The Rules on Alcohol Advertising – Served Straight Up By Gregg P. Skall
Questions frequently arise regarding the legality of advertising certain “red flag” products. The products that might be placed in the “red flag” category include alcohol, tobacco, casino gaming and weight-loss plans. Perhaps the most frequent question is about alcohol advertising.
The key case in this area is the Supreme Court’s 1996 decision in 44 Liquormart, Inc. v. Rhode Island. 44 Liquormart struck down as unconstitutional a Rhode Island statute that barred sellers of alcohol from advertising alcohol prices except at the point of purchase (and even there retailers were limited to doing so in a manner not visible from outside the premises). The Court emphasized that, as an outright ban on truthful, nonmisleading advertisements with a specific content, the Rhode Island law violated the Constitution despite the state’s interest in promoting temperance. Justice Thomas’ concurring opinion cites Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., where the Court held that speech that does “no more than propose a commercial transaction” is protected by the First Amendment, and struck down a ban on price advertising for prescription drugs. According to the Supreme Court, a “particular consumer’s interest in the free flow of commercial information” may be as keen as, or keener than, his interest in “the day’s most urgent political debate.”
Following 44 Liquormart almost all prohibition on the outright ban of alcohol advertising has fallen away. However, one is well advised to note that the nine Justices agreed on only one thing unanimously, and that was the unconstitutionality of the Rhode Island statute. Otherwise, the Court was severely fractured as to how far First Amendment commercial speech doctrine need be stretched to protect advertising and to reach the judgment in the case. The Court issued four different opinions, each with its own rationale, with two of the opinions being signed by four Justices each. One of those two opinions explicitly declined to extend commercial speech law any further. The other “plurality” opinion, which worked the greatest advancement of the commercial speech doctrine toward stricter application against government regulation, also garnered only four votes but secured only three votes for the most far-reaching section of the opinion. Nevertheless, the case has stood the test of time.
This is important in light of more recent concerns over alleged alcohol advertising to underage consumers. Some states have tried to curb such advertising. A decade ago the Federal Trade Commission issued a report followed by a series of updates on self-regulation by the beverage industry, Self-Regulation in the Alcohol Industry, to avoid promoting alcohol to teenagers and young adults.
The report concludes that alcohol ad placement and content, and the product placement “best practices” currently followed by some companies, should be more widely adopted to reduce underage exposure to alcohol ads by changing the current placement standards that allow advertising in media when as much as 50 percent of the audience is under 21. In 2003, the industry raised that standard to 70 percent. An evaluation of the industry practices and recommendations for Internet alcohol advertising was issued by the Federal Trade Commission in 2008.
Generally, the FTC believes that the spirits industry has done a good job and is acting responsibly in its advertising practices regarding underage drinking.
The earlier 1999 FTC report was prepared in response to a joint request from the House and Senate Committees on Appropriations. It recommended that all industry members adopt the following best practices.
- For ad placement: Bar placement in media with the largest underage audiences and conduct regular audits of previous product placements.
- For ad content: Prohibit ads with substantial underage appeal, even if they also appeal to adults; or target ads to persons 25 and older.
- For product placement in movies and television: Restrict the promotional placement of alcohol products to “R” and “NC-17” rated films (or, if unrated, to films with similarly mature themes) and apply the standards for placing traditional advertising to product placement on television.
- For online advertising: Use available mechanisms to reduce underage access and avoid content that would attract underage consumers.
- For college marketing: Curb on-campus and spring break sponsorships and advertising.
Three trade associations, The Beer Institute, the Distilled Spirits Council of the United States, and the Wine Institute, have advertising codes that contain similar provisions about the placement and content of ads designed to prevent the marketing of alcohol to underage consumers. While most advertising has complied with the codes, some has been criticized for code violations.
While the old NAB code did contain a voluntary prohibition on the advertising of hard liquor, the code was discarded in a settlement with the Justice Department, which had taken action against the National Association of Broadcasters alleging that the NAB Code operated to limit the amount of available commercial time, leading to favoritism for the networks largest advertisers to the prejudice of smaller advertisers.
The bottom line is that there is no Federal law or national broadcasting standard or code that bans or even regulates a broadcaster advertising alcoholic beverages. However, the beverage industry codes represent important recognition of where the industry itself believes appropriate lines should be drawn and many in broadcasting believe it wise to adhere to these industry standards, even when advertisers might seek to go beyond their guidance.
It is noteworthy as well, that some states have attempted to legislate in this. For example, several years ago, California considered, but did not pass, a bill that would have subjected the use of alcoholic beverages in any advertisement that encourages minors to drink alcoholic beverages to criminal penalty. Other states or local jurisdictions may have regulations that could cause problems for local distributors or retailers and that could implicate their advertising practices. Common sense would dictate that broadcasters should be familiar with any local regulation, conform their advertising practices to local law and ensure their local listeners will not be distressed by material they broadcast.
So, bottom, bottom line: while current law does not strictly prohibit any alcohol advertising, broadcasters should respect the industry advertising codes. It might be tempting to take some advertising that pushes the edges, but consider the cost to the industry if that advertising campaign became the catalyst for much heavier regulation.
This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.