BILL ANALYSIS Ó
SB 778
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 778 (Padilla) - As Amended: June 14, 2012
Policy Committee: Governmental
Organization Vote: 17 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill allows winegrowers, beer manufacturers, distillers,
importers, and other specific alcoholic beverage licensees to
conduct consumer contests or sweepstakes offering chances to win
prizes. Specifically, this bill:
1)Provides that no entry fee may be charged to participate in a
contest. Provides that entry into or participation in a
contest shall be limited to persons 21 years of age or older.
Specifies that no contest shall require consumption of
alcoholic beverages by a participant.
2)Provides that alcoholic beverages or anything redeemable for
alcoholic beverages shall not be awarded as a contest prize.
3)Provides that advertising or promotion of a contest shall only
be conducted on the premises of a retail licensee when such
advertisement or promotion involves a minimum of three
unaffiliated retail licensees, as defined.
4)Provides that an authorized licensee shall not include a beer
and wine wholesaler, a beer and wine importer general, or
distilled spirits importer general that only holds a
wholesaler's or retailer's license as an additional license.
FISCAL EFFECT
Approximately 4,500 licensees would be authorized to conduct
sweepstakes and contests in California. This would likely
result in a significant increase in public inquiries and
complaints to the Department of Alcoholic Beverage Control's
SB 778
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(ABC) Trade Enforcement Unit. Assuming those inquiries and
complaints result in between 25 and 50 investigations per year,
workload costs for ABC would be between $100,000 and $200,000
per year (ABC Fund).
COMMENTS
1)Purpose . The author's office notes this measure is
co-sponsored by the Wine Institute and the Family Winemakers
of California and is intended to allow Californians 21 years
of age or older to join the rest of the nation's consumers in
being able to take part in marketing activities conducted by
producers as a means to build brand awareness and interest.
The sponsors point out that SB 778 is modeled after guidelines
previously utilized by ABC and includes numerous restrictions
and safeguards to preserve the integrity of the state's
alcoholic beverage laws and regulations in order to guide
authorized licensees in how to legally conduct contests and
sweepstakes.
The bill would permit an authorized licensee to conduct a
contest themselves (meaning that they are organizing and
holding the contest in their own name) in addition to
sponsoring someone else's contest under the existing authority
of Rule 106 (see below).
2)Background . For the better part of a 20-year period California
consumers were eligible to enter alcoholic beverage
sweepstakes like other states. ABC issued a series of policy
guidelines authorizing sweepstakes under specific conditions.
However, in response to what many felt was an overly
aggressive brewer marketing program, where increasingly
attractive gifts could be redeemed based on the quantities of
alcohol consumed (e.g., redemption of bottle caps), ABC in
1999 amended its Rule 106 to clarify that existing law
prohibits the giving of any premium, gift, or free goods, by
any means whatsoever, including, but not limited to,
sweepstakes, drawings, prizes, and cross-merchandising
promotions, where the value of such premium, gift, or free
good exceeds the monetary limits determined in statute.
3)ABC Rule 106 . ABC Rule 106 clarifies that the giving of any
prohibited premium, gifts or goods of any sort, is a
violation, whether by way of sweepstakes, drawings, prizes,
cross merchandizing promotions with a non-alcoholic beverage
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or product, or any other method if the value of the premium,
gift or good exceeds $0.25 with respect to beer, $1 with
respect to wine, or $5 with respect to distilled spirits.
Rule 106 does allow suppliers to sponsor contests being
conducted by bona fide amateur or professional organizations
established for the encouragement of the activities involved
(for example, PGA golf tournaments or NFL football games, and
the like). Such sponsorship is limited to monetary payments
to amateur or professional organization conducting the
contest, and the rule also provides that such sponsorship
shall not require the exclusive sale of the supplier's
products and the supplier shall not give anything of value to
anyone other than the organization conducting the contest.
Entry fees may be charged to such contests, but there shall be
no requirement that a participant purchase any of the
supplier's products.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081