BILL ANALYSIS Ó
AB 1928
Page 1
Date of Hearing: April 2, 2014
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
AB 1928 (Bocanegra) - As Amended: March 26, 2014
SUBJECT : Alcoholic beverages: coupons: beer.
SUMMARY : Prohibits a beer manufacturer or a beer and wine
wholesaler from offering, funding, producing, sponsoring,
promoting, furnishing, or redeeming any type of coupon. The
bill would also prohibit a licensee authorized to sell alcoholic
beverages at retail from accepting, redeeming, possessing, or
utilizing any type of coupon that is funded, produced,
sponsored, promoted, or furnished by a beer manufacturer or beer
and wine wholesaler. The bill would define beer manufacturer
and coupon for these purposes. Specifically, this bill :
1) Provides that a beer manufacturer or a beer and wine
wholesaler shall not offer, fund, produce, sponsor, promote,
furnish, or redeem any type of coupon, as specified.
2) Provides that a licensee authorized to sell alcoholic
beverages at retail shall not accept, redeem, possess, or
utilize any type of coupon that is funded, produced, sponsored,
promoted, or furnished by a beer manufacturer or beer and wine
wholesaler.
3) Defines "beer manufacturer" as a holder of a beer
manufacturer's license, a holder of an out-of-state beer
manufacturer's certificate, a holder of a beer and wine
importer's general license when selling beer, malt beverages,
cider, or perry, or a winegrower that is a wholly owned
subsidiary of a beer manufacturer
4) Defines "Cider" and "Perry" as set forth in the Code of
Federal Regulations.
5) Defines "Coupon" as any method by which a consumer receives
an instant discount at the time of a purchase that is funded,
produced, sponsored, promoted, or furnished, either directly or
indirectly, by a beer manufacturer or beer and wine wholesaler,
including, but not limited to, a paper coupon, a digital coupon,
an instant redeemable coupon (IRC), or an electronic coupon
commonly referred to as a scan or scanback. A "Coupon" does not
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include:
a) A mail-in rebate by which the consumer purchases an item
and submits required
information in order to receive a rebate or discount from the
beer manufacturer.
b) A coupon that is offered and funded by a distilled
spirits manufacturer, distilled spirits importer general,
distilled spirits importer, or distilled spirits wholesaler that
offers a discount on the purchase of a distilled spirits
product beer, malt beverages, cider, or perry are not advertised
in connection with the coupon.
c) A coupon offered and funded by a winegrower, a wine
rectifier, a wine blender, a beer and
wine importer, a beer and wine importer general, or a wine
broker that offers a
discount on the purchase of a wine product if beer, malt
beverages, cider, or perry are not
advertised in connection with the coupon.
EXISTING LAW :
1) The enactment of the 21st Amendment to the U.S. Constitution
in 1933 repealed the 18th Amendment and ended the era of
Prohibition. Accordingly, states were granted the authority to
establish alcoholic beverage laws and administrative structures
to regulate the sale and distribution of alcoholic beverages.
2) Establishes ABC and grants it exclusive authority to
administer the provisions of the Alcoholic Beverage Control Act
(Act). This involves licensing individuals and businesses
associated with the manufacture, importation and sale of
alcoholic beverages in this state and the collection of license
fees for this purpose.
3) Prohibits any licensee from giving any premium, gift, or
free goods in connection with the sale or distribution of any
alcoholic beverage, except as specifically authorized. With
respect to beer, a beer manufacturer may give consumer
advertising specialties to the general public that do not exceed
three dollars ($3) per unit original cost to the beer
manufacturer who purchased it.
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4) Prohibits the ABC from imposing a dollar limit of less than
$5 for consumer advertising specialties furnished by a distilled
spirits supplier to a retailer or the general public. Existing
law also provides that consumer advertising specialties
furnished by a wine supplier to a retailer or to the general
public shall not exceed $1 per unit original cost to the
supplier who purchased it.
5) Authorizes wine, beer and spirits producers to conduct
consumer "contests" or "sweepstakes", as specified.
6) States that the "Tied-House" Law, separates the alcoholic
beverage industry into three component parts of manufacturer,
wholesaler, and retailer. The original policy rationale for
this body of law was to prohibit the vertical integration of the
alcohol industry and to protect the public from predatory
marketing practices. Generally, other than exemptions granted
by the Legislature, the holder of one type of license is not
permitted to do business as another type of licensee within the
"three-tier" system.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : According to the author, there is a lack
of transparency in the beer market as it relates to beer
manufacturer coupons. Additionally, there is a high level of
inequity between the major beer conglomerates and the craft
breweries in the marketplace.
Instant redeemable coupons (IRCs) offered by beer manufacturers
are one type of discount that offers an instant reduction in the
price of a product when purchased at a retail licensee. However,
these beer manufacturer coupons could easily lend themselves to
fraudulent practices, such as counterfeiting.
The author states, brewers and retailers are losing revenues and
are being exposed to unnecessary liability due to fake coupons,
which are often hard to distinguish from coupons that are
produced by the manufacturer.
The author further states that the elimination of coupons will
level the playing field between the major brewing conglomerates
and the craft breweries that are quickly becoming a sizeable
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part of our state economy. Unlike the major conglomerates, most
craft breweries, which are much smaller operations, cannot
afford to offer their own beer coupons.
The author points out that a number of states, including New
York, Massachusetts, and Texas, already ban manufacturer beer
coupons.
In support : MillerCoors, in support, states this bill will
prohibit instant redeemable coupons (IRCs) offered by beer
manufacturers. IRCs are a type of discount that offers an
instant reduction in the price of a product when purchased at a
retail facility. However, IRCs easily lend themselves to
fraudulent practices like counterfeiting with little checks or
balances. They have thus grown to become a costly liability and
there is widespread support within the beer industry to remove
them from the marketplace.
Furthermore, AB 1928 would only prohibit instant coupons that
are sponsored by beer manufacturers and beer distributors but
would still allow distilled spirits and wine companies to offer
coupons on spirits and wine.
According to Anheuser-Busch, "unfortunately, IRCs which
represent a redeemable cash value, provide an easy way to evade
alcohol beverage laws that restrict the giving away of things of
value to licensed retailers. Therefore, the use of instant
redeemable coupons should be prohibited by the state, thus
ensuring the protection of Tied-house principles. Under AB
1928, coupons offered and funded by retailers and
mail-in-rebates offered and funded by beer manufactures would
still be permitted."
Prior legislation : AB 2184 (Hall), Chapter 480, Statutes of
2012). Authorized, until January 1, 2016, wine, beer and
spirits producers to participate in promotional events held at
an off-sale retail licensed location for the purpose of
providing autographs on bottles or other items to consumers.
AB 778 (Padilla), Chapter 489, Statutes of 2012. Added a new
section of law to the Act that authorizes wine, beer and spirits
producers to conduct consumer "contests" or "sweepstakes."
AB 1245 (Torrico), Chapter 629, Statutes of 2008. Allowed beer
manufacturers to give adult consumers promotional advertising
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items valued at three dollars per unit original cost to the beer
manufacturer who purchased it.
AB 2293 (De Leon), Chapter 638, Statutes of 2008. Added a new
provision to the Act that permits a manufacturer of distilled
spirits, winegrower, rectifier, or distiller, or its authorized
agent to provide their product, as well as entertainment and
food to consumers over 21 years of age during invitation-only
events (free of charge), as specified. The events must occur on
premises for which a caterer's permit authorization has been
issued.
SB 1548 (Murray) Chapter 670, Statutes of 2006, authorizes beer
manufacturers and wholesalers to offer beer samples (not to
exceed eight ounces per person, per day) to individuals of legal
drinking age at on-sale retail licensed premises, as specified.
AB 2285 (V. Brown) Chapter 248, Statutes of 1998, allows on-sale
retail licensees to offer limited tastings of wine or distilled
spirits at the licensed establishment.
SB 993 (Burton) Chapter 544, Statutes of 1997, among other
things: 1) provides that no rule of ABC may impose a dollar
limit for consumer advertising specialties furnished by a
distilled spirits supplier to a retailer or to the general
public of less than $5 per unit original cost to the supplier
who purchased it; and, 2) authorizes a licensed distilled
spirits manufacturer to conduct tastings of distilled spirits on
the licensed premises under specified conditions.
REGISTERED SUPPORT / OPPOSITION :
Support
Anheuser-Busch
California Chamber of Commerce
California Beer and Beverage Distributors
MillerCoors
Opposition
None on file
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Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531