on compliance with code standards, particularly to address

complaints about underage appeal. The present study provides evidence that the proceedings of

the Code Review Board of the Distilled Spirits Council of the United States (DISCUS) provide a

critical review of spirits company compliance with the DISCUS Code. Additionally, Coors

Brewing Company now participates in a third-party review program run by the Dispute

Resolution Division of the Council of Better Business Bureaus, and two other companies have

stated that they will adopt alternative approaches to obtain third-party input regarding their

compliance with self-regulatory standards. The Commission continues to believe that third-party

review provides an important measure of credibility to self-regulation and encourages all

companies to adopt some form of an external review process.

The largest improvements have occurred in the area of ad placement. In 2002, the alcohol

companies surveyed achieved 99% compliance with the standard that at least 50% of the relevant

media audience be adults. More importantly, the industry now has committed to adhere to a

70% placement standard and to implement post-placement audits.

The study also revealed added industry attention to the issue of ad content. This area is

particularly sensitive, given that minors are present in nearly every venue where ads are

disseminated. Company documents show many examples of ad concepts being rejected, and ad

content being modified, to reduce the likelihood of appeal to minors. Still, a visible minority of

beer ads feature concepts that risk appealing to those under 21. Unless care is taken, alcohol ads

targeted to young legal drinkers also may appeal to those under the legal age. Because of

significant constitutional issues, the Commission continues to recommend enhanced selfregulation to address concerns about alcohol advertising’s appeal to minors.

In addition to self-regulation of advertising, a comprehensive alcohol policy also must

address the means by which teens obtain alcohol for consumption. Younger minors obtain

alcohol primarily from noncommercial sources; this social availability can be addressed by

changing adult attitudes about teen use. Changes also are needed to reduce underage alcohol

purchases from commercial outlets, a source of alcohol for older minors. Support is needed for

the efforts of organizations that can conduct rigorous field studies of the efficacy of alternative

approaches to improving enforcement of minimum age purchase laws.

The Commission will continue to monitor alcohol industry self-regulation, particularly the

implementation of the new placement standard requiring that adults constitute at least 70% of the

audience for advertising. Additionally, the Commission will monitor the effectiveness of thirdparty review programs and will continue to evaluate new advertising programs that may have

undue appeal to underage consumers.

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Flavored Malt Beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

B. Prior FTC Investigation of FMB Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

C. Results of Updated FTC Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1. FMB Ad Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Content of Advertising for FMBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3. Effect of FMB Marketing on Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

III. The Status of Advertising Self-Regulation in the Alcohol Industry . . . . . . . . . . . . . . . . . . . . 7

A. The Benefits of Self-Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B. Current State of Industry Self-Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1. Enforcement of Self-Regulatory Code Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2. Advertising Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3. Advertising Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

4. Other Marketing Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5. Consumer Education by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

IV. Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

A. Marketing of Flavored Malt Beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

B. Industry Self-Regulation Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

C. Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Appendix A: Beer Institute Advertising and Marketing Code (1997)

Appendix B: Code of Good Practice for Distilled Spirits Advertising and Marketing (1998)

Appendix C: Code of Advertising Standards, Wine Institute (2000)

Appendix D: Beer Institute: Advertising and Marketing Code and Buying Guidelines (2003)

Appendix E: Code of Responsible Practices for Beverage Alcohol Advertising and Marketing

and Buying Guidelines, DISCUS (2003)

I. Introduction

In March 2003, the Conferees of the House and Senate Appropriations Committees directed

the Federal Trade Commission to study the impact on underage consumers of the significant

expansion of ads for new malt beverages.1 In addition, the Conferees asked that the Commission

study and report on whether the beverage alcohol industry has implemented the

recommendations contained in the Commission’s 1999 report to Congress regarding selfregulatory efforts to limit the appeal and exposure of alcohol advertising to underage consumers

(1999 Report).2 This report sets forth the Commission’s findings on these subjects.

Concerns about the marketing of alcohol reflect the serious costs of underage alcohol use.

Underage drinking has declined significantly since all states adopted 21 as the minimum legal

drinking age two decades ago, as shown by Figure 1,3 but drinking by minors remains high. In

2002, one-fifth of 8th graders, over one-third of 10th graders, and nearly half of 12th graders

reported drinking within the past 30 days, and significant numbers reported engaging in binge

drinking.4

Figure 1: Long Term Trends In 30-Day Prevalence

Of Use Of Alcohol For 8th, 10th, and 12th Graders

(One or More Drinks in the Past Month)

80%

The manner in which minors

drink places them at risk of

significant harm.5 Excessive

drinking is associated with a variety

70%

of risky behaviors and injury,

60%

50%

including drunk driving accidents,

40%

30%

suicide, sexual assault, and high-

20%

risk sexual activity.6 Public health

10%

8th Graders

Source: The Monitoring the Future Study, the University of Michigan.

10th Graders

12th Graders

organizations, the government, and

the alcohol industry have all

recognized that it is important to

reduce underage drinking in order to lessen drinking-related harm.7

Given the risks of underage drinking, all involved agree that the alcohol industry advertising

must avoid targeting minors. This report evaluates the status of self-regulatory efforts by the

industry to meet that goal. Section II addresses the marketing of the new flavored malt

beverages; Section III contains an update on alcohol industry self-regulation; and Section IV

contains the Commission’s recommendations.

This report’s findings are based upon information obtained following issuance of compulsory

process orders to nine major alcohol industry members,8 as well as discussions with a wide

variety of entities, including interested consumer groups, researchers, and industry trade

associations.9

II. Flavored Malt Beverages

A. Background

In recent years, flavored malt beverages (FMBs) have become increasingly popular. These

products combine beer and distilled spirits characteristics. To produce a FMB, a brewer starts

with a base of beer, uses filtering techniques to remove a portion of the beer taste, and adds

flavors derived from spirits to achieve the desired taste and alcohol level. FMBs are marketed in

traditional beer bottles, and have an alcohol content of 4% to 6% by volume, similar to other

beers.

Marketers introduced citrus-flavored FMBs, including “hard” lemonades in the late 1990's.10

More recently, brewers have entered into agreements with distillers to introduce spirits-branded

FMBs that typically taste like a combination of light beer and citrus or other fruit.11 Other FMBs

have flavors similar to wine coolers or cocktails (such as bourbon and cola).12

FMBs are relatively new products. As a result of efforts to introduce them into the

marketplace, a disproportionate share of beer advertising expenditures currently are directed to

FMBs.13 As new products have been introduced over the last five years, these expenditures have

increased dramatically, from 2% of beer advertising in 1998 to approximately 17% of beer

advertising in 2002.14 During that same period of time, FMB sales grew at a far slower pace,

from 1.3% of beer sales in 1998 to approximately 3% of beer sales in 2002.15 Over this time,

total per capita beer consumption has increased modestly, by about 1% per annum; a substantial

portion of FMB sales are derived from consumers who have reduced purchases of other malt

beverages.16 See Figure 2 (page 6).

B. Prior FTC Investigation of FMB Marketing

In 2001, in response to a complaint filed by the Center for Science in the Public Interest

(CSPI), the FTC conducted an investigation to determine if FMBs were being targeted to minors.

Among other things, the Commission staff reviewed whether the products were placed among

non-alcoholic beverages in retail outlets; whether the advertising for these newer products was

targeted to an underage audience; and whether consumer survey evidence proved that teens were

more likely than adults to be aware of and use the products, as alleged in the CSPI complaint.17

The investigation was conducted in collaboration with the U.S. Treasury’s Alcohol and

Tobacco Tax and Trade Bureau (TTB, formerly the Bureau of Alcohol, Tobacco and Firearms).

The Commission obtained proprietary information from marketers of the five products identified

in CSPI’s complaint, including internal documents relating to product development, marketing

plans, consumer research, and distribution plans. In addition to a review of the documentation,

the investigation included a ten-city survey to determine where the newer malt beverages were

placed in retail outlets.

With respect to the placement of FMBs in retail outlets, industry documents obtained by the

FTC showed that the alcohol companies had expressly urged distributors to place the products

with other alcohol products, generally with imports and microbrews.18 The FTC/TTB survey of

retail outlets in ten cities confirmed that the beverages were not co-mingled with non-alcoholic

products in retail outlets.

The Commission’s review also found no evidence of intent to target minors with the FMB

products, packaging, or advertising. For example, the internal company documentation,

including planning materials and consumer research results, demonstrated that the marketers

tested alternate product and packaging versions on adults aged 21 to 29 to determine the optimal

product taste profiles and packaging styles and that they tested the appeal of advertising by

surveying adults above the legal drinking age.

Finally, the Commission reviewed the consumer survey evidence submitted in support of the

proposition that the new malt beverages are predominantly popular with minors. The

Commission concluded that flaws in the survey’s methodology limit the ability to draw

conclusions from the survey data.19

C. Results of Updated FTC Investigation

In response to the Committee’s March 2003 request, the Commission initiated a new review

of the advertising and marketing of FMBs. The Commission sent compulsory process requests

to nine alcohol industry members, eight of whom market one or more beverages that compete in

the FMB category.20 The compulsory process requests required the companies to produce

internal documents relating to the marketing of these products, including documents describing

the target audiences and relating to advertising development and placement.

1. FMB Ad Placement

The Commission obtained marketing plans discussing the advertisement placement strategies

for the FMBs as well as data showing the age composition of the audience for FMB ads. As

discussed below,21 in 2002 the industry codes required that at least 50% of the audience for

alcohol advertising consist of adults aged 21 and over. The Commission’s review shows that, in

2002, over 99% of the dollars spent to advertise FMBs on television, radio, and in print media

were expended in compliance with this goal.

Although compliance with the 50% standard was quite high, the standard still permitted ads

to be placed in venues with a substantial underage audience composition. To limit the likelihood

that ads for FMBs (or other alcohol) would appear in such venues, five companies also

maintained lists of programs on which they would not place ads (“no buy” lists). Typically, they

instructed their media buyers not to place ads on MTV or the UPN network, on wrestling or

extreme sports shows, or on teen-oriented shows such as “Malcolm in the Middle,” “Gilmore

Girls,” “Boston Public,” “Sabrina,” “Grounded for Life,” “Celebrity Death Match,” “Dawson’s

Creek,” “Moesha,” “7th Heaven,” and “Popular.” A sixth company limited the likelihood of

placement on teen-oriented shows by requiring a 70% adult audience for placements. Finally,

two of the companies marketing FMBs did not advertise their products in print or broadcast

media.

The companies’ documents showed that on a few occasions, FMB ads appeared on

individual episodes of teen-theme shows in individual TV markets in 2002. Given the high

overall compliance, however, these incidents appeared to have been inadvertent, rather than

deliberate attempts to target teens.

2. Content of Advertising for FMBs

The alcohol company documents submitted in response to compulsory process consisted of

planning and operational documents prepared in the ordinary course of business. These

documents indicate that the companies target advertising for the FMBs to persons of legal

drinking age and older. Marketing concepts (including advertising and packaging) are directed

to a specific “target” category of consumers. The company documents show that the intended

targets for FMBs were above the legal drinking age, generally 21-year-olds to 27- or 29-yearolds.

The companies’ documents further indicate that before ads are disseminated, the alcohol

companies often use consumer research to test them for persuasiveness and efficacy.22 Research

participants are screened for target demographic characteristics including age, generally 21 to

29, and are asked a wide range of questions, including questions designed to elicit whether the ad

is appealing and whether it communicates that the advertised brand appeals to the target.23

Further, industry-conducted research on consumers over the age of 21 who use FMBs shows

that these consumers generally view the FMBs as substitutes for beer, although companies

developed them in part to attract consumers who did not like beer’s taste (often women). The

research indicates that adult FMB drinkers see the brands as appropriate for use on a wide

variety of occasions where they consume alcohol. This research also concludes that consumers

are not likely to consume more than two or three FMBs on any occasion because of the products’

sweetness.

To evaluate the success of FMB sales, the industry members rely on survey information

about product awareness, trial, and repeat usage among consumers aged 21 to 27, and among

older segments.24 These data show that in 2002, FMBs had substantial sales to adults. Although

consumers who are 21 to 27 are the largest single group of FMB users, the majority of FMB

drinkers are over the age of 27:

21-27 41%

28-34 22%

35-49 26%

50+ 11%

These data also show that users of FMBs are somewhat more likely to be female, a fact

which industry attributes to the products’ sweeter taste.

In summary, the documents provided by the companies indicate that marketing for FMBs is

targeted to adults 21 and over; that companies measure product success in terms of use by adults;

and that adults in fact use the products.

Figure 2: Percentage Growth of FMB Advertising,

FMB Sales and Per Capita Beer Consumption

18%

3. Effect of FMB

Marketing on Minors

The Committees also directed

16%

14%

the Commission to look at the

12%

impact on underage consumers of

10%

the expansion of marketing for

FMBs. As noted in the 1999

1998

1999

2000

FMB Advertising as Percentage of Beer Advertising

Per Capita Beer Consumption

2001

2002

FMB Sales As Percentage of Beer Sales

Source: FMB Advertising and Sales, Proprietary Industry Documents

Per Capita Beer Consumption, Adams Business Media

Report, advertising campaigns

targeted to 21-year-olds may also

appeal to those under 21.25 Thus,

Figure 3: Recent Trends In 30-Day Prevalence

Of Use Of Alcohol For 8th, 10th, and 12th Graders

(One or More Drinks in the Past Month)

the companies’ advertising for

FMBs may have had a “spillover”

60%

effect on teens, and the products’

50%

sweeter tastes seem likely to appeal

40%

to teens. The company documents

and other evidence available to the

30%

20%

Commission did not provide

10%

information on the particular impact

1998

1999

8th Graders

2000

10th Graders

2001

on minors of this expanded

2002

12th Graders

marketing. There also are no

Source: The Monitoring the Future Study, the University of Michigan.

reliable survey data on the brands

that teens drink and thus there are no data on whether or how many teens drink FMBs, or the

impact of FMB advertising on such drinking.26 The available data show that, despite increases in

FMB advertising, overall drinking by minors decreased between 2000 and 2002.27 See Figures 2

and 3. In any event, given that many factors influence teen drinking, including individual,

family, peer, and environmental factors, it is not clear that changes in drinking trends can be

attributed to changes in advertising.28

D. Conclusion

The Commission’s investigation of the marketing, sale, and use of FMBs indicates that adults

21 to 29 appear to be the intended target of FMB marketing; that the products have established a

niche in the adult market; and that FMB ads were placed in compliance with the industry’s 50%

placement standard. At the same time, the 50% placement standard in effect when these

products were introduced permitted the ads to reach a substantial youth audience. Further, some

themes attractive to new legal drinkers, as well as the products’ sweet tastes, may also be

attractive to minors. Although it is probable that some teens drink FMBs, teen drinking

continued to decline during the period when these beverages were being aggressively marketed.

The Commission believes, nonetheless, that marketers should exercise strong caution when

introducing new alcohol products, to ensure that they are not directed to an underage audience.

Further, the Commission continues to recommend that labels for all beverage alcohol products,

including FMBs, be required to disclose accurately the alcohol content by volume.29

III. The Status of Advertising Self-Regulation in the Alcohol

Industry

A. The Benefits of Self-Regulation

Strong and visible self-regulation can play an important role in addressing underage drinking

and beverage alcohol marketing concerns. Moreover, meaningful industry self-regulation can

address a broad range of advertising issues without raising the constitutional issues that

government regulation would pose.30

Each of the three major segments of the alcohol industry – beer, wine and spirits – has its

own self-regulatory code: the Beer Institute Code, the Wine Institute Code, and the Distilled

Spirits Council of the United States (DISCUS) Code.31 These codes are followed by member

companies as well as non-member smaller organizations.32 Additionally, many individual

companies have codes or practices that go beyond the provisions of the industry codes.

The Commission’s 1999 Report reviewed the self-regulatory codes of the alcohol industry

and concluded that, although the industry members for the most part complied with their codes,

improvements in standards and implementation were needed to reduce the likelihood that alcohol

advertising would be directed to underage consumers. The Commission recommended that the

alcohol industry improve enforcement mechanisms by adopting third-party review of code

compliance; raise the standards for placing alcohol ads; and conduct post-placement audits to

verify that ads complied with the new standards. The Commission also recommended that trade

associations and industry members adopt and build upon the “best practices” followed by

individual companies pertaining to ad content, product placement in media, online advertising,

and ad monitoring.33

B. Current State of Industry Self-Regulation

For this report, the Commission reviewed documents and interrogatory responses submitted

by nine alcohol companies in response to FTC order. This section first reviews

recommendations in the 1999 Report and then reviews particular industry efforts to implement

those recommendations from September 1999 to the present.

1. Enforcement of Self-Regulatory Code Standards

a. Findings of 1999 Report Regarding Third-Party Review of Advertising

Compliance

The 1999 Report opined that self-regulation is most effective when the alcohol companies’

internal mechanisms for fostering code compliance are supplemented by an external mechanism

for resolution of disputes about whether a particular practice violates code standards.34

Moreover, the 1999 Report noted shortcomings with the level of external review of compliance

in the alcohol industry. The Beer Institute and Wine Institute forwarded complaints about

member compliance to the individual companies but did not follow up to see how the company

responded to the complaint. DISCUS had a Code Review Board that reviewed and took action

on complaints about member performance, but the process was not made public.35 As noted in

the 1999 Report, public notice regarding complaint resolution enhances the credibility of selfregulation and provides valuable information to consumers and other industry members.36 Thus,

the Commission recommended that the industry adopt a third-party review system, particularly

to address complaints about underage appeal. The Commission recommended that a third-party

review system (1) be impartial and objective; (2) be public; and (3) apply standards

consistently.37

b. Third-Party Review After the 1999 Report

The Commission’s review reveals modest steps to implement the Commission’s

recommendation. Some segments of the industry have taken steps to incorporate some form of

third-party review in their compliance procedures. Others have not adopted third-party review,

believing that it is unreasonably expensive or redundant of existing, internal, multi-level

advertising review procedures.

The Commission’s review also found that, currently, complaints that advertising appeals to

youth are relatively infrequent: From 2001 to 2002, the nine companies that were the subject of

the current inquiry received 14,829 complaints, of which 305 (approximately 2%) related to

appeal to underage consumers.

Review of Coors Brewing Company Advertising

In the spring of 2002, Coors reached an agreement with the Dispute Resolution Division of

the Council of Better Business Bureaus (BBB) to implement a third-party advertising review and

complaint resolution program. The BBB program is called the Advertising Pledge Program

(APP), and Coors is its first client. The BBB APP is designed to settle disputes involving a

participating company’s compliance with that company’s voluntary advertising pledge

concerning marketing or advertising practices. If the BBB APP finds that the company failed to

comply with its pledge, then the BBB APP may recommend that the advertising or marketing

materials that are the subject of the complaint be modified or discontinued. Final decisions of

the BBB APP are publicly reported.

The BBB APP has issued final decisions in two cases involving Coors’ ads. In the first case,

it rejected an allegation that an advertisement for the FMB Zima featuring a nurse in a tight9

fitting uniform violated Coors’ advertising pledge not to use symbols with primary appeal to

those under 21. In the second case, it rejected an allegation that music in an ad for Coors beer

was primarily popular with teens, as data showed that the artist was predominantly popular with

older adults. Nevertheless, the BBB APP ruled that the ad’s content, depicting extreme

behavior, violated the Coors code commitment to not condone irresponsible behavior and

excessive drinking.38 Coors discontinued the ad.

ii. DISCUS Review Activities

DISCUS has a five-member Review Board that considers complaints received about member

advertising and marketing; it generally acts within two to four weeks of receiving a complaint.

On occasion, it takes action although no complaint has been filed. Findings of the majority of

the Review Board are communicated to the advertiser and, when appropriate, to all members of

the DISCUS Board of Directors. Board findings are not made public, however. In 1999, the

Commission commended DISCUS for having a system to review complaints about member

compliance but noted concern that the process was not made public and questioned whether

DISCUS, as an industry representative, was able to provide fully independent review.

Over the past three years, the DISCUS Code Review Board has considered 26 complaints

about distilled spirits ads. It found that 19 of the ads were in violation of the DISCUS code. In

every case involving a DISCUS member, and in approximately 40% of cases involving a

company that is not a DISCUS member, the company advertiser voluntarily discontinued or

revised the ad in response to the Board’s input.39

Four of the complaints considered by the Board involved allegations that ads or promotions

for distilled spirits products targeted underage consumers. In the first of the four cases, the

Board concluded based upon relevant demographic evidence that the challenged practice did not

violate the DISCUS code; in the remaining three cases, it recommended changes in marketing

activities to address concerns of appeal to underage consumers.40

The Commission’s review suggests the DISCUS Review Board’s analysis of complaints over

the past three years has been rigorous. Further, DISCUS has now determined to make its

decisions public, on a semi-annual basis. It has also created an outside advisory board

comprised of three persons with extensive expertise in alcohol advertising issues to provide input

on cases where the Code Review Board is unable to reach a majority decision and to provide

advice to individual companies, when sought. Appendix E at E-11. These changes will add

credibility to the process.

iii. New Approaches to External Review

Although not implementing a system for third-party review of complaints, individual

companies have engaged in other efforts to reduce the likelihood of noncompliance with selfregulatory codes. One company will use an outside panel to act as a sounding board for

advertising and marketing ideas. The panel, consisting of at least three outside individuals

chosen for their expertise in fields such as advertising, communications, marketing, broadcast

media, societal norms, and government regulation, will meet three to four times a year to

consider ad concepts, often before ads or promotions are created.41

Another company has announced plans to adopt a program to incorporate a third-party

review system that includes a panel of outsiders who will review its efforts to comply with the

company’s internal advertising code.

iv. Conclusion

The industry has made modest but important improvements in the area of external review of

self-regulatory compliance since the 1999 Report. Coors and members of DISCUS use thirdparty review systems. Two other companies are in the process of adopting alternatives to thirdparty review. These alternatives represent an attempt to incorporate, into the advertising

process, an outside analysis of code compliance. The Commission will continue to evaluate the

effectiveness of these systems as they are implemented.

2. Advertising Placement

a. Findings of 1999 Report

Each of the industry codes has provisions limiting the underage composition of the audience

for ads. In 1999, they required that more than 50% of the audience for ads be over 21.42

The Commission’s 1999 report criticized both this standard and the low level of effort to

ensure compliance with it. The Commission noted that because only 30% of the U.S. population

is under age 21, the 50% standard permits placement of ads on programs where the underage

audience far exceeds its representation in the U.S. population. Moreover, only one-half of the

reporting companies could show that nearly all of their ads were shown to a majority legal-age

audience; one-quarter of the companies failed to obtain the demographic data needed to evaluate

code compliance; and the data for the final one-quarter of companies showed weeks when a large

portion of ads were shown to a majority underage audience.43

The 1999 Report identified several best practices in alcohol advertising placement that

minimize underage exposure. Some companies supplemented ad placement policies with “no

buy” lists; had higher standards for placing ads; or reviewed past placements to monitor whether

compliance had occurred. The Commission endorsed these best practices and strongly

recommended that more industry members raise the standards for placement and conduct

periodic after-the-fact audits of placements to identify practices requiring modification.44

b. Placement Standards After the 1999 Report

In response to the 1999 Alcohol report, one major industry member adopted a higher

placement standard (60 to 70%, depending on the medium), and another member that previously

followed a 70% standard for a few brands applied it company-wide. Additionally, the Wine

Institute amended its code to adopt a 70% placement standard.45

Nonetheless, from 2000 to the present, the prevailing standard for placement of ads has

continued to be 50%, as set forth in the beer and spirits codes. Accordingly, for this report the

Commission evaluated compliance with the 50% standard, as it pertained to the brands whose

target included 21-year-old consumers.46 This category includes many beer, wine, and distilled

spirits products; FMBs are a subset of this category.

The new data show that alcohol companies have improved placement compliance

considerably since issuance of the 1999 Report. The Commission’s review showed that in 2002,

for brands whose target included 21-year-old consumers, over 99% of dollars spent for

television, radio, and print ads were expended in compliance with the 50% standard.47 (Eight of

the nine companies to whom the Commission issued compulsory process orders disseminated

ads for brands whose target included 21-year-olds in 2002.)

While this represents near-perfect compliance with code standards, as the Commission has

previously noted, the 50% standard permits large numbers of underage consumers to be exposed

to alcohol ads. As in the case with ads for FMB products, five companies complement the 50%

standard with “no buy” lists of networks (such as UPN and MTV) and shows on which they

would not permit alcohol ad placements, because of high teen interest.48 Some companies also

used higher placement standards to limit the likelihood that ads would appear on shows of this

type.

c. Adoption of a New Standard

In response to concern regarding advertising placement, the Beer Institute and DISCUS have

now modified their standards in important aspects. Specifically, the Beer Institute and DISCUS

amended their codes in 2003 to require that adults over 21 constitute at least 70% of the audience

for TV, magazine, and radio ads, based upon reliable data.49 To facilitate compliance, the

revised Beer Institute and DISCUS Codes require that members conduct periodic post-placement

audits of a portion of placements and to promptly remedy any identified problems. The revised

codes are attached as Appendices to this report.50

d. Conclusion

Adoption of a 70% placement standard for alcohol ads by all three of the industry trade

associations represents a significant improvement in placement standards. The requirement to

monitor compliance through periodic audits should help to ensure adherence to the standard.

These steps represent positive responses to the 1999 Report’s recommendations and the

Commission will monitor compliance with these revised provisions.51

3. Advertising Content

a. Findings of the 1999 Report

Some minors are present in nearly every advertising audience; thus, it is important that

alcohol advertisers take steps to ensure that alcohol ad content not target youth. Each of the

alcohol self-regulatory codes contains several provisions pertaining to the content of ads. With

regard to minors, the codes require that ad content not appeal primarily to those under the legal

drinking age. They also identify specific content that should be avoided, and in the case of the

beer and spirits industries, require that actors in ads be at least 25 years old and appear to be over

21.52 The 1999 Report recommended that companies target ads to persons 25 and older, or bar

ads with substantial appeal to underage consumers, even if they also appeal to adults.53

b. Self-regulation of Advertising Content After the 1999 Report

Following issuance of the Commission’s recommendation to avoid “overflow” appeal to

minors by targeting brands to older consumers only, one company introduced a new brand and

targeted it to consumers 25 and older. The introduction was not fully successful, a fact that

company marketers attributed to the “handcuffs of [the] mature package” and a “25+ media plan

[that] limited the initial appeal/ability to secure prime distribution.” Accordingly, the company

revamped its brand to include the “important 21-24 consumer in the target.” Other companies

have stated that because many alcohol consumers develop loyalty to alcohol brands by the age of

25, it is necessary to target legal drinkers ages 21 to 24 to ensure market share. As a result,

companies are not likely to restrict their targeting of ads to those over the age of 25, except in the

case of premium wine and spirits products.

As discussed in the section regarding FMB marketing, the industry documents indicate that

alcohol industry members make efforts to target ad content to persons of legal drinking age and

over.54 They direct advertising concepts to a specific “target” category of consumers aged 21

and over, conduct consumer research on adults aged 21 and over to confirm appeal to that target,

and measure success by data regarding trial, use, and repeat purchases by consumers of legal

age. Further, information previously obtained from the companies during prior investigations

has shown that if adult consumers participating in consumer research indicate that an ad conveys

the impression that the brand appeals to persons under the age of 21, the company will withdraw

it.

Nonetheless, some advertising targeted to the youngest legal drinkers continues to risk

appealing to minors. Companies targeting new legal drinkers should engage in continual efforts

to avoid use of ad concepts with potentially strong appeal to underage consumers. Despite some

conspicuous ad campaigns with juvenile themes, the documents submitted to the Commission

reveal that legal, marketing, and other company staff review marketing efforts during both

development and implementation with an eye to code provisions. They evidence a number of

instances when content was rejected out of concern about particular appeal to children, and

others when ad content was adjusted in an attempt to reduce the likelihood that an ad, once

executed, would appeal strongly to minors.55

Companies also take steps to address problems identified after an ad is disseminated.

Companies rely on consumer complaints to bring problems to their attention. For instance, the

Commission’s inquiry revealed an instance where, following receipt of complaints that an ad

could be interpreted to condone public drinking and vandalism, the company pulled the ad. In

another instance, when a complaint from a school alerted an alcohol company to the fact that a

billboard operator had placed its ad adjacent to the school playground (contrary to the alcohol

company’s instructions), the company promptly removed its ad from the billboard.

As noted above, external review processes are also designed to address advertising concerns.

The BBB APP and the DISCUS Code Review Board identify concepts that may appeal to youth,

and persuade companies to pull problematic ads.

c. Conclusion

Alcohol company documents provided to the Commission indicate that industry members

have policies prohibiting content that targets teens as well as implementation procedures

designed to give meaning to these policies. They also suggest that external review procedures

can be important if internal procedures fail. Coors, through the BBB, and the distilled spirits

companies, through DISCUS, have forms of external review that can serve as an important backup system to internal review. Accordingly, the Commission continues to recommend that all

alcohol companies adopt some form of a formal external review process.

4. Other Marketing Efforts

In addition to content and placement policies, many companies follow policies addressing

specific contexts where their product may be advertised, such as through product placements in

movies and television, on the Internet, and advertising directed to college students.

a. Product Placement

Product placement refers to the practice of providing alcohol products, logoed items, or

signage, to a program or film producer for possible prop use. In the 1999 Report, the

Commission recommended that product placements be limited to movies rated “R” or having

mature themes, and that placements not be made in films and programs where an underage

person is a primary character. The Commission also cited as a best practice a company policy

that prohibited advertising during shows dealing strictly with college life.56

The documents submitted by the companies indicate that the companies generally follow

such best practices. In 2002, the companies appeared to restrict alcohol product placements to

movies and television shows with mature themes or “R” ratings. They also avoided movies with

themes that could particularly appeal to underage consumers such as any “coming of age”

movies or those that primarily feature an underage character, and rejected requests to place their

products in movies that displayed irresponsible drinking, drunk driving, or college drinking

scenes. The revised Beer Institute Code contains a specific provision regarding product

placements. It prohibits placements in films depicting underage drinking; irresponsible

consumption in connection with driving; as well as placement in films that are particularly

attractive to children or have underage primary characters.

b. Internet Advertising

The 1999 Report, noting the significant presence of children on the Internet, urged improved

efforts to restrict underage access to alcohol company web sites. It recommended that

companies avoid Internet content that would be particularly attractive to underage consumers

and urged sites to carry messages about responsible drinking. It identified, as a best practice, use

of systems to limit access to the sites to users that state that they are over the age of 21.57

The nine alcohol companies that were the subject of this inquiry operate more than 80 web

sites to promote their brands. The Commission staff reviewed the companies’ sites for

consistency with the 1999 Report’s recommendations. With some exceptions, the content of the

web sites is mild. A typical site contains a description of the brand’s history and the location

where it is produced, depictions of the packaging, beverage-compatible food recipes and serving

tips, and an opportunity to shop online for logoed merchandise (e.g., golf shirts, patio umbrellas,

and glassware). Some of the sites offer an opportunity to sign up for e-mail messages that

contain similar text. Approximately a dozen of the sites have interactive features, such as the

opportunity to play a game like dominoes or to click on images of men and women in a cocktail

lounge to see what they are saying. These features are presented in a slow-paced, low-key

manner; their appeal to today’s youth is uncertain. Four of the sites feature more alluring

content, e.g., photos of scantily clad models on a beach. Over 90% of the sites feature references

to the fact that alcohol is for persons of legal age or contain other responsibility messages.

The Commission also reviewed the sites for response to the Commission’s 1999

recommendation to attempt to limit access to users stating they are over the age of 21. All of the

brewers’ sites and most of the vintners’ sites had responded to the recommendation, and featured

such a system. Most of the distillers’ sites instead required that visitors click on a box stating

that they are of legal age before entering the site; however, DISCUS has now modified its code

to require use of an age verification mechanism which could consist of requiring visitors to enter

a birth date over the age of 21 in order to enter an alcohol advertising site. Three companies

provided data showing that between 30% and 70% of consumers exit a site rather than entering

their date of birth. It is not known whether this is because they are underage, wish to avoid the

inconvenience, or are concerned about privacy. In some cases, if a consumer enters his age and

is rejected for being underage, the consumer is automatically sent to a web site promoting

responsible drinking practices (such as the Century Council site) or to a site for a non-alcohol

product.58

In addition to sponsoring branded web sites, some companies place banner ads on web sites

operated by others. The documents obtained from two companies that engaged in this practice in

2002 show that such ads are placed on sites shown by reliable data to have adult audiences that

equaled or exceeded 75% (such as NHL.com and Maxim.com) or even 85% (such as

Ticketmaster.com and ESPN.com).

Alcohol web sites are different from other alcohol advertising because consumers must seek

them out – unlike television or print ads, their content does not appear unsolicited. Further,

when the Commission last reviewed this issue, there were no technologies that permitted

advertisers to limit site entry to those who could be determined to be of legal age. As a result,

the Commission urged alcohol advertisers to limit entry to alcohol web sites to those who

entered a date of birth showing that they were 21 or older. The Commission recognizes that

some consumers may indicate an inaccurate date of birth. So long as web site content is not

likely to appeal to minors, however, the requirement to enter date of birth may be sufficient, as

the alternative is to require site visitors to provide sufficient personal information to permit

verification of their adult status. The Commission thus continues to urge all industry members to

avoid web site content that appeals to minors.

Operators of web sites that feature content likely to have strong appeal to minors, or that

permit consumers to order alcohol online, should consider use of age verification technologies.

These technologies require the consumer to enter personal identifying information (such as a

name and driver’s license number); they immediately compare this data to publicly available

information in government databases and then limit site access to those consumers demonstrated

to be over a specific age (such as 21).59

c. Advertising to College Students

In the 1999 Report, the Commission identified advertising to college students as a source of

concern, given the presence of a significant underage audience and the high incidence of abusive

college drinking. It cited, as a best practice, restrictions on campus alcohol beverage advertising

and raised concerns about ads in campus newspapers placed by off-campus bars that appeared to

promote irresponsible drinking.

A substantial minority of college students – approximately 42.5% – are below the legal

drinking age, and a 2002 report sponsored by the National Institute on Alcohol Abuse and

Alcoholism discussed in depth the issues associated with college drinking and identified

potential prevention measures.60 As of 2003, the Wine Institute and DISCUS codes continue to

prohibit advertising in college newspapers and prohibit marketing activities on campuses, except

(in the case of the DISCUS Code) at licensed retail establishments. The Beer Institute Code

continues to permit members to sponsor on-campus sports events, but only with the approval of

the college and (in the case of public events) where most of the audience is reasonably expected

to be 21 or over. The Revised Beer Institute Code also specifies that promotions on college

campuses should not portray consumption of beer as being important to education; shall not

degrade studying; and shall not encourage irresponsible, excessive, underage, or otherwise

illegal alcohol consumption.

With regard to ads local alcohol retailers place in college campus media, most companies

now direct the parties engaged in selling their product, including distributors, wholesalers, and

sales and marketing personnel to comply with their college marketing policies. The Commission

is not aware of any indications of non-compliance with these policies.

With regard to activities specifically targeted to U.S. students at “spring break” locations,

whether here or abroad, the alcohol companies surveyed by the Commission now universally

limit such promotions to licensed retail locations such as bars and restaurants.61 A few of the

companies stated that when sponsoring on-premise promotions, they take extra steps to prevent

underage consumption by having extra security to check identification.62

d. Direct Shipment of Alcohol to Consumers

Alcohol is typically purchased at a retail outlet or an “on-premise” location. This is

consistent with the three-tier system, established after Prohibition and enforced under state laws,

which generally requires that alcohol manufacturers sell to retailers and wholesalers, who in turn

sell to retailers, and who in turn sell to consumers. Through this system, consumers can obtain

the most popular brands of beer, wine, and spirits.

Nevertheless, consumers sometimes seek other avenues to purchase beverage alcohol. They

may order alcohol through consumer clubs or from vintners’ web sites.63 In a recent staff report,

the Commission’s staff concluded that state laws banning direct shipment of wine to consumers

reduced consumer choice and raised prices. It noted that states that permit interstate direct

shipping generally report few or no problems with shipment to minors, with some states applying

safeguards to online sales, such as requirements that package delivery companies obtain an adult

signature at the time of delivery, and others developing penalty and enforcement systems to

provide incentives for compliance with prohibitions on sales to minors.64

Direct shipment remains a very minor part of the alcohol supply system. In the case of wine,

an industry expert estimates that at least 90% of wine is sold through the traditional three-tier

channels.65 Data show that over 99.9% of the malt beverages sold in the U.S. is shipped from

breweries to beer wholesalers or sold to consumers in brewpubs or tasting rooms at breweries.66

Similarly, because the vast majority of spirits brands are available through local retail outlets,

there has been little demand for direct shipping.67 The web sites operated by the companies that

were the subject of this inquiry do not, except in the case of wine sites, provide for sale of

alcohol to consumers. As set forth in the Commission’s Wine Report, there is little evidence that

teens seek to obtain alcohol through direct shipment. Nonetheless, it is important that direct

shippers remain vigilant and that they use tools, such as adult signature requirements and online

age verification technologies, to prevent online alcohol sales from being a means of teen access.

e. Conclusion

Beverage alcohol is promoted in a myriad of ways. The Commission’s review shows that

industry members generally consider self-regulatory provisions when engaging in marketing

efforts for beverage alcohol. Additionally, the industry trade associations continue to revise selfregulatory guidelines to address changes in marketing methods. The Commission encourages

continued attention to these issues and will monitor implementation.

5. Consumer Education by Industry

Although precise figures are not available, it appears that on average the beverage alcohol

industry spends more than $50 million annually to sponsor public service activities to combat

alcohol abuse and to reduce underage drinking and attendant injury.68 Some of these programs

are sponsored directly by individual alcohol companies; others are sponsored by industry

organizations such as the Century Council, the Beer Institute, the National Beer Wholesalers

Association, and the Brewers’ Association of America. Materials are widely available free of

charge and often in different languages.

The alcohol industry’s public service efforts include a number of programs and resources

aimed at reducing the harm associated with underage and abusive drinking, and to assist

enforcement of the legal drinking age and drunk driving laws. They include:

•

programs for parents and other adults, to facilitate conversations with children about

alcohol issues;69

•

programs for underage persons, intended to educate adolescents and young adults about

the importance of the legal age requirement, responsible drinking, and risks of abuse;70

•

programs for college administrators, designed to provide guidance to colleges about

effective programs to reduce alcohol abuse on college campuses;71 and

•

programs for alcohol beverage retailers and servers, designed to promote enforcement of

laws prohibiting sale to minors and to prevent serving underage and intoxicated

persons.72

These programs are generally developed by professionals in the fields of education,

medicine, or alcohol abuse. Many are undertaken in partnership with community organizations,

educational groups, law enforcement officials, and the public health community. These

programs follow approaches recommended by alcohol research. For example, research shows

that parental monitoring protects against alcohol use;73 industry programs designed to facilitate

parent-child communications about alcohol use are intended to promote such monitoring.

Research also shows that adolescents and young adults overestimate social norms, that is, peer

approval and use of alcohol; these erroneous beliefs are correlated with alcohol use and abuse.74

Although more study is needed, some studies have shown that well-implemented programs to

correct erroneous views of social norms can have a positive effect.75 Finally, efforts to facilitate

enforcement of the legal drinking age are shown to reduce underage alcohol use.76

Although more rigorous research regarding the effectiveness of specific programs is needed,

the industry’s consumer education programs have the potential to help address issues of

underage alcohol use. The Commission encourages industry members to maintain links on their

web sites to these programs and their materials, to facilitate access to this information.

IV. Conclusions and Recommendations

A. Marketing of Flavored Malt Beverages

The Commission’s investigation found no evidence of targeting underage consumers in the

marketing of FMBs. Adults 21 to 29 appear to be the intended target of FMB marketing and the

products are popular among adults, including those over 27. FMB ads were placed in

compliance with the industry’s 50% placement standard.

The 50% placement standard in effect at the time these products were introduced permitted

the ads to reach a substantial youth audience, however, and ad content that appeals to new legal

drinkers, as well as the sweet taste of FMBs, may be attractive to minors. Although there is no

information to show the extent to which teens drink these beverages, the Commission believes

that marketers should exercise significant caution when introducing new alcohol products, to

ensure that they are not marketed to an underage audience.

B. Industry Self-Regulation Programs

Self-regulation practices in the alcohol industry have shown improvement since issuance of

the 1999 Report. With regard to external review of code compliance, in 1999 only the DISCUS

Code Review Board provided external review of company compliance with self-regulatory

guidelines; there was insufficient evidence, however, whether the Code Review Board’s program

was conducted in a critical and independent fashion, and the Commission criticized the

proceedings for being nonpublic. The present review suggests that the DISCUS Code Review

Board proceedings do provide an important review of spirits industry compliance with the

DISCUS Code; further, DISCUS has now committed to publicize its findings semi-annually and

has created an outside advisory group to provide input on certain cases. Additionally, Coors

now participates in a third-party review program run by the BBB, and two other companies are

adopting alternative mechanisms to obtain external input regarding their compliance with selfregulatory standards.

The largest improvements have occurred in the area of ad placement. In 1999, only half of

the companies surveyed were able to demonstrate compliance with placement standards. In

2002, all of the companies achieved 99% compliance with the 50% standard. More important,

the industry now has committed to adhere to a 70% placement standard and to implement postplacement audits.

Additionally, the industry documents show increased attention to the issue of ad content.

This area is particularly sensitive, given that minors are present in nearly every context where

ads are disseminated. The company documents show many examples of ad concepts being

rejected or modified to reduce the likelihood of appeal to minors. Still, a visible minority of beer

ads feature concepts that risk appealing to those under 21.

Since the issuance of the 1999 report, the companies also have made improvements in

practices relating to product placement, Internet advertising, and marketing on college campuses.

Most importantly, the companies that were the subject of this report have ceased sponsoring

spring break activities outside of licensed retail establishments.

Though self-regulatory compliance is substantially improved, concerns remain that unless

care is taken, alcohol ads targeted to young legal drinkers also may appeal to those under the

legal age. Nonetheless, because of significant constitutional issues, the Commission continues to

recommend enhanced self-regulation to address concerns about alcohol advertising’s appeal to

minors.

C. Recommendations

While advertising self-regulation is designed to prevent advertising and marketing practices

that target underage consumers and reduce the number of ads seen by minors, a comprehensive

alcohol policy also must address the means by which teens actually obtain alcohol for

consumption. Research indicates that younger minors obtain alcohol primarily from

noncommercial sources such as friends, parents, and other adults. For example, in one survey,

32% of 6th graders, 56% of 9th graders, and 60% of 12th graders reported obtaining alcohol at

parties.77 Social availability of alcohol to teens through parents, friends, and strangers can be

addressed only by changing adult attitudes about teen use. Institutions focusing on alcohol

issues may wish to consider development of additional programs targeted to adults. For

example, wider awareness of the success of the legal drinking age in reducing underage drinking

and related injury could influence some adults who provide alcohol to minors.

Second, changes are needed to reduce underage alcohol purchases from commercial outlets.

Minimum age purchase laws are implemented by staff at local retail outlets and enforced by law

enforcement agencies with limited resources and significant competing responsibilities. Older

minors too often are able to obtain alcohol from commercial sources, such as retail stores or bars,

although access to alcohol from commercial sources is less likely in states with better

enforcement of legal drinking age laws.78 During this past year, the many stakeholders in the

alcohol control process – including state alcohol control agencies; state law enforcement

officials; representatives of major retail outlets; and alcohol producers, wholesalers, and

distributors – organized under the aegis of the Responsible Retailing Forum (RRF) to evaluate

what changes are needed to reduce minors’ ability to purchase alcohol in retail outlets.79 Support

is needed for the efforts of organizations, like RRF, that can conduct rigorous field studies of the

efficacy of alternative approaches to improving enforcement of minimum age purchase laws.

The Commission’s review of alcohol industry self-regulation reveals a substantial response

to the recommendations contained in the 1999 Report. All industry members need to be active in

preventing advertising or marketing that may support or encourage underage alcohol use.

Although more could be done to reduce underage exposure to alcohol marketing, increased

attention to preventing teen access to alcohol, whether through social or commercial channels,

also is needed to address this important issue.

The Commission will continue to monitor alcohol industry self-regulation. In particular, the

Commission will monitor the new placement standard requiring that adults constitute 70% of the

audience for advertising. Additionally, the Commission will monitor the effectiveness of thirdparty and other external review programs and will continue to evaluate new advertising

programs that may have undue appeal to underage consumers.

Endnotes

1. The Conferees direct the Commission to study the impact on underage consumers of the

significant expansion of new ads for liquor-branded "alcopops" and report the Commission's

finding to the Committee within six months of enactment of this Act. The Conferees are also

concerned that the alcoholic beverage industry has not implemented all of the

recommendations of the 1999 Commission report, ‘Self Regulation and the Alcohol

Industry,’ and that only one industry member has taken action to provide for independent

review of complaints about its advertising. The Conferees urge the Commission to

encourage the industry to adopt stricter advertising placement standards as well as establish

an independent third-party review mechanism to limit the appeal and exposure of alcohol

advertising to underage consumers and report back to the Committees on Appropriations no

later than six months from enactment of this bill on the status of the implementation of these

recommendations and whether further rule-making by the Commission is required.

Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7, Div. B., Title II (House

Subcommittee on Appropriations).

2. Id.; see Self-Regulation in the Alcohol Industry, A Report to Congress From the Federal

Trade Commission (Sept. 1999) [hereinafter “1999 Report”].

3. L.D. JOHNSTON ET AL., NAT’L INST. ON DRUG ABUSE, MONITORING THE FUTURE STUDY, tbls.

2 and 6 (2002), http://monitoringthefuture.org/data/02data/pr02t2.pdf and

http://monitoringthefuture.org/data/02data/pr02t6.pdf (accessed 6/23/03). Nationwide data

regarding alcohol consumption by 8th and 10th graders was first collected in 1991.

4. L.D. JOHNSTON ET AL., NAT’L INST. ON DRUG ABUSE, MONITORING THE FUTURE, NATIONAL

RESULTS ON ADOLESCENT DRUG USE: OVERVIEW OF KEY FINDINGS, 2002, NIH PUB. NO. 025374 at 47 (2003) [hereinafter MTF 2002]. In 2002, 12.4% of 8th graders, 22.4% of 10th

graders, and 28.6% of 12th graders reported consuming five or more drinks in a row in the

previous two weeks. Id. at 48.

5. Id. Also in 2002, 6.7% of 8th graders, 18.3% of 10th graders, and 30.3% of 12th graders

reported being drunk in the last 30 days. Id. at 47. Binge drinking rates increase until the

age of 22, decrease slowly until the age of thirty, and then stabilize at about 25%. For

example, Monitoring the Future data show that in 2001, binge drinking was engaged in by

29.7% of 18-year-olds, 36.3% of 19-20-year-olds, 42.4% of 21-22-year-olds, 38.2% of 2324-year-olds, 33.7% of 25-26-year-olds, 29.2% of 27-28-year-olds, and 27.3% of 29-30year-olds. Binge drinking by 35- and 40-year-olds is approximately 25%. L.D. JOHNSTON

ET AL., NAT’L INST. ON DRUG ABUSE, MONITORING THE FUTURE, NATIONAL SURVEY

RESULTS ON DRUG USE, 1975-2001, VOLUME II COLLEGE STUDENTS & ADULTS AGES 19-40,

2001, NIH PUB. NO. 02-5107 at 152 (2002).

6. NAT’L INST. ON ALCOHOL ABUSE & ALCOHOLISM (“NIAAA”), ALCOHOL ALERT NO. 59,

UNDERAGE DRINKING: A MAJOR PUBLIC HEALTH CHALLENGE (Apr. 2003), at

http://www.niaaa.nih.gov/publications/aa59.htm.

7. Healthy People 2010, a nationwide health agenda formulated by federal and state, public and

private health experts, includes several goals related to adolescent alcohol abuse. It seeks to

increase the age and proportion of adolescents who remain alcohol and drug free; to increase

the proportion of adolescents not using alcohol or any illicit drugs during the past 30 days;

and to reduce students engaging in binge drinking during the past two weeks. DEP’T OF

HEALTH & HUMAN SERV., NAT’L INST. OF HEALTH & SUBSTANCE ABUSE & MENTAL

HEALTH SERV. ADMIN., Focus Area 26, HEALTHY PEOPLE 2010 SUBSTANCE ABUSE (Vol. 2:

Nov. 2000), at http://www.healthypeople.gov/Document/HTML/volume2/26Substance.htm

(accessed 6/23/03).

8. The Commission received information in response to orders for compulsory process issued to

Anheuser Busch, Inc., Miller Brewing Company, Inc., Coors Brewing Company, Inc.,

Allied-Domecq PLC, Diageo PLC, Brown-Forman Corporation, E & J Gallo Winery, Mark

Anthony Group, and Jim Beam Company. Together, these companies are responsible for an

estimated 70% of alcohol sales and 70% of alcohol advertising. Material obtained from

industry members that may constitute confidential commercial or financial information under

relevant statutes is set forth in an aggregate or anonymous fashion. See 15 U.S.C. §§ 46(f),

57b-2 (2002).

9. The staff also received important information from a wide variety of sources, including but

not limited to the Center for Science in the Public Interest; Center on Alcohol Marketing and

Youth (CAMY); Mothers Against Drunk Driving; Joel W. Grube, Ph.D, Director and Senior

Research Scientist of the Prevention Research Center; Thomas Babor, Ph.D, Department

Chair of Community Medicine, University of Connecticut Health Center; Governors

Highway Safety Association; American Medical Association; Ted R. Miller, Ph.D, Principal

Research Scientist, Pacific Institute for Research and Evaluation; Magazine Publishers of

America; National Alcohol Beverage Control Association; Responsible Retailing Forum;

Heineken Brewing Company; Constellation Brands, Inc.; Bacardi & Company, Ltd.; Boston

Beer Company; National Beer Wholesalers Association; Beer Institute; Wine Institute;

Distilled Spirits Council of the United States; and the Century Council. Government

agencies consulted by the Commission staff include the Alcohol and Tobacco Tax and Trade

Bureau of the U.S. Department of Treasury and the National Institute of Alcohol Abuse and

Alcoholism of the U.S. Department of Health and Human Services. Additionally, the

Commission staff conducted a review of relevant literature.

10. These products include Mike’s Hard Lemonade, Rick’s Spiked Lemonade, and Doc Otis

Hard Lemon.

11. Products in this category include Smirnoff Ice, Bacardi Silver, Sauza Diablo, Stoli Citrona,

Skyy Blue, and Tequiza.

12. Products in this category include Jack Daniels Country Cocktails.

13. Newly introduced products are typically advertised more heavily than established ones, as

are products whose customers are constantly changing. E.g., The Concise Encyclopedia of

Economics, Advertising, available at http://www.econlib.org/library/Enc/Advertising.html

(accessed 6/22/03).

14. Information derived from confidential industry documents.

15. Information derived from confidential industry documents.

16. Beer Handbook, ADAMS BUSINESS MEDIA at 170 (2002); industry documents discuss the fact

that FMB purchases are “sourced” from consumers who previously bought other kinds of

beer or spirits. Overall alcohol consumption (including beer, wine, and spirits) increased by

1.5% per capita between 1996 and 2001, the last year for which such data is available.

Liquor Handbook, ADAMS BUSINESS MEDIA at 284 (2003).

17. Letter from CSPI, to Robert Pitofsky, former Chairman of the FTC (May 9, 2001) (setting

forth CSPI’s allegations that the formulation, labeling, packaging, and marketing of the new

malt beverages target an audience of teenage consumers), available at

http://www.cspinet.org/booze/alcopops_ftcletter.htm (accessed 7/30/03).

18. Under the three-tiered alcohol sales system established after Prohibition, alcohol companies

do not deal directly with retailers. Instead, they sell alcohol to distributors, who in turn sell

to the retailers. Alcohol manufacturers provide distributors with a range of marketing

support, including recommendations for retail shelf placement to maximize product sales.

19. Most important, the format of questions posed to adults and teens differed in a manner that

was likely to influence the results. In the course of asking questions about familiarity and

use, the survey company asked teens “aided recall” questions, while adults were asked

“unaided recall” questions. Commission case law and federal trial manuals indicate that

comparison of results using these two different techniques is inappropriate because the aided

recall format will generate higher response rates than the unaided recall format. E.g.,

Stouffer Foods Corp., 118 F.T.C. 746 (1994) (unaided recall questions showed 43 to 60%

recall of message; aided recall question elicited 78 to 83% recall). Other questions posed to

teens were phrased differently than the questions posed to adults, so that the answers were

not comparable. Adults were asked if they had seen, read, or heard ads for “newer alcoholic

drinks like hard lemonades and hard ciders.” Teens were asked if they had seen, read, or

heard ads for “newer drinks that contain alcohol and are sweeter than beers, like hard

lemonade, hard cider, premixed cocktails, or wine coolers” (emphasis added). Given that the

question posed of teens asked about a more well-defined and broader category of beverages,

it was likely to generate higher response rates. Thus, the survey does not provide a basis for

CSPI’s conclusions about the difference between adult and teen familiarity with and use of

FMBs.

The investigation closing letter is available at:

http://www.ftc.gov/os/closings/staff/cpsiresponse.htm (accessed 7/30/03).

20. Miller Brewing Company has marketed Sauza Diablo and Stolichnaya Citrona (in

conjunction with Allied Domecq, PLC), Skyy Blue (in conjunction with Skyy Vodka, Inc.),

and Jack Daniels Hard Cola (in conjunction with Brown-Forman Corporation); Anheuser

Busch, Inc. markets Bacardi Silver, Doc Otis Hard Lemon, and Tequiza; Brown-Forman

Corporation markets Jack Daniels Hard Cola and Jack Daniels Country Cocktails; Coors

Brewing Company, Inc. has marketed Zima and Vibe; Diageo PLC has marketed Smirnoff

Ice and Captain Morgan Gold; E & J Gallo Winery markets Bartles & Jaymes; Jim Beam

Company markets Jim Beam Classic Cocktails; Mark Anthony Group markets Mike’s Hard

Lemonade, Mike’s Hard Cranberry Lemonade, and Mike’s Hard Ice Tea.

21. See Section III(B), supra.

22. Some FMB ads contain language designed to communicate that the products are for

consumers over 21. One company conducted research on this aspect of the ads, and found

that consumers notice and recall this information.

23. Participation is limited to persons who currently drink alcohol (generally, they must have

consumed at least one alcohol beverage within the past week; for some surveys, they must

drink the brand at issue or related brands). Questions asked include whether the ad indicates

that the product is “for people like [you]”; “for [people] 21-27” or one that the consumer

would “be comfortable ordering in a bar or club.”

24. The companies do not collect data on whether persons under 21 use their products.

25. 1999 Report at 11.

26. Any study of teen brand selection would be very costly, and current data regarding teen

alcohol brand choice would be of limited use without an earlier baseline against which

comparisons could be made.

27. These unpublished data were provided at the FTC’s request by the Monitoring the Future

Study, the University of Michigan. Other studies corroborate this finding. See PARTNERSHIP

FOR A DRUG-FREE AMERICA, PARTNERSHIP ATTITUDE TRACKING STUDY, TEENS 2002, http://

www.drugfreeamerica.org/acrobat/pats_2002.pdf (showing declines in alcohol use by teens

between 2000 and 2002); PRIDE SURVEYS, Pride Questionnaire Report, 2001-02 National

Summary, Grades 6-12, at 2 (2002) (showing declines in beer consumption by students in

each grade level between 2000-2001 survey and 2001-2002 survey).

28. Researchers have devoted substantial effort to eliciting the diverse and complex factors that

contribute to and protect against adolescent alcohol use and adult alcohol abuse. Individual

genetic and biologic factors contribute to alcoholism and early initiation of alcohol use.

NIAAA, 10TH SPECIAL REPORT TO THE U.S. CONGRESS ON ALCOHOL AND HEALTH 169-70

(2000) [hereinafter 10TH SPECIAL REPORT]; M. McGue et al., Origins and Consequences of

Age at First Drink, 25(8) ALCOHOL CLIN. EX. RES. 1166, 1166-67 (2001), available at

http://www.ncbi.nlm.nih.gov/entrez/query.fcgi. Family and peer influences are critical.

Parental drinking influences drinking decisions by young adolescents, while peer influences

play an increasing role in decisions by older adolescents. E.g., S.L. Ellickson et al.,

Prospective Risk Factors for Alcohol Misuse in Late Adolescence, 62(6) J. STUD. ON

ALCOHOL 773 (2001), available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi. Aspects

of parenting, including parental support, monitoring of activity by parents, and positive

adolescent-parent communication, appear to play a strong protective role, whether or not

there is a family history of alcoholism. Infra 10TH SPECIAL REPORT at 181-86 (factors

influencing adolescent use in families with a history of alcoholism); A.W. Mason, M.

Windle, Family, Religious, School and Peer Influences on Adolescent Alcohol Use: A

Longitudinal Study, 62 J. STUD. ON ALCOHOL 1 (2001), available at

http://www.ncbi.nlm.nih.gov/entree/query.fcgi (factors influencing adolescent alcohol use

generally). A wide range of environmental factors, including legal and cultural standards,

also play very important roles. NIAAA, NINTH SPECIAL REPORT TO THE U.S. CONGRESS ON

ALCOHOL AND HEALTH 51 (1997).

29. There have been complaints that the names and packaging of spirits-branded FMBs imply

that they contain spirits. Consumer research confirms that some but not all consumers

believe that FMBs contain spirits. To the extent that the flavors and a portion of the alcohol

in spirits-branded FMBs derive in part from distilled spirits, consumers with this

understanding are unlikely to be deceived. Nonetheless, improved labeling of FMBs is

worthy of consideration. Currently, marketers of FMBs are prohibited from indicating

affirmatively that their products contain flavors derived from spirits, and are not required to

disclose alcohol content or ingredients. The U.S. Treasury’s Alcohol and Tobacco Tax and

Trade Bureau is considering issues related to the content and labeling of FMBs. 68 Fed.

Reg. 14,292 (proposed March 24, 2003) (to be codified at 27 C.F.R. pts. 7, 25).

30. The Supreme Court has struck down regulatory restrictions on truthful, non-misleading

commercial speech in recent cases involving marketing of alcohol, tobacco, and gambling. In

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 501-07 (1998), the Supreme Court stated

that while alcohol regulation serves a substantial government interest, any such regulations

must be narrowly tailored to serve that interest. Subsequently, in Lorillard Tobacco Co. v.

Reilly, 533 U.S. 525 (2001), the Supreme Court struck down Massachusetts regulations of

tobacco advertising that included a prohibition on placing outdoor tobacco advertising within

1,000 feet of a school, as well as a provision that tobacco advertising could not be placed

lower than five feet from the floor of any retail establishment within 1,000 feet of a school.

533 U.S. at 534-36. The Court explained:

The State’s interest in preventing underage tobacco use is substantial, and even

compelling, but it is no less true that the sale and use of tobacco products by adults is a

legal activity. We must consider that tobacco retailers and manufacturers have an interest

in conveying truthful information about tobacco products. In a case involving indecent

speech on the Internet we explained that ‘the governmental interest in protecting children

from harmful materials does not justify an unnecessarily broad suppression of speech

addressed to adults.’

533 U.S. at 564 (citing Reno v. American Civil Liberties Union, 521 U.S. 844, 875 (1997)

(striking down portions of the Communications Decency Act, prohibiting transmission of

obscene or indecent telecommunications to persons under 18). See also Greater New

Orleans Broadcasting Assoc. v. United States, 527 U.S. 173 (1999) (striking down FCC

regulation prohibiting broadcast advertising of lawful private casino gambling); 44

Liquormart, Inc., 517 U.S. at 489 (striking down state ban on alcohol price advertising);

Rubin v. Coors, 514 U.S. 476 (1995) (striking down a ban on accurate alcohol by volume

label disclosures for beer); Utah Licensed Beverage Assoc. v. Leavitt, 256 F.3d 1061 (10th

Cir. 2001) (finding that state restrictions on wine and spirits advertising did not pass First

Amendment muster because they failed to directly and materially advance the state’s

substantial interests in temperance and operation of public businesses).

31. These Codes are attached as Appendices A, B, and C to this Report.

32. For instance, the Brewer's Association of America (BAA), representing small brewers, has

adopted the Beer Institute Code. Wine America, the New York Wine and Grape Foundation,

the Washington Wine Institute, and the Family Winemakers of California have adopted the

Wine Institute Code.

33. See 1999 Report, at 16-17. Although some parties initially expressed concerns that such selfregulatory efforts might violate antitrust statutes, that concern is unfounded. Antitrust

statutes prohibit collusive conduct that unreasonably restricts competition and harms

consumers, but they permit reasonable self-regulatory efforts designed to prevent alcohol

advertising from being targeted to underage consumers. See id. at 16 & App. H.

34. Id. at 14-15.

35. Id. at 15.

36. Id. at 3.

37. Id. at 14-16. As an example of effective third-party review, the Commission cited the

operations of the National Advertising Division (NAD) of the Council of Better Business

Bureaus, Inc. Since 1971, NAD has expeditiously investigated complaints about the

truthfulness of advertising made by consumers or competitors. NAD handles several

hundred cases per year, and in virtually all cases where it concludes that advertising is

misleading, the advertiser discontinues or modifies its ad voluntarily. NAD decisions are

publicly reported in the NAD Case Reports, issued ten times per year. Press releases and

other information regarding the NAD self-regulatory system, including the appeals process

and operations of the Children’s Advertising Review Unit, are available at

http://www.nadreview.org.

38. The BBB APP’s final decisions are available on the Better Business Bureau’s web site at

http://www.bbb.org/app.

39. The DISCUS Code Review Board sometimes reviews advertisements for consistency with its

Code even without a complaint being lodged.

40. The first complaint alleged that a distilled spirits banner advertisement improperly appeared

on the United States Ski and Snowboard Association’s (USSA) web site. As demographics

data for the web site showed that 65% of the viewers were of legal age, the DISCUS Code

Review Board found that the ad did not violate the DISCUS Code.

A second complaint regarding a similar issue alleged that an alcohol company was

sponsoring a USSA event attended by minors. The advertiser determined that it had been

misled about the demographics of the event and committed to sponsor it again only if all

contestants were over 21 and the audience consisted primarily of adults over 21.

In a third instance, the Code Review Board alerted an advertiser that web site materials for a

liqueur contained language (apparently intended for potential distributors) claiming that the

product marketing materials would appeal to “all age groups.” The Code Review Board

noted that this language was inconsistent with DISCUS Code provisions providing that

spirits beverages were for adults only. The advertiser deleted the offending language and

added notices to its web site telling visitors that the liqueur was for consumers of legal

drinking age.

Finally, DISCUS addressed a complaint about container design. The packaging for an

alcohol product resembled a pudding “snack pack”; once the lid was removed, there was

nothing on the package that identified it as containing beverage alcohol. Following

communications with DISCUS, the manufacturer committed to redesign the package and

ensure that the body of the package (not just the lid) featured a prominent alcohol content

warning.

41. The panel membership may overlap with the DISCUS Advisory Panel membership.

42. 1999 Report at 5.

43. Id. at 9.

44. Id. at 10.

45. Wine Institute Code, at 3(d), Appendix C.

46. In the Commission’s experience, brands that include 21-year-old consumers in their target

audience (e.g., brands with target audiences such as “males 21 to 29") are more susceptible

to errors in placement practices, whereas brands with older target audiences are more likely

to be advertised in full compliance with the codes’ placement standards. Thus, the

Commission requested the data that were most likely to show whether problems had

occurred.

47. Recent reports have made clear that alcohol advertising is widely disseminated and often

seen by youth. In 2002 and 2003, the advocacy organization, Center for Alcohol Marketing

and Youth (CAMY), published several studies regarding teen exposure to alcohol ads, a

substantial body of work that represents a helpful contribution to the understanding of

alcohol placement issues. E.g., CAMY, Television: Alcohol’s Vast Adland (Dec. 18, 2002);

CAMY, Overexposed: Youth a Target of Alcohol Advertising in Magazines (Sept. 24, 2002);

CAMY, Radio Daze: Alcohol Ads Tune in Underage Youth (Apr. 2, 2003).

CAMY is concerned that children are “overexposed” to alcohol advertising, that is, that

children are more likely to see television, radio, and print ads for alcohol than adults are.

CAMY bases this concern on the fact that the alcohol ad “gross rating points,” or “GRPs,”

for youth are greater than they are for adults in two of the three media (radio and magazines).

(GRPs are calculated by multiplying the percentage of a population, such as “adults 21-34,"

that has the potential to see an ad, times the number of times individuals are so exposed.)

CAMY’s data confirm, however, that adults are in fact the primary audience for alcohol

advertising. In national television ads, for example, CAMY found that alcohol ad GRPs for

youth were only 64% of the adult GRPs. Id., at Tbl. 3 (for television advertising, adults are

defined as those aged 21 or over). CAMY explained that this data showed that “for every

two [alcohol] ads seen by adults, youth saw one.” CAMY, Television: Alcohol’s Vast

Adland, at 8 (emphasis added). For alcohol advertising in radio and magazines, the CAMY

data shows that adult GRPs were higher than youth GRPs when the adult group is limited to

the more relevant young adult segment (21-34). CAMY, Overexposed: Youth a Target of

Alcohol Advertising in Magazines at 6 (GRPs of adults aged 21 to 34 higher than GRPs of

youth in magazines featuring alcohol ads); CAMY, Radio Daze: Alcohol Ads Tune in

Underage Youth at 8 (GRPs of adults aged 21 to 34 higher than GRPs for youth on radio

featuring alcohol ads).

The CAMY reports suggest an approach under which alcohol marketers would, when placing

ads, affirmatively assess the impact on the youth market instead of just the adult market.

Advertisers currently do not do this. Although assessing the impact of their ad placements

on the youth market might allow alcohol marketers to formulate more refined placement

practices, it also would have troubling implications in law enforcement and would risk

placing in their hands better information for monitoring the youth market. That is, if they

gathered such information, it would be hard to distinguish between deliberate targeting of

minors and valid attempts to limit minors’ incidental exposure.

Additionally, the GRP data evaluated by CAMY need to be considered along with other data

about advertising exposure. GRP data treat audience segments, like youth 12 to 20 and

adults 21 to 75, equally. However, the U.S. adult population as a whole is several times

larger than the youth population. Thus, advertisers look not only at GRPs, but also at

“impressions.” Impressions reflect how well a particular audience segment was reached as

well as how many consumers are within that audience segment. For example, the young

adult population, 21 to 34, is about 50% larger than the youth population, 12 to 20. Even if

the GRPs for the two populations are the same, therefore, 50% more impressions reach the

adult 21 to 34 population. This distinction is more striking in the case of small audience

segments, such as Hispanic youth. CAMY’s report about Hispanic youth reveals that

Hispanic teens GRPs for spot radio were slightly larger than the GRPs for adults over 21.

CAMY, Exposure of Hispanic Youth to Alcohol Advertising (Apr. 20, 2003). When

converted to impressions, one can determine that adults over 21 received 20 times more

impressions than Hispanic youth. This example shows the potential distortions that can arise

from considering the GRP data in isolation.

48. See p. 4, supra.

49. The kind of data needed to support a placement depends upon the medium and the available

demographic audience. Guidelines that will accompany the revised BI and DISCUS codes

indicate that such data includes:

a) For print ads:

1) data from a recognized measurement service regarding audience composition aged 12

and over, if available; otherwise,

2) data regarding the audience composition aged 18 and over;

3) if the medium’s audience composition is unaudited (unmeasured), or the medium is

new, data regarding the target readership, subscription data, or data for similar

publications.

b) For television ads:

1) national network ads: data regarding the national audience composition of the

program in its timeslot.

2) syndicated cable and local spot ads: national audience composition data for the

program or daypart being purchased.

3) new shows: national audience composition data for comparable programs in

comparable time periods.

c) For radio:

1) for audited (measured) stations, data regarding the station's audience during the

daypart in which the spot is to air;

2) for unaudited stations, data regarding the audience composition of stations with

similar formats in comparable markets or regarding the audience composition of the

target listenership.

The revised codes provide that a placement will be in compliance if the advertiser 1) had a

reasonable basis for the placement at the time it was made, based upon the data set forth

above, and 2) promptly addresses any discrepancy upon learning of it. The guidelines are

subject to review, in the event that more accurate measurement technologies become

available.

50. See Appendices D and E.

51. CAMY has suggested that industry should instead adopt a higher standard, such as 85%.

This would, of course, reduce the number of youths exposed to alcohol ads, but it would also

prevent the companies from advertising in media where there is substantial adult interest.

For example, increasing the standard from 70% to even 80% would mean that alcohol

companies could not place ads in magazines such as GQ or on TV broadcasts of some

National Basketball Association games. An 85% standard would eliminate such magazines

as Ebony, Men’s Fitness, and Shape, and TV broadcasts of the National Hockey League

games and the remaining National Basketball Association games.

52. Beer Institute Code Section 4; DISCUS Code Section, “Responsible Content.” The Wine

Institute Code requires that actors in ads appear at least 25 years of age. Wine Institute Code

Section 3(a).

53. 1999 Report at 17.

54. See Section II(c)(2), supra.

55. Companies rejected, for example, proposals to place alcohol brand names on ketchup,

skateboards, action figures, and stuffed animals; proposals to include inflatable sleds and

animals in displays; a proposal to depict an animated worm and a bird in a print ad; branded

restaurant napkins featuring maze, tic-tac-toe, or hangman games; requests to sponsor music

groups with strong teen appeal; and requests to use ads when an actor could not be verified to

be over 25 or otherwise appeared to be too young. In other instances, companies instructed

ad agencies to use only versions of print ads featuring older-appearing actors.

56. 1999 Report, at 12.

57. Id. at 13.

58. The Century Council is a not-for-profit organization, funded by distilled spirits companies,

that is dedicated to reducing underage drinking problems and drunk driving.

59. Such services are provided by Cybersource Corp.

(http://www.cybersource.com/products_and_services/verification_and_compliance_services/

age_verification/); Paymentech

(http://www.paymentech.net/sol_frapro_carnotpre_agever_page.jspJ); and Aristotle

International, Inc. (http://www.kidsheriff.com/home.asp?aid=).

60. NIAAA, Task Force of the National Advisory Council on Alcohol Abuse and Alcoholism, A

CALL TO ACTION: CHANGING THE CULTURE OF DRINKING AT U.S. COLLEGES (2002),

available at: http://www.collegedrinkingprevention.gov/images/TaskForceReport.pdf

(accessed 7/30/03).

61. There may have been a reduction in spring break activities sponsored by alcohol companies.

One company advised the Commission that it conducts no spring break activities outside the

U.S., and another company has ceased spring break sponsorship altogether.

62. One company arranged for the Century Council’s Blood Alcohol Educator van to be parked

at the site of an on-premise promotion.

63. Examples of such web sites include: http://www.wine.com; http:// www.geerwade.com; and

http://www.thewinesellars.com.

64. The Commission staff’s report regarding online wine sales, FEDERAL TRADE COMMISSION,

POSSIBLE ANTICOMPETITIVE BARRIERS TO E-COMMERCE: WINE (2003), is available at

http://www.ftc.gov/us/2003/07/winereport2.pdf (accessed Aug. 13, 2003), [hereinafter WINE

REPORT].

65. Telephone Conversation with Wendell Lee, General Counsel, Wine Institute (July 16, 2003).

66. Letter from Arthur J. DeCelle, General Counsel, Beer Institute, to Jonathan J. Rusch, Esq.,

Special Counsel for Fraud Prevention, U.S. Department of Justice Criminal Division (Apr.

15, 2001) (on file with the Federal Trade Commission).

67. Consumers can also purchase alcohol from web sites such as http://www.800spirits.com.

These sites do not, however, provide direct shipment, that is, shipment from the distiller.

Instead, such sites locate a licensed retailer that can ship a desired brand to a consumer.

Additionally, they appear to require any purchaser to provide driver’s license and other

information showing proof of age.

68. This estimate is based on information provided by the companies that were the subject of the

FTC’s inquiry. Not all of the reporting companies, however, provided an estimate of

expenditures for public service activities. Moreover, expenditures may vary from year to

year.

69. Examples of such programs are:

Ready or Not: Talking with Kids About Alcohol, developed in partnership with the Boys &

Girls Clubs of America and designed to facilitate communication with children in the middle

school years. Besides targeted distribution efforts, the Ready or Not videotape is generally

available at video stores across the country, available at

http://www.centurycouncil.org/under_age/education/ready/ (accessed 7/22/03).

Family Talk about Drinking, a guidebook and videotape program that is also distributed

directly to third parties, including pediatricians and family practitioners, available at

http://www.familytalkonline.com (accessed 7/22/03).

College Talk: A Parent’s Guide on Talking to Your College-Bound Student About Drinking,

is designed to help parents continue communicating openly and honestly with their children

about this issue, as their students prepare for the next phase in independence and begin a life

on their own, available at http://www.collegetalkonline.com/ (accessed 7/22/03).

Parents, You’re Not Done Yet, a brochure that offers tips to parents of college freshmen for

the critical weeks before students leave home. Over three million copies of this brochure

have been distributed at over 1,300 colleges around the country, available at

http://www.centurycouncil.org/parents/english.cfm (accessed 7/22/03).

Prom Tips for Parents, a web site developed to facilitate parental conversations with teens to

inspire a safe prom night; it also contains access to educational materials designed to prevent

underage drinking, available at http://www.promtips.org (accessed 7/22/03).

70. Examples of such programs are:

Make the Right Call, which features a former emergency helicopter flight nurse who

addresses the consequences of underage drinking and driving, available at

http://www.mcquades.com/html/aware.html (accessed 7/22/03).

Brandon and Tony Silveria Lecture Program, a high school program that features Brandon

Silveria, a permanently disabled young man who crashed his car after having a few drinks at

age 17. Mr. Silveria and his father tour high schools full-time to educate students about the

consequences of teen drinking. They are featured in Brandon Tells His Story, a videotape

distributed widely to high schools, available at http://www.centurycouncil.org/silveria/

(accessed 7/22/03).

Alcohol 101 Plus, an interactive CD-ROM designed to help college students make safer

decisions about alcohol. It is set on a “virtual campus” to enable participants to experience

different outcomes of alternative drinking decisions. The multi-media cybergame is

supplemented by teaching materials and facilitator guides for fraternities and sororities,

student-athletes, and peer educators, available at http://www.alcohol101plus.org/ (accessed

7/22/03).

Speak Up!, a video and facilitator guide jointly developed with the National Collegiate

Athletic Association to encourage student-athletes to discuss alcohol issues, available at

http://www.centurycouncil.org/speakup.cfm (accessed 7/22/03).

The BACCHUS and GAMMA Peer Education Network, a prevention training model for

college students, which promotes safe spring break and other alcohol awareness activities,

available at http://www.iatf.org/baccus.htm (accessed 7/22/03).

Blood Alcohol Educator, an interactive CD-ROM, available in both English and Spanish,

designed to educate young adults about their state laws and how drinking affects an

individual’s blood alcohol concentration level. Before entering the “virtual bar,” visitors

must click on their home state to learn the legal limit, available at http://www.b4udrink.org/

(accessed 7/22/03).

71. Such programs include:

Promising Practices: Campus Alcohol Strategies, a source book that identifies constructive

ways to fight campus alcohol abuse, and includes nearly 300 alcohol abuse prevention

programs that have been implemented at public and private schools around the country,

available at http://www.centurycouncil.org/campus/promprac/index.cfm (accessed 7/22/03).

Campus Event Notebook, a guide to help college administrators and legal-drinking-age

student leaders plan events associated with the campus community, available at

http://www.millerbrewing.com/liveresponsibly/data/campusCombined.pdf (accessed

7/22/03).

72. Such programs include:

Cops in Shops, which has been implemented in 42 states and places undercover police

officers in stores to deter underage purchases. Program signs warn that police officers may

be posing as store employees, thereby discouraging illegal purchase attempts even when

police are not present, available at http://www.centurycouncil.org/under_age/retail/cops.cfm

(accessed 7/22/03).

I.D. initiatives (such as We I.D. and No I.D. No Sale No Way) to help retailers recognize and

accept only valid identification. Prominent point-of-sale materials for these programs

include posters, decals, and buttons, available at

http://centurycouncil.org/materials/view.cfm?prg=1 (accessed 7/22/03).

The 2003 Driver License Booklet displays for retailers reproductions of all current valid

license formats. Many states and provinces have multiple designs in circulation at the same

time. Even though a new license is issued, it may take several years to phase out previous

issues. For each state or province, samples show the most current license format, available at

http://www.millerbrewing.com/liveresponsibly/programs/underAge/driverLBooklet.asp

(accessed 7/22/03).

Age Verification Devices, systems that read drivers’ licenses and determine whether they are

authentic, are being distributed to retailers. These devices have the potential to assist alcohol

retail sales personnel.

21 Means 21, includes point-of-sale materials that provide a clear message against underage

drinking and the underage purchase of alcohol, available at

http://www.coors.com/community/pos.asp (accessed 7/22/03).

TIPS (Training for Intervention Procedures), is a nationwide alcohol intervention program

through which servers learn responsible alcohol service, available at http://www.gettips.com

(accessed 08/13/03).

73. E.g., A.W. Mason, M. Windle, supra note 28 at 1; R.J. DiClemente et al., Parenting

Monitoring: Association with Adolescents’ Risk Behaviors, 2001 PEDIATRICS, Jun. 2001, at

1363, available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi (accessed 6/23/03).

74. E.g., J.P. Read et al., Making the Transition from High School to College: The Role of

Alcohol-related Social Influence Factors in Student’s Drinking, SUBST. ABUSE, Mar. 2002, at

53, available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi; C.A. Carter, W.M.

Kahnweiler, The Efficacy of the Social Norms Approach to Substance Abuse Prevention

Applied to Fraternity Men, J. AM. COLL. HEALTH, Sept. 2000, at 66, available at

http://www.ncbi.nlm.nih.gov/entrez/query.fcgi (accessed 9/5/03).

75. Studies showing success of such programs include H.W. Perkins, Social Norms and the

Prevention of Alcohol Misuse in Collegiate Contexts, J. STUD. ALCOHOL SUPPL., Mar. 2002,

at 164, available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi; W. DeJong, The Role of

Mass Media Campaigns in Reducing High-Risk Drinking Among College Students, J. STUD.

ALCOHOL SUPPL., Mar. 2002, at 182, available at

http://www.ncbi.nlm.nih.gov/entrez/query.fcgi; see also NIAAA, A Call to Action, supra

note 60. A study showing lack of success for such programs is H. Wechsler, et al.,

Perception and Reality: A National Evaluation of Social Norms Marketing Interventions to

Reduce College Students’ Heavy Alcohol Use 64 J. OF STUD. ON ALCOHOL 484 (2003),

available at http://www.hsph.harvard.edu/cas/Documents/social_norms/484_Wechsler.pdf

(accessed 8/13/03).

76. See A.C. Wagenaar & M. Wolfson, Deterring Sales and Provision of Alcohol to Minors: A

Study of Enforcement in 295 Counties in Four States, 110(4) PUBLIC HEALTH REP. 419

(1995), available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi (accessed 8/13/03).

77. P.A. Harrison et al., Relative Importance of Social Versus Commercial Sources in Youth

Access to Tobacco, Alcohol, and Other Drugs, PREVENTATIVE MEDICINE, July 2000, at 39,

available at http://www.ncbi.nlm.nih.gov/entrez/query.fcgi (accessed 8/13/03).

78. D.F. Preusser et al., Underage Access to Alcohol: Sources of Alcohol and Use of False

Identification, 14 INT’L CONFERENCE ON ALCOHOL, DRUGS, & TRAFFIC SAFETY 1017

(C.Mercier-Guyon ed., Centre d’Etudes et de Recherches en Medecine du Trafic Vol. 3

1997).

79. The RRF is a joint project of Brandeis University’s Schneider Institute for Health Policy and

Florida State University’s Institute for Science and Public Affairs. Some of RRF’s activities

receive financial support from members of the alcohol industry.

Appendix A: Beer Institute Advertising and Marketing Code

(1997)

This code contains the voluntary advertising and marketing guidelines subscribed to by the

members of the Beer Institute.

Introduction

Beer is a legal beverage meant to be consumed responsibly. Its origins are ancient, and it has

held a respected position in nearly every culture and society since the dawn of recorded history.

Advertising is a legitimate effort by brewers to make consumers aware of the particular types,

brands, and prices of malt beverages that are available.

Three basic principles, which have long been reflected in the policies of the brewing industry,

continue to underlie these Guidelines. First, beer advertising should not suggest directly or

indirectly that any of the laws applicable to the sale and consumption of beer should not be

complied with. Second, brewers should adhere to standards of candor and good taste applicable

to all commercial advertising. Third, brewers are responsible corporate citizens, sensitive to the

problems of the society in which they exist, and their advertising should reflect that fact.

Brewers strongly oppose abuse or inappropriate consumption of their products.

Guidelines

1. These guidelines apply to all brewer advertising and marketing materials, including

Internet and other cyberspace media. These guidelines do not apply to educational

materials or televised, printed or audio messages of a non-brand specific nature; nor to

materials or messages designed specifically to address issues of alcohol abuse or

underage drinking.

2. Beer advertising and marketing materials should portray beer in a responsible manner.

a. Beer advertising and marketing materials should not portray, encourage or condone

drunk driving.

b. Beer advertising and marketing materials should not depict situations where beer is

being consumed excessively, in an irresponsible way, or in any way illegally.

c. Beer advertising and marketing materials should not portray persons in a state of

intoxication or in any way suggest that intoxication is acceptable conduct.

d. Beer advertising and marketing materials should not portray or imply illegal activity

of any kind.

e. Retail outlets or other places portrayed in advertising should be depicted as well kept

and respectable establishments.

A-1

3. Brewers are committed to the policy and practice of responsible advertising and

marketing directed to persons of legal purchase age. To facilitate this commitment,

purchases by brewers, directly or indirectly, of Nielsen or other recognized TV viewer

composition data shall reflect those viewers over the legal purchase age. Brewers shall

review this Nielsen or other recognized TV viewer composition data on a regular basis

(at least semi-annually) in order to insure that advertisements are placed in compliance

with this code.

4. Beer advertising and marketing materials are intended, for adults of legal purchase age

who choose to drink.

a. Beer advertising and marketing materials should not employ any symbol, language,

music, gesture, or cartoon character that is intended to appeal primarily to persons

below the legal purchase age. Advertising or marketing material has a primary

appeal to persons under the legal purchase age if it has special attractiveness to such

persons above and beyond the general attractiveness it has for persons above the legal

purchase age, including young adults above the legal purchase age.

b. Beer advertising and marketing materials should not employ any entertainment figure

or group that is intended to appeal primarily to persons below the legal purchase age.

c. Beer advertising and marketing materials should not depict Santa Claus.

d. Beer advertising and marketing materials should not be placed in magazines,

newspapers, television programs, radio programs, or other media where most of the

audience is reasonably expected to be below the legal purchase age.

e. To help insure that the people shown in beer advertising are and appear to be above

the legal purchase age, models and actors employed should be a minimum of 25 years

old, substantiated by proper identification, and should reasonably appear to be over

21 years of age.

f. Beer should not be advertised or marketed at any event where most of the audience is

reasonably expected to be below the legal purchase age. This guideline does not

prevent brewers from erecting advertising and marketing materials at or near facilities

that are used primarily for adult-oriented events, but which occasionally may be used

for an event where most attendees are under age 21.

g. No beer identification, including logos, trademarks, or names should be used or

licensed for use on clothing, toys, games, or game equipment, or other materials

intended for use primarily by persons below the legal purchase age.

h. Brewers recognize that parents play a significant role in educating their children

about the legal and responsible use of alcohol and may wish to prevent their children

from accessing Internet web sites without parental supervision. To facilitate this

exercise of parental responsibility, Beer Institute will provide to manufacturers of

parental control software the names and web site addresses of all member-company

web sites. Additionally, brewers will post reminders at appropriate locations in their

web site indicating that brewer products are intended only for those of legal purchase

age. These locations include entrance into the web site, purchase points within the

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web site, and access into adult-oriented locations within the web site, such as virtual

bars.

5. Beer consumption is intended as a complement to leisure or social activity. Beer

advertising and marketing activities should not associate or portray beer drinking before

or during activities which require a high degree of alertness or coordination.

6. Beer advertising and marketing materials should not make exaggerated product

representations.

a. Beer advertising and marketing materials should not convey the impression that a

beer has special or unique qualities if in fact it does not.

b. Beer advertising and marketing materials should make no scientifically

unsubstantiated health claims.

c. Beer may be portrayed to be part of personal and social experiences and activities.

Nevertheless, beer advertising and marketing materials should contain no claims or

representations that individuals cannot obtain social, professional, educational,

athletic, or financial success or status without beer consumption; nor should they

claim or represent that individuals cannot solve social, personal or physical problems

without beer consumption.

7. Beer advertising and marketing materials should reflect generally accepted contemporary

standards of good taste.

a. Beer advertising and marketing materials should not contain any lewd or indecent

language or images.

b. Beer advertising and marketing materials should not portray sexual passion,

promiscuity or any other amorous activity as a result of consuming beer.

c. Beer advertising and marketing materials should not employ religion or religious

themes.

8. Beer advertising and marketing materials should not disparage competing beers. In the

event comparisons are drawn between competing beers, the claims made should be

truthful and of value to consumers.

9. Beer advertising and marketing materials should never suggest that competing beers

contain objectionable additives or ingredients.

10. Beer advertising and marketing materials should not refer to any intoxicating effect that

the product may produce.

11. Beer advertising and marketing materials should not depict the act of drinking.

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12. Beer advertising and marketing materials should not show littering or otherwise improper

disposal of beer containers, unless the scenes are used clearly to promote anti-littering

and/or recycling campaigns.

13. Beer advertising and marketing activities on college and university campuses, or in

college media, should not portray consumption of beer as being important to education,

nor shall advertising directly or indirectly degrade studying. Beer may be advertised and

marketed on college campuses or at college-sponsored events only when permitted by

appropriate college policy.

Code Compliance and Dissemination

Each member of the Beer Institute is committed to the philosophy of the Code and is committed

to compliance with the Code. When the Beer Institute receives complaints with regard to any

member’s advertising or marketing, it has long been its practice and it will continue to be its

practice to promptly refer such complaints in writing to the member company for its review and

action. To facilitate this end, the Beer Institute maintains an 800 number (1-800-379-2739). A

copy of this code shall continue to be given to every brewery employee, wholesale distributor

and outside agency whose responsibilities include advertising and marketing beer, as well as to

any outside party who might request it.

September, 1997 Edition

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Appendix B: Code of Good Practice for Distilled Spirits

Advertising and Marketing (1998)

Preamble

The Distilled Spirits Council of the United States, Inc. (DISCUS) is the national trade

association representing producers and marketers of distilled spirits sold in the United States.

The members of DISCUS adopt this Code of Good Practice as guidelines concerning the

placement and content of advertising and marketing materials. These guidelines have two

overriding principles: (1) to ensure responsible, tasteful, and dignified advertising and marketing

of distilled spirits to adult consumers who choose to drink and (2) to avoid targeting advertising

and marketing of distilled spirits to individuals below the legal purchase age.

The consumption of beverage alcohol products has played an accepted and important role in

the cultural and social traditions of both ancient and modern society. DISCUS members take

special pride in their products and their commitment to promoting responsible consumption by

those adults who choose to drink. Nevertheless, it is the obligation of each consumer who

chooses to drink to enjoy beverage alcohol products in a responsible manner.

The distilled spirits industry acknowledges the problems inherent in abusive consumption of

beverage alcohol, and DISCUS members remain committed to combatting alcohol abuse. To

that end, the industry has joined with government and civic groups in efforts to encourage

responsible use of beverage alcohol products. DISCUS also actively supports informational,

educational, research, and treatment initiatives in an effort to better understand, prevent, and

combat abuse of its products.

Scope

The producers and members of distilled spirits encourage responsible decision-making

regarding drinking of beverage alcohol by adults, and discourage abusive consumption of their

products. The distilled spirits industry urges that adults who choose to drink, do so responsibly.

Towards this end, DISCUS members pledge voluntarily to conduct their advertising and

marketing practices in the United States in accordance with the provisions of this Code. The

provisions of the Code apply to every type of print and electronic media, including the Internet

and any other on-line communications, used to advertise or market distilled spirits.

DISCUS members recognize that it is not possible to cover every eventuality and, therefore,

agree to observe the spirit as well as the letter of this Code. Questions about the interpretation of

the Code, member companies’ compliance with the Code, and the application of its provisions

are directed to the Code Review Board of DISCUS.

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Responsible Placement

1. Distilled spirits should not be advertised or marketed in any manner directed or primarily

intended to appeal to persons below the legal purchase age.

2. Distilled spirits advertising and marketing should not be placed in any communication

intended to appeal primarily to individuals below the legal purchase age.

3. Distilled spirits should not be advertised on college and university campuses or in college

and university newspapers.

4. Marketing activities for distilled spirits should not be conducted on college and

university campuses except in licensed retail establishments located on such campuses.

5. Distilled spirits advertising and marketing should not be specifically aimed at events

where most of the audience is reasonably expected to be below the legal purchase age.

Fixed distilled spirits advertising and marketing materials at facilities used primarily for

adult-oriented events fall outside its guideline.

6. Distilled spirits advertising should not be placed on any outdoor stationary location with

five hundred (500) feet of an established place of worship or an elementary or secondary

school except on a licensed premise.

Responsible Content

Underage Persons

1. Distilled spirits advertising and marketing materials are intended for adults of legal

purchase age who choose to drink.

2. The content of distilled spirits advertising and marketing materials should not be intended

to appeal primarily to individual below the legal purchase age.

3. Distilled spirits advertising and marketing materials should not depict a child or portray

objects, images, or cartoon figures that are popular predominantly with children.

4. Distilled spirits advertising and marketing materials should not contain the name of or

depict Santa Claus or any religious figure.

5. Distilled spirits should not be advertised or marketed on the comic pages of newspapers,

magazines, or other publications.

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6. Distilled spirits should not be advertised or promoted by any person who is below the

legal purchase age or who is made to appear, through clothing or otherwise, to be below

the legal purchase age.

7. Distilled spirits web sites should contain a reminder of the legal purchase age on such

web pages as the home page, access sites for the purchase of distilled spirits or

brand-logoed consumer merchandise, and access sites depicting consumption of beverage

alcohol, for example, a “virtual bar.”

8. Distilled recognize the crucial role parents play in educating their children about the legal

and responsible consumption of beverage alcohol. To enable parents who choose to

prevent their children from accessing Internet web sites without their supervision,

DISCUS will provide those parents and the manufacturers of parental control software

upon request the web site address of each member company so that the parent or

manufacturer can use this information.

Social Responsibility

9. Distilled spirits advertising and marketing materials should portray distilled spirits and

drinkers in a responsible manner. These materials should not show a distilled spirits

product being consumed abusively or irresponsibly.

10. On-premise promotions sponsored by distillers should encourage responsible

consumption by those adults who choose to drink and discourage activities that reward

excessive/abusive consumption.

11. Distilled spirits advertising and marketing materials should not promote the intoxicating

effects of beverage alcohol consumption.

12. Distilled spirits advertising and marketing materials should not contain any curative or

therapeutic claim except as permitted by law.

13. Distilled spirits advertising and marketing materials should contain no claims or

representations that individuals can obtain social, professional, educational, or athletic

success or status as a result of beverage alcohol consumption.

14. Distilled spirits should not be advertised or marketed in any manner associated with

abusive or violent relationships or situations.

15. Distilled spirits advertising and marketing materials should not imply illegal activity of

any kind.

16. No distilled spirits advertising or marketing materials should portray distilled spirits

being consumed by a person who is engaged in, or is immediately about to engage in, any

activity that requires a high degree of alertness or physical coordination.

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17. No distilled spirits advertising or marketing activity should be associated with anti-social

or dangerous behavior.

18. Distilled spirits may be portrayed to be part of responsible personal and social

experiences and activities, such as the depiction of persons in a social or romantic setting,

persons who appear to be attractive or affluent, and persons who appear to be relaxing or

in an enjoyable setting.

Drunk Driving

19. Driving while intoxicated is against the law. Distilled spirits advertising and marketing

materials should not portray, encourage, or condone drunk driving.

Alcohol Content

20. Distilled spirits advertising and marketing materials should not refer to alcohol content

except in a straightforward and factual manner.

Good Taste

21. No distilled spirits advertising or marketing materials should contain advertising copy or

an illustration unless it is dignified, modest, and in good taste.

22. No distilled spirits advertising or marketing materials should claim or depict sexual

prowess as a result of beverage alcohol consumption.

23. Distilled spirits advertising and marketing materials should not degrade the image, form,

or status of women, men, or of any ethnic, minority, sexually-oriented, religious, or other

group.

24. Distilled spirits advertising and marketing materials should not employ religion or

religious themes, nor should distilled spirits be advertised in publications devoted

primarily to religious topics.

Code Review Board

There shall be established and maintained a Code Review Board, which shall meet when

necessary to consider complaints lodged by DISCUS members or other interested parties.

The Code Review Board shall be comprised of no less then five (5) members in good

standing of the Board of Directors of DISCUS. Each member shall be elected by a majority vote

of the Board of Directors.

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Findings of the majority of the members of the Code Review Board shall be communicated

promptly to the responsible advertiser and in appropriate circumstances to all members of the

Board of Directors of DISCUS.

B-5

Appendix C: Code of Advertising Standards, Wine Institute

(2000)

Preamble

Informal principles of good advertising practice for the winegrowing industry were first

adopted in 1949. In recent years, California wine advertisers have desired more specific and

significantly stronger standards to reflect the industry's concern with maximum social

responsibility.

This code is designed to encourage continued high standards so that California wine

advertising may increasingly be viewed as a positive contribution to society.

All advertising in all forms of media – including, but not limited to Internet and other digital

or cyberspace media, product labels, direct mail, point-of-sale, outdoor, displays, radio,

television and print media – shall adhere to both the letter and the spirit of this Code.

April 1978; May 1987; 1993; Last Amended December 2000

Guidelines

These guidelines shall apply only to voluntary subscribers of this Code of Advertising

Standards.

1. Wine and wine cooler advertising shall encourage the proper use of wine. Therefore

subscribers to this code shall not depict or describe in their advertising:

a. The consumption of wine or wine coolers for the effects their alcohol content may

produce.

b. Direct or indirect reference to alcohol content or extra strength, except as otherwise

required by law or regulation.

c. Excessive drinking or persons who appear to have lost control or to be

inappropriately uninhibited.

d. Any suggestion that excessive drinking or loss of control is amusing or a proper

subject for amusement.

e. Any persons engaged in activities not normally associated with the moderate use of

wine or wine coolers and a responsible lifestyle. Association of wine use in

conjunction with feats of daring or activities requiring unusual skill is specifically

prohibited.

f. Wine or wine coolers in quantities inappropriate to the situation or inappropriate for

moderate and responsible use.

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g. The image of wine and wine coolers in advertising and promotion shall be

adult-oriented and socially responsible. Comparative or competitor-derogatory

advertising is inappropriate.

2. Advertising of wine has traditionally depicted wholesome persons enjoying their lives

and illustrating the role of wine in a mature lifestyle. Any attempt to suggest that wine

directly contributes to success or achievement is unacceptable. Therefore, the following

restrictions shall apply to subscribers of this code:

a. Wine and wine coolers shall not be presented as being essential to personal

performance, social attainment, achievement, success or wealth.

b. The use of wine and wine coolers shall not be directly associated with social, physical

or personal problem solving.

c. Wine and wine coolers shall not be presented as vital to social acceptability and

popularity.

d. It shall not be suggested that wine or wine coolers are crucial for successful

entertaining.

3. Any advertisement which has particular appeal to persons below the legal drinking age is

unacceptable, even if it also appeals to adults. Therefore, wine and wine cooler

advertising by code subscribers shall not:

a. Show models and personalities in advertisements who are under the legal drinking

age. Models shall appear to be 25 years of age or older.

b. 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.

c. Appear in children or juvenile magazines, newspapers, television programs, radio

programs or other media specifically oriented to persons below the legal drinking

age.

d. Appear in any media where more than 30% of the audience is underage (determined

by using reliable, up-to-date audience composition data).

e. Appear on the premises of college and university campuses or in newspapers of

college and university campuses.

f. Be presented as being related to the attainment of adulthood or associated with "rites

of passage" to adulthood.

g. Suggest that wine or a wine cooler product resembles or is similar to another type of

beverage or product (milk, soda, candy) having particular appeal to persons below the

legal drinking age.

h. Use current or traditional heroes of the young such as those engaged in pastimes and

occupations having a particular appeal to persons below the legal drinking age.

i. Use amateur or professional sports celebrities, past or present.

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4. Code subscribers shall not show motor vehicles in such a way as to suggest that they are

to be operated in conjunction with wine or wine cooler use.

Advertising shall in no way suggest that wine or wine coolers be used in connection

with driving motorized vehicles such as automobiles, motorcycles, boats, snowmobiles,

or airplanes.

5. Wine and wine cooler advertising shall not be placed in media with substantial underage

appeal:

a. Subscribers shall be mindful that online advertising may be viewed by underaged

individuals and shall take steps to insure that online content remains consistent with

provisions of this code.

b. To the extent possible, subscribers placing products in visual media, regardless of the

visual media’s rating, shall strive to depict wine appropriately and consistent with

other provisions of this code.

c. Wine and wine cooler advertising shall not be placed in or directly adjacent to

television or radio programs or print media that dramatize or glamorize

over-consumption or inappropriate use of alcoholic beverages.

6. Wine and wine cooler advertising by code subscribers shall make no reference to wine's

medicinal or caloric values.

7. Wine and wine cooler advertising by code subscribers shall not degrade, demean, or

objectify the human form, image or status of women, men, or of any ethnic, minority or

other group, or feature provocative or enticing poses.

8. Wine and wine cooler advertising shall not be directed to underage drinkers or pregnant

women. Wine and wine cooler advertising will not portray excessive drinking.

9. Wine and wine cooler advertising by code subscribers shall not exploit the human form,

feature provocative or enticing poses, nor be demeaning to any individual. Wine and

wine cooler advertising by code subscribers shall not reinforce nor trivialize the problem

of violence in our society. Therefore, wine and wine cooler advertising shall not associate

wine or wine coolers with abusive or violent relationships or situations.

10. A distinguishing and unique feature of wine is that it is traditionally served with meals or

immediately before or following a meal.

Therefore, when subscribers to this code use wine advertising which visually depicts a scene or

setting where wine is to be served, such advertising where appropriate shall include foods and

show that they are available and are being used or are intended to be used.

C-3

This guideline shall not apply to the depiction of a bottle of wine, vineyard, label,

professional tasting etc. where emphasis is on the product.

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Appendix D: Beer Institute: Advertising and Marketing

Code and Buying Guidelines (2003)

Introduction

Beer is a legal beverage meant to be consumed responsibly. Its origins are ancient, and it has

held a respected position in nearly every culture and society since the dawn of recorded history.

Advertising is a legitimate effort by brewers to make consumers aware of the particular types,

brands, and prices of malt beverages that are available.

Beer distribution in the United States is subject to extensive laws and regulations, enforced

by federal, state and local governments. Federal and state law establishes a three-tiered

distribution system for beer, composed of brewers, wholesale distributors, and retail sellers.

Companies in each tier of this distribution system are required by law to maintain their

commercial independence. The Beer Institute encourages all with whom brewers do business to

adhere to the law, as well as this voluntary Advertising and Marketing Code, which is provided

annually to the independent distributors which sell their products.

Three basic principles, which have long been reflected in the policies of the brewing

industry, continue to underlie these Guidelines. First, Beer advertising should not suggest

directly or indirectly that any of the laws applicable to the sale and consumption of beer should

not be complied with. Second, brewers should adhere to standards of candor and good taste

applicable to all commercial advertising. Third, brewers are responsible corporate citizens,

sensitive to the problems of the society in which they exist, and their advertising should reflect

that fact. Brewers strongly oppose abuse or inappropriate consumption of their products.

Guidelines

1. These guidelines apply to all brewer advertising and marketing materials, including

Internet and other cyberspace media. These guidelines do not apply to educational

materials or televised, printed or audio messages of a non-brand specific nature; nor to

materials or messages designed specifically to address issues of alcohol abuse or

underage drinking.

2. Beer advertising and marketing materials should portray beer in a responsible manner.

a. Beer advertising and marketing materials should not portray, encourage or condone

drunk driving.

b. Beer advertising and marketing materials should not depict situations where beer is

being consumed excessively, in an irresponsible way, or in any way illegally.

c. Beer advertising and marketing materials should not portray persons in a state of

intoxication or in any way suggest that intoxication is acceptable conduct.

D-1

d. Beer advertising and marketing materials should not portray or imply illegal activity

of any kind.

e. Retail outlets or other places portrayed in advertising should be depicted as well kept

and respectable establishments.

3. Brewers are committed to a policy and practice of responsible advertising and marketing.

As a part of this philosophy, beer advertising and marketing materials are intended for

adults of legal purchase age who choose to drink.

a. Beer advertising and marketing materials should not employ any symbol, language,

music, gesture, or cartoon character that is intended to appeal primarily to persons

below the legal purchase age. Advertising or marketing material has a “primary

appeal” to persons under the legal purchase age if it has special attractiveness to such

persons beyond the general attractiveness it has for persons above the legal purchase

age.

b. Beer advertising and marketing materials should not employ any entertainment figure

or group that is intended to appeal primarily to persons below the legal purchase age.

c. Beer advertising and marketing materials should not depict Santa Claus.

d. Beer advertising and marketing materials shall only be placed in magazines, on

television or on radio where at least 70% of the audience is expected to be adults of

legal purchase age. The brewer placing advertising or marketing materials in

magazines, on television or on radio shall conduct periodic after-the-fact audits, at

least semi-annually, of a random portion of its placements. If a brewer learns that a

placement did not meet the Code Standard it will take steps to prevent a reoccurrence.

A placement will be considered reasonable if the audience composition data reviewed

prior to placement met the percentages set forth above. What constitutes a reasonable

basis for placement depends on the medium and available data for that medium.

Buying guidelines for the implementation of this section will be distributed in

conformance with the dissemination provisions of this code.

e. To help insure that the people shown in beer advertising are and appear to be above

the legal purchase age, models and actors employed should be a minimum of 25 years

old, substantiated by proper identification, and should reasonably appear to be over

21 years of age.

f. Beer should not be advertised or marketed at any event where most of the audience is

reasonably expected to be below the legal purchase age. This guideline does not

prevent brewers from erecting advertising and marketing materials at or near facilities

that are used primarily for adult-oriented events, but which occasionally may be used

for an event where most attendees are under age 21.

g. No beer identification, including logos, trademarks, or names should be used or

licensed for use on clothing, toys, games, or game equipment, or other materials

intended for use primarily by persons below the legal purchase age.

h. Brewers recognize that parents play a significant role in educating their children

about the legal and responsible use of alcohol and may wish to prevent their children

from accessing Internet Web sites without parental supervision. To facilitate this

exercise of parental responsibility, Beer Institute will provide to manufacturers of

D-2

parent control software the names and Web site addresses of all member-company

Web sites. Additionally, brewers will require disclosure of a viewer’s date of birth at

the entry to their websites and will post reminders at appropriate locations in their

Web site indicating that brewer products are intended only for those of legal purchase

age. These locations include entrance into the Web site, purchase points within the

Web site, and access into adult-oriented locations within the Web site, such as virtual

bars.

4. Beer consumption is intended as a complement to leisure or social activity. Beer

advertising and marketing activities should not associate or portray beer drinking before

or during activities which require a high degree of alertness or coordination.

5. Beer advertising and marketing materials should not make exaggerated product

representations.

a. Beer advertising and marketing materials should not convey the impression that a

beer has special or unique qualities if in fact it does not.

b. Beer advertising and marketing materials should make no scientifically

unsubstantiated health claims.

c. Beer may be portrayed to be part of personal and social experiences and activities.

Nevertheless, beer advertising and marketing materials should contain no claims or

representations that individuals cannot obtain social, professional, educational,

athletic, or financial success or status without beer consumption; nor should they

claim or represent that individuals cannot solve social, personal or physical problems

without beer consumption.

6. Beer advertising and marketing materials should reflect generally accepted contemporary

standards of good taste.

a. Beer advertising and marketing materials should not contain any lewd or indecent

language or images.

b. Beer advertising and marketing materials should not portray sexual passion,

promiscuity or any other amorous activity as a result of consuming beer.

c. Beer advertising and marketing materials should not employ religion or religious

themes.

7. Beer advertising and marketing materials should not disparage competing beers. In the

event comparisons are drawn between competing beers, the claims made should be

truthful and of value to consumers.

8. Beer advertising and marketing materials should never suggest that competing beers

contain objectionable additives or ingredients.

9. Beer advertising and marketing materials should not refer to any intoxicating effect that

the product may produce.

D-3

10. Beer advertising and marketing materials should not depict the act of drinking.

11. Beer advertising and marketing materials should not show littering or otherwise improper

disposal of beer containers, unless the scenes are used clearly to promote anti-littering

and/or recycling campaigns.

12. College marketing

Beer advertising and marketing activities on college and university campuses, or in college

media, should not portray consumption of beer as being important to education, nor shall

advertising directly or indirectly degrade studying. Beer may be advertised and marketed on

college campuses or at college-sponsored events only when permitted by appropriate college

policy.

a. On-campus promotions/sponsorships

1. Company sponsored events: Company sponsorship of on-campus events or

company promotions at on-campus licensed retail establishments shall be limited

to events conducted in accord with this Code, state law, and applicable

institutional policies. In their content and implementation, company on-campus

promotions and sponsorships shall not encourage the irresponsible, excessive,

underage or otherwise illegal consumption of alcohol.

2. Branded products: Beer-branded promotional products such as key chains,

clothing, posters or other tangible goods designed to promote specific beer

brands, are intended only for adults of legal purchase age. Distribution of these

items will therefore take place only at licensed retail establishments or where

distribution is limited to those over the legal purchase age, and otherwise

conforms with applicable laws and institutional policies.

3. Tastings: Tasting events at which product samples are provided should occur at

licensed retail establishments or where distribution is limited to those over the

legal purchase age, and otherwise conforms with applicable laws and institutional

policies.

b. Company sales representatives

Company sales representatives who undertake sales calls on or near a college campus

must be at least of legal purchase age, and shall conduct sales activities in conformity

with this Code.

13. Billboards

Billboard advertisements by brewers shall be located at least 500 linear feet from established

and conspicuously identified elementary or secondary schools, places of worship or public

playgrounds.

14. Product placement

Movies and television programs frequently portray consumption of alcohol and related

signage and props in their productions. Brewers encourage producers to seek company

approval before using their products, signage or other props in artistic productions. While

producers sometimes seek prior approval from the companies, the final artistic and editorial

D-4

decisions concerning product portrayal are always within the exclusive control of the movie

or television producers.

With regard to those who seek company approval, product placement will be guided by the

following principles:

a. Case by Case Approval: Where their approval is sought, brewers will approve or

reject product placement in specific projects or scenes on a case by case basis, based

upon the information provided by the movie or television program’s producers.

b. Portrayal of drinking and driving: Brewers discourage the illegal or irresponsible

consumption of their products in connection with driving. Consistent with that

philosophy, the companies will not approve product placement where the characters

engage in illegal or irresponsible consumption of their products in connection with

driving.

c. Underage drinking: Brewers discourage underage drinking and do not intend for

their products to be purchased or consumed illegally by minors. Consistent with that

philosophy, the companies will not approve product placement which portrays

purchase or consumption of their products by persons who are under the legal

purchase age.

d. Primary appeal to minors: Brewers discourage underage drinking and do not intend

for their products to be purchased or consumed illegally by minors. Consistent with

that philosophy, the companies will not approve product placement where the

primary character(s) are under the legal purchase age or the primary theme(s) are,

because of their content or presentation, particularly attractive to children.

e. Portraying alcoholism/alcohol abuse: Brewers do not want their products to be

abused. Consistent with that philosophy, the companies will not approve product

placement where characters use their products irresponsibly or abusively or where

alcoholism is portrayed, unless the depiction supports a responsible-use message.

Code Compliance and Dissemination

Each member of the Beer Institute is committed to the philosophy of the Code and is committed

to compliance with the Code. When the Beer Institute receives complaints with regard to any

member’s advertising or marketing, it has long been its practice and it will continue to be its

practice to promptly refer such complaints in writing to the member company for its review and

action. To facilitate this end, the Beer Institute maintains an 800 number (1-800-379-2739). A

copy of this code shall continue to be given to every brewery employee, wholesale distributor

and outside agency whose responsibilities include advertising and marketing beer, as well as to

any outside party who might request it.

Beer Institute

122 C Street, NW, Suite 750

Washington, DC 20001-2150

202-737-2337

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Buying Guidelines for the Implementation of Section 3(d) of

the Beer Institute Advertising and Marketing Code (2003)

Brewers shall use the following guidelines when purchasing advertising in magazines or on

television or radio.

Magazines

A. For the purchase of print advertisements in magazines, use of a nationally recognized

measurement service providing age 12-plus audience composition data to the extent

available, or if not available, age18-plus audience compositional data, or, if unmeasured

subscription data and/or other data from comparable publications;

B. For the purchase of print advertisements in new magazines, use of subscription data

and/or other data from comparable publications;

C. A placement will be considered appropriate when data supplied by the sources referenced

in (A) and (B) above shows that the publication is in compliance with the code.

Television

A. For national network television advertising buys, use of national audience composition

data on the program in the timeslot;

B. For syndicated, cable or local spot television buys, use of national audience composition

data for the program or daypart being bought;

C. For new buys, use of national audience composition data for comparable programs in

comparable timeslots;

D. A placement will be considered appropriate when data for two consecutive rating periods

shows that the program or daypart is in compliance with the Code.

Radio

A. For audited radio stations, use of audience composition data for the daypart;

B. For unaudited radio stations, use of audience composition data provided by the station

regarding the targeted daypart being bought or compositional data for the daypart of

comparable stations in comparable markets;

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C. A placement will be considered appropriate when data for the preceding rating period of

at least six months shows that the daypart is in compliance with the Code.

These guidelines will be reviewed from time to time to assure that they are the most accurate

measurement available for the audience composition data in question.

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Appendix E: Code of Responsible Practices for Beverage

Alcohol Advertising and Marketing and Buying

Guidelines, DISCUS (2003)

Preamble

•

The Distilled Spirits Council of the United States, Inc. (DISCUS) is the national trade

association representing producers and marketers of distilled spirits sold in the United

States. Some of our members also are producers and marketers of many malt beverage

(beer) and wine brands sold in the United States. With a full portfolio of beverage alcohol

products, DISCUS members have developed a Code of advertising and marketing

responsible practices to provide guidance to all those involved in the promotion of their

respective brands.

•

DISCUS members are committed to the responsible placement and content of their brand

communications. The overriding principle of our Code is to market our products to adults

in a responsible and appropriate manner. Towards this end, DISCUS members pledge

voluntarily to conduct their advertising and marketing practices in the United States in

accordance with the provisions of this Code.

•

The consumption of beverage alcohol products has played an accepted and important role

in the cultural and social traditions of both ancient and modern society. DISCUS

members take special pride in their products and their commitment to promoting

responsible drinking by those adults who choose to drink.

•

DISCUS members encourage responsible decisionmaking regarding drinking, or not

drinking, by adults, and discourage abusive consumption of their products. DISCUS

members urge that adults who choose to drink, do so responsibly. Nevertheless, it is the

obligation of each consumer who chooses to drink to enjoy beverage alcohol products in

a responsible manner.

Scope

•

This Code applies to all activities undertaken to advertise and market distilled spirits,

malt beverage and wine brands. These activities include brand advertising, consumer

communications, promotional events, packaging, labels, and distribution and sales

materials.

•

The provisions of the Code apply to every type of print and electronic media, including

the Internet and any other on-line communications, used to advertise or market beverage

alcohol. These provisions also apply to every type of promotional or marketing activity

or event, including all product placements.

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•

DISCUS members recognize that it is not possible to cover every eventuality and,

therefore, agree to observe the spirit, as well as the letter, of this Code. Questions about

the interpretation of the Code, member companies' compliance with the Code, and the

application of its provisions are directed to the Code Review Board of DISCUS.

Responsible Placement

Adult Audiences/Underage Persons

1. Beverage alcohol advertising and marketing materials are intended for adults of legal

purchase age who choose to drink.

2. Beverage alcohol products should not be advertised or marketed in any manner directed

or primarily appealing to persons below the legal purchase age. (The definition of

“primarily appeal” is set forth under the Responsible Content provisions.)

3. Beverage alcohol advertising and marketing should be placed in broadcast, cable, radio,

and print communications only where at least 70 percent of the audience is reasonably

expected to be above the legal purchase age (determined by using reliable, up-to-date

audience composition data).

• To facilitate these placement commitments, recognized electronic and print

composition data should be reviewed on a regular basis (at least annually) in order to

ensure that the audience composition data are current and appropriate.

• Internal, periodic after-the-fact audits of past placements should be undertaken to

verify that past advertising placements were in compliance with this Code and to take

appropriate, corrective action for future placements.

4. Appropriate measures and best efforts should be taken so that beverage alcohol

advertising and marketing are not specifically aimed at events unless at least 70 percent

of the audience is reasonably expected to be above the legal purchase age.

5. Fixed beverage alcohol advertising and marketing materials may be placed at venues that

are used primarily for adult-oriented events defined as where at least 70 percent of the

audience attending those venue events is reasonably expected to be above the legal

purchase age.

6. Beverage alcohol products should not be advertised or marketed in college or university

newspapers, or on college and university campuses except for licensed retail

establishments located on such campuses.

7. Beverage alcohol advertising should not be placed on any outdoor stationary location

within five hundred (500) feet of an established place of worship or an elementary school

or secondary school except on a licensed premise.

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Responsible Content

Adult Audiences/Underage Persons

1. Beverage alcohol advertising and marketing materials are intended for adults of legal

purchase age who choose to drink.

2. The content of beverage alcohol advertising and marketing materials should not appeal

primarily to individuals below the legal purchase age.

3. Beverage alcohol advertising and marketing materials should not depict a child or portray

objects, images or cartoon figures that primarily appeal to persons below the legal

purchase age. Advertising or marketing material is considered to “primarily appeal” to

persons below the legal purchase age if it has special attractiveness to such persons

beyond the general attractiveness it has for persons above the legal purchase age.

4. Beverage alcohol advertising and marketing materials should not contain the name of or

depict Santa Claus.

5. Beverage alcohol products should not be advertised or marketed on the comic pages of

newspapers, magazines or other publications.

6. Beverage alcohol products should not be advertised or marketed in a manner associated

with the attainment of adulthood or the “rite of passage” to adulthood.

7. Beverage alcohol products should not be advertised or promoted by any person who is

below the legal purchase age or who is made to appear to be below the legal purchase

age. To help ensure that individuals in beverage alcohol advertising are and appear to be

above the legal purchase age, models and actors employed should be a minimum of 25

years old, substantiated by proper identification and should reasonably appear to be over

21 years of age.

8. No brand identification, including logos, trademarks or names, should be used or licensed

for use on clothing, toys, games, or game equipment, or other items intended for use

primarily by persons below the legal purchase age.

Websites

9. Age verification mechanisms should be employed for DISCUS member-controlled

beverage alcohol advertising and marketing websites. They also should contain a

reminder of the legal purchase age.

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10. DISCUS members recognize the crucial role parents play in educating their children

about the legal and responsible consumption of beverage alcohol. To enable parents who

choose to prevent their children from accessing Internet websites without their

supervision, DISCUS will provide those parents and the manufacturers of parental

control software upon request the website address of each member company so that the

parent or manufacturer can use this information.

11. Each DISCUS member-controlled website with advertising or marketing materials should

provide a link to a responsible decision-making site.

Social Responsibility

12. Beverage alcohol advertising and marketing materials should portray beverage alcohol

products and drinkers in a responsible manner. Beverage alcohol products and drinkers

may be portrayed as part of responsible personal and social experiences and activities,

such as the depiction of persons in a social or romantic setting, persons who appear to be

attractive or affluent, and persons who appear to be relaxing or in an enjoyable setting.

13. Beverage alcohol advertising and marketing materials should not depict situations where

beverage alcohol is being consumed excessively or in an irresponsible manner. These

materials should not portray persons in a state of intoxication or in any way suggest that

intoxication is socially acceptable conduct, and they should not promote the intoxicating

effects of beverage alcohol consumption.

14. Beverage alcohol advertising and marketing materials should not contain any curative or

therapeutic claim except as permitted by law.

15. Beverage alcohol advertising and marketing materials should contain no claims or

representations that individuals can attain social, professional, educational, or athletic

success or status as a result of beverage alcohol consumption.

16. Beverage alcohol products should not be advertised or marketed in any manner

associated with abusive or violent relationships or situations.

17. Beverage alcohol advertising and marketing materials should not imply illegal activity of

any kind.

18. Beverage alcohol advertising and marketing materials should not portray beverage

alcohol being consumed by a person who is engaged in, or is immediately about to

engage in, any activity that requires a high degree of alertness or physical coordination.

19. Beverage alcohol advertising and marketing materials should not be associated with

anti-social or dangerous behavior.

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20. Driving while intoxicated is against the law. Beverage alcohol advertising and marketing

materials should not portray, encourage or condone driving any motor vehicle while

intoxicated.

Good Taste

21. Beverage alcohol advertising and marketing materials should reflect generally accepted

contemporary standards of good taste.

22. Beverage alcohol advertising and marketing materials should not degrade the image,

form, or status of women, men, or of any ethnic, minority, sexually-oriented, religious, or

other group.

23. Beverage alcohol advertising and marketing materials should not contain any lewd or

indecent images or language.

24. Beverage alcohol advertising and marketing materials should not employ religion or

religious themes.

Sexual Prowess and Sexual Success

25. Beverage alcohol advertising and marketing materials may depict affection or other

amorous gestures or other attributes associated with sociability and friendship. While a

brand preference may be portrayed as a mark of good taste and discernment, beverage

alcohol advertising and marketing materials should not rely upon sexual prowess or

sexual success as a selling point for the brand. Accordingly, advertising and marketing

materials should not contain or depict:

• graphic or gratuitous nudity;

• overt sexual activity;

• promiscuity; or

• sexually lewd or indecent images or language.

Promotional Events

26. On-premise promotions sponsored by DISCUS members should encourage responsible

consumption by those adults who choose to drink and discourage activities that reward

excessive/abusive consumption.

27. Where supplier sampling is permitted, DISCUS members should ensure that appropriate

measures are employed to safeguard against underage drinking.

28. DISCUS members should not promote or encourage any drinking in conjunction with

reckless and/or irresponsible behavior at an on-premise promotion sponsored by DISCUS

members.

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Alcohol Content

29. Beverage alcohol advertising and marketing materials should not refer to the alcohol

content of a beverage alcohol product except in a straightforward and factual manner or

promote the potency of a beverage alcohol product.

Social Responsibility Statements

30. Responsible drinking statements should be included in beverage alcohol advertising,

marketing materials and promotional events where practicable.

Internal Compliance System

1. DISCUS members should establish an internal process to ensure compliance with the

Code. To the extent possible given a company’s size and organizational structure, this

process should include a separate review of advertising and marketing materials by a

company employee who is not in the marketing department or who was not involved in

the development of the advertising or marketing materials.

2. DISCUS members should provide a copy of the Code to advertising agencies, media

buyers and other external consultants involved in a member’s advertising or marketing

activities.

Code Review Board

There shall be established and maintained a Code Review Board, which shall meet when

necessary to consider complaints lodged by DISCUS members or other interested parties,

including members of the public.

The Code Review Board shall be comprised of no less than five (5) members in good standing of

the Board of Directors of DISCUS or his/her designee. Each member shall be elected by a

majority vote of the Board of Directors.

Findings of the majority of the members of the Code Review Board shall be communicated

promptly to the responsible advertiser and, in appropriate circumstances, to all members of the

Board of Directors of DISCUS.

Semiannual Code Report

On a semiannual basis, the Code Review Board will issue a report summarizing complaint

decisions and the advertiser’s response.

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Outside Advisors

On a voluntary, nonbinding and confidential basis, DISCUS will make available a mechanism

whereby beverage alcohol industry member advertisers can seek the guidance of outside advisors

concerning any questions an advertiser may have about whether particular advertising or

marketing materials are consistent with the Code.

These outside advisors also will be contacted for their respective opinion if the Code Review

Board cannot arrive at a majority decision about a particular advertisement or marketing

material.

Code Review Process

•

For more than 68 years, distillers have abided by a voluntary Code of advertising

practices. First adopted in 1934, the Code now includes 39 provisions regarding the

responsible placement and content of beverage alcohol advertising and marketing

materials.

•

Through these voluntary provisions, DISCUS members hold themselves to a standard

higher than mandated by any law or regulation. By this Code, DISCUS members hold all

of their beverage alcohol products — distilled spirits, beer and wine — to the same high

standard.

•

Our commitment to responsibility and self-regulation always has been, and will continue

to be, the cornerstone of our advertising and marketing practices.

•

A Code Review Board, established under the provisions of the Code, provides a

mechanism for any complaints or inquiries regarding all advertising and marketing

materials subject to this Code. The Code Review Board has been a functioning and

effective component of our voluntary Code for decades.

•

If you have any questions regarding the Code of Responsible Practices or a particular

advertisement or marketing material subject to the Code, please write to the DISCUS

Code Review Board, 1250 Eye Street, N.W., Suite 400, Washington, D.C. 20005.

E-7

Demographic Data/Advertisement Placement Guidelines to

Implement the Responsible Placement Provisions of the

DISCUS Code of Responsible Practices for Beverage Alcohol

Advertising and Marketing (2003)

Set forth below are guidelines regarding placement of advertisements in various media and

periodic, random after-the-fact audits (post audits) of placements to meet the demographic

standard where at least 70% of the audience for TV, print and radio advertisements is reasonably

expected to be 21 years of age or older (the legal purchase age (LPA) audience composition).

I. Media placement and the 70% LPA standard

A. A placement will be considered to be in compliance with this LPA standard if:

i) The advertiser has a reasonable expectation, determined by using reliable, up-to-date

audience composition data, that the LPA audience composition will be at least 70%;

ii) The advertiser conducts internal, periodic after-the-fact audits of a random portion of

past placements to verify that such placements were in compliance with the 70% LPA

audience composition standard; and

iii) The advertiser, upon learning of a non-compliant placement, takes appropriate,

corrective action for future placements.

B. A reasonable expectation for meeting this demographic standard takes into account

marketplace realities, the medium and available demographic audience composition data,

and includes:

i) Recognition that a company’s media buys generally are determined prior to its

upcoming fiscal year for placement during the course of that fiscal year;

ii) Recognition that a company’s media buys rely upon historical demographic data to

estimate the future LPA audience composition;

iii) Recognition of the availability and publication intervals of syndicated audience

composition data; for example, MRI TwelvePlus data are published annually and

Arbitron data are published quarterly, whereas national broadcast networks have the

most frequently measured syndicated audience composition data (national Nielsen

data) thereby affording, among other things, more data for advertisement placement

and for more expeditious after-the-fact audit

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