Limp DISCUS – How Alcohol Lacks A Watchdog

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DISCUS is no Watchdog
DISCUS is no Watchdog

How alcohol is handled in the United States is nothing short of chaotic, piecemeal, and absurd. Although the prohibition of the sale and consumption of alcohol was repealed in 1933 by the Federal Government, the dismantling of Prohibition was handled by each individual state. This lead to a nation with a patchwork of rules, laws, and regulations, including one of the most absurd facts that one of the nation’s largest spirits, Jack Daniels, is made in a “dry” county that still observes some of the laws of prohibition.

To manage this hodgepodge, the Federal Government created the Alcohol and Tobacco Tax and Trade Bureau (TTB). The core function of this body is to ensure that the Federal Government receives a national excise tax for the sale and distribution of all alcohol in the US. In order to properly tax this alcohol, the TTB had to create a set of rules and regulations aimed at classifying, typing, and controlling the manufacturing and sale of spirits. These rules weren’t really about consumer protection or cutting through the chaos of a dysfunctional system, they were established to prevent alcohol producers and distributors from playing a cup-and-ball magic trick with their products to avoid paying taxes.

Here’s the formal mission of the TTB (note that it starts with its core, tax):

Collect the taxes on alcohol, tobacco, firearms and ammunition;
protect the consumer by ensuring the integrity of alcohol products;
and prevent unfair and unlawful market activity for alcohol and tobacco products.

When a new distillery is founded, the TTB will inspect the facility to ensure that it’s compliant with the rules and eliminate any sort of trickery to avoid tax. Inspectors have been known to try to search for hidden doors and walls, and accuse distillers of attempting every form trickery with how they handle their spirits. The TTB isn’t interested in the safety of the people working in the distillery – that is handled by local fire and government – it’s all about making sure they get paid.

This is also the focus of the TTB’s infamous label approval process, whose aim again isn’t really to make sure that customers aren’t getting harmed, but to make sure that the label is clear and the classification is correct so the TTB can get their tax. Beyond tax issues, the Federal Government under the TTB does not generally get involved with enforcement of alcohol laws, responsible marketing, or consumer protection (although they create the perception that they are there to protect consumers). Their advertising rules are more focused on making sure spirit companies don’t engage in “interstate or foreign commerce”.

Yes, some of the TTB rules end up being consumer friendly, like making sure alcohol manufacturers disclose if they’re using neutral grain spirits, and the prohibition of health claims on products. But when it comes to where the rubber actually meets the road, including when spirit makers market their products to kids, or when a product adds over 30% sugar without disclosing it,  the TTB isn’t involved. Neither is the Food and Drug Administration. The FDA doesn’t consider alcohol a food or drug and as such doesn’t require it to adhere to any of its food labeling or safety laws.

To “police” the industry, the TTB looks to the Distilled Spirits Council of The United States (aka DISCUS). DISCUS is a Washington, DC based national trade association (aka lobbying group) supported by many of the major spirit brands (known as “member companies”). These brands support DISCUS, whose major focus is lobbying the Federal Government to enable spirit companies to be increasingly free to sell their products without the further encumbrance of additional taxes and regulations.

Their mission statement makes that pretty clear:

Our team of economists, scientists, lobbyists and public affairs professionals works to support laws that increase adult market access for spirits products, provide greater convenience and choices for our adult consumers and encourage responsible consumption. We protect the hospitality industry from higher taxes and work diligently to reduce tariffs and trade barriers across the globe.

The problem, though, is that this “trade association” is also responsible for policing the marketing practices of the spirits industry. That’s right, the lobby group that spends the majority of its time refuting studies on the harms of alcohol and getting more states to allow the sale of alcohol on Sundays (aka rolling back Blue Laws) is also supposed to be the “watch dog” of the industry. It’s like asking a football team to call their own penalties – it just doesn’t work.

In the past 4 years, DISCUS has only ruled on 14 complaints, and in 14 complaints, no punitive action has ever been taken. In the rare circumstance where a spirits company has been found to be in violation of the Distilled Spirits Council Code of Responsible Practices, the result has been for DISCUS to work with the company to resolve the offense.

When you consider the thousands of products that came to market over that period and the myriad of marketing and sales tactics used by brands, the fact that there have only been 14 filed complaints is pretty mind blowing. But when you actually read over these complaints, it’s clear why there are so few: DISCUS isn’t a watchdog, they’re a lobbying group, and their rules are so loose, you could drive an 18 wheeler through them.

To illustrate just how toothless the system is, we decided to put it to the test. In November 2014, Phillips Distilling, makers of UV Sugar Crush Vodka, and their PR Firm Formula PR, sent out a cocktail pitch to tie their product to the new Hunger Games movie, Mockingjay Part 1. The pitch went as follows:

Hi Geoffrey,

Get your bow ready because The Hunger Games: Mockingjay hits theaters on November 21st and Katniss Everdeen won’t be taking any prisoners! There’s no better way to celebrate the opening of this highly anticipated movie than with UV Vodka’s Hunger Games inspired cocktails.

So whether you’re #TeamPeeta or #TeamGale, UV Vodka has over 20 innovative, first-to-market flavors ranging from UV Sriracha to UV Sugar Crush that everyone can agree to love. Try a few of our recipes below, perfect for any tribute.

If you are interested in learning more about UV Vodka, would like high-res images, product samples or additional recipes sent to you, please do not hesitate to ask! I can be contacted at 212.219.0321 or [email protected]

May the odds be ever in your flavor,
Jess
Formula PR for UV Vodka

HUNGER GAMES INSPIRED COCKTAIL RECIPES

The Nightlock Sleeper
1 part UV Sugar Crush
1 part pomegranate juice
1 part club soda

Mockingjay Bloody
2 parts UV Sriracha
2 parts tomato juice
1 part celery salt
1 part tabasco sauce
1 part worcestershire sauce

District 13
1 part UV Blue
1 part creme de cacao
1 part triple sec
1 part lime juice

The pitch was a pretty clearly out of the bounds of acceptability. Using a movie that’s based on a young adult book series to promote a vodka isn’t just in bad taste, it should be illegal, right? You’d think so.

Our first stop was the Feds, and we contacted the TTB by phone and email. After a few attempts to levy our complaint we were told:

TTB does not generally regulate where advertisements are placed or the types of entertainment with which products are associated (in this case the Hunger Games movie). For TTB to have any recourse, the advertisement itself would have to be contrary to a particular TTB regulation at 27 CFR Part 5, Subpart H.

We suggest you contact the Distilled Spirits Council of the United States (DISCUS) to determine if this would be an issue under their industry Code of Responsibility at http://www.discus.org/responsibility/code/.

Jeffrey A. Salisbury, Specialist
Advertising, Labeling and Formulation Division
Alcohol and Tobacco Tax and Trade Bureau

We then contacted DISCUS, who asked us to file a formal complaint which they would review. We did this on November 4, 2014. We asserted that Phillips Distilling, via its brand UV Vodka, was clearly trying to appeal to young, underage drinkers both through their Hunger Games promotion and through the Sugar Crush product which features cartoon candy on the label.  The response came a full 2 months later in a publication on the DISCUS web site.  While DISCUS has a defined policy on how long a response should take, Lynne Omlie, DISCUS Code Staff Liaison, cited holidays and “computer problems” as a reason why it wasn’t responded to within the defined period of time.

As you’d expect, DISCUS agreed that pitching Hunger Game Cocktails couldn’t be seen under any light as acceptable.

After careful consideration of the complaint and the advertiser’s response, the Code Review Board found that, regarding the first component of the complaint, the marketing materials for UV Vodka’s “Hunger Games Inspired Cocktails” violated Responsible Content Provision No. 2 of the Code, which provides that “[t]he content of beverage alcohol advertising and marketing materials should not primarily appeal to individuals below the legal purchase age.” As set forth in the Code, “[a]dvertising 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 of legal purchase age.”

So what was the consequence? Nothing.

The advertiser immediately withdrew and ceased the “Hunger Games Inspired Cocktails” promotion. In addition, the advertiser instituted proactive measures to ensure all external communications thoroughly are reviewed against the Code provisions.

Two months after a promotion ran, DISCUS just asked them to stop it. There was no form of punitive damages, no fines levied, no teeth. A company did something so clearly in violation of even the loosest code of conduct and the result is DISCUS saying, “Hey, stop it…”

What’s worse is that the wall that this one sailed over was so tall that most complaints over products aimed at young drinkers don’t meet the standard. The code’s caveat is that a spirits marketing material must “primarily appeal to persons below the legal purchase age”. That’t right, a complaint must show that the PRIMARY target is kids. So if you were to prove in any way that adults were also possibly a target, then the ad passes muster. This was the justification to OK the cartoon candy design on a product where the company was caught red-handed marketing primarily to persons below the legal purchase age.

The advertiser further stated that “Sugar Crush tested favorably with our millennial target, and our use of bright colors is reflective of what they shared they love when they talked about the ‘grown-up’ retail candy trend in shops such as Dylan’s Candy Bar and Sugar Factory.”

All Phillips Distilling had to do was argue that there are some retail stores that sell candy to adults and that was compelling enough for DISCUS to say, oh, okay, even though we’ve caught you red-handed trying to market a cartoon candy product to kids, the fact that people sell candy to adults means you aren’t primarily marketing to kids, so you’re good to go. It’s the same kind of thinking that made them give the go-ahead to Adult Chocolate Milk.

Without any real consequences, the liquor industry has no motivation not to skirt the line and market their products to young, underage drinkers. And in the case of UV Vodka, it’s working. A recent post in the /r/alcohol section of Reddit is just one example of UV’s success in selling to underage drinkers:

I just turned 21, and I want to celebrate. I also just got my own crib and I just got a huge severance from my last job and I don’t start my next job for a week so now I’ve gotta party, right? I think so. The only issue I have is I don’t really ever buy my own alcohol, the only alcohol I’ve ever bought was to bring to other people’s parties. I bought a lot of UV in high school and beer of course, but I want to stock my bar with a few bottles and I don’t know a lot about high-quality liquor.

Underage drinking is a real problem, and it’s no wonder: there are precious few people whose job it is to prevent it.

I think it’s time that the alcohol industry had some sort of real watchdog, because DISCUS isn’t it. It’s a shame that the Federal Government defers to a lobby group to enforce the trade practices of the companies who fund it. As a watchdog, DISCUS not only has no bark, it literally has no bite. Even when you compare DISCUS to its UK counterpart, The Portman Group, it’s clear just how limp DISCUS’ commitment to responsible marketing is. During the same period from 2010 to the end of 2014, The Portman Group heard more than twice the number of complaints. This is a country with 20% of the population of the US with less than half the alcohol products on the market.

I’m not advocating some major re-haul of the TTB, or even moving alcohol over to the FDA (which I’m told would single handedly eliminate craft distilling in America), but it’s time that the alcohol industry had consequences for breaking the rules, and there need to be better rules for them to follow. It’s simply not unreasonable to hold alcohol companies’ feet to the fire so that in no way do any of their marketing efforts appeal to underage drinkers. It’s also time that they were compelled to disclose what’s in their products, where they come from, and exactly what’s added to them. Alcohol companies try to hide behind trade secrets, but consumers consume significant quantities of these products, and they ought to know what they are consuming.

If DISCUS isn’t up to this task, then there needs to be another watchdog, perhaps one that isn’t funded by the brands it watches, and it’s got to have teeth. Without real consequences for breaking rules, liquor companies have absolutely no incentive to do anything but what’s in their own best interest, and for spirits, that’s acquire customers as close to the point they can (legally or illegally) buy it.

 

 

 

  • frank coleman

    Geoff –

    A few facts are in order here. Your readers might be interested to know that in response to the complaints you filed, immediate action was taken in early November. In fact, you noted in mid-November to the DISCUS Code Executive that you were aware that the Hunger Games campaign had been pulled. Moreover, USDP Co. (a non-DISCUS member) “instituted proactive measures to ensure all external communications thoroughly are reviewed against the Code provisions.” This is in fact a very real consequence.

    For more than 80 years, the distilled spirits industry has had an effective Code review process in place to consider and act upon advertising and marketing complaints. Throughout the decades, there has been 100% compliance by DISCUS members with the Code Review Board’s decisions and overwhelming compliance by non-DISCUS members.

    That there have been only 14 complaints filed in the last 4 years, could lead one to conclude that it is testimony to the effectiveness of the Code and to the industry’s commitment to responsible advertising governed by rigorous internal structures. It seems apparent that the negative public exposure of the Code review process in fact acts as a serious deterrent and consequence for companies found in violation of the Code.

    You also seem to ignore or are unaware of the fact that the Federal Trade Commission is the federal regulator of advertising and marketing in the United States.

    In 2014, in its latest alcohol advertising report, the FTC recognized the Distilled Spirits Council for its “robust” and effective self-regulatory system. The FTC underscored its support for self-regulation stating that “a self-regulatory regime has several advantages over government regulation,” noting that it “is more prompt and flexible than government regulation.” It also noted that self-regulatory systems “are most effective when consumers and competitors take advantage of them and submit complaints, as demonstrated by the DISCUS experience.”

    Your characterization of DISCUS and its Code Review Board is seriously flawed, because
    it does not recognize the inherent limits of the ability of government to control free speech under the first amendment. Our Code represents a serious and longstanding effort to fill this void and to encourage social responsibility.

    For readers interested in learning more about the industry’s self-regulatory process and complaint decisions, please visit our website at http://www.discus.org/responsibility/code/.

    Sincerely –

    Frank Coleman
    Senior Vice President
    Distilled Spirits Council

    • Frank,

      I sincerely disagree with you. First off, DISCUS does an poor job of educating and communicating to consumers that they can indeed file a complaint in the case of a spirit companies advertising they feel is unethical or aimed at underage drinkers.

      A federal bureau accolading a lobby group is nothing to brag about. The issue here is that alcohol is indeed a drug. A legal drug, but a drug none the less. It has intoxicating qualities which when handled irresponsibly can have serious consequences. This drug also shouldn’t be in the hands of underage drinkers, but often is. Something I think you fail to acknowledge and adequately address.

      This isn’t an issue of freedom of speech, the marketing and communications for a controlled substance shouldn’t be free and unfettered, and I’d argue that it already isn’t. The problem is, DISCUS is being presented as an agency that can actually help self regulate the alcohol industry. You simply are doing a horrible job. The code of ethics is so easily circumvented and you’ve presented absolutely no negative implications for brands who don’t comply. You make no effort to encourage brands to provide clear and accurate information on their products, how they are made, and where they come from. Just look at the myriad of lawsuits lately for brands where consumers say they have been deceived.

      The movie industry, who has an arguably less “dangerous” product to kids does a better job of self regulation. Certain movies are explicitly prohibited to be shown to kids and their marketing is tightly controlled so that kids aren’t exposed to it (ie the red band trailer). The tobacco industry also has much stronger controls over any marketing that could even REMOTELY be seen as appealing to kids. And that part of the issue, brands which you review market in a way that APPEALS to kids, even if that’s not their primary appeal.

      But the real truth is, you aren’t really self policing, you are giving the perception of self policing, which is even worse. DISCUS is a lobby group plain and simple. Your goal is to help the unfettered commerce for distilled spirits (vs The Portman Group, your UK counterpart, who has a stronger focus on responsible consumption and marketing and acts that way) And maybe the real solution is that the policing needs to happen elsewhere. You’ve proven to be ineffective with it.

      Consumers need to be represented and protected from unfair, deceptive, and inappropriate marketing. And when it comes to DISCUS you have no tools to really do that.

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  • Jason H

    There is one very important detail that Mr. Kleinman did not consider. The first Hunger Games novel was released in 2008, or about 6 years ago. Katniss is a 16 year old in this novel, and so adding 6 years to her age would result in a 21-22 year old Katniss at the time of the promotion’s launch. The legal drinking age is 21 in all 50 U.S. states. Why can’t he conceive that the promotion was actually targeting consumers of a legal drinking age? Personal accountability is getting lost in our country – it always seems to be someone’s fault, someone should have protected me from my bad choice. In fact, I see very little difference with the car companies marketing high tech infotainment systems in their product offerings. The legal age driver certainly does not need to be “entertained” while driving, and in fact, it would be illegal in most states. So are they marketing to underage drivers? Of course not! Grow up, Mr. Kleinman, and understand that everyone needs to be held accountable for their own actions.

  • Barry

    Limp DISCUS?! Well played sir, well played.
    I knew there was more to this little blog than met the eye. This is true journalism. These guys need to be called out and have their feet held to the fire.
    Great article!

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  • utmb

    I realize this is months old but I have to comment. The minimum drinking age falls under STATE jurisdiction and is enforced by state and local law enforcement agencies, from laws written and passed by STATE legislators. You say:

    …Using a movie that’s based on a young adult book series to promote a vodka isn’t just in bad taste, it should be illegal, right? You’d think so. Our first stop was the Feds, and we contacted the TTB by phone and email…

    As an agency of the federal government, TTB is responsible for the administration and enforcement of the Internal Revenue Code, the Federal Alcohol Administration Act, and the Webb-Kenyon Act. Those three sets of laws mention many things but not one word (not one!) about a minimum drinking age.

    Also it’s incorrect to say “the TTB had to create a set of rules and regulations…” No. TTB didn’t create any of the LAWS and regulations under which it operates. Congress passed those laws many, many years ago.

    I wonder why you didn’t try to contact the FBI or Homeland Security while you were at it? Why not! They could have also told you that they can’t enforce any laws (or “rules”) concerning the minimum drinking age either — BECAUSE STATES DO THAT. Then you go on to say:

    …I’m not advocating some major re-haul of the TTB, or even moving alcohol over to the FDA (which I’m told would single handedly eliminate craft distilling in America), but it’s time that the alcohol industry had consequences for breaking the rules, and there need to be better rules for them to follow. It’s simply not unreasonable to hold alcohol companies’ feet to the fire so that in no way do any of their marketing efforts appeal to underage drinkers… If DISCUS isn’t up to this task, then there needs to be another watchdog, perhaps one that isn’t funded by the brands it watches, and it’s got to have teeth.

    Wow. It sounds like you’re angry that TTB (a federal agency) won’t work with you to enforce some set of advertising “rules” from something called the “Code of Responsible Practices” — which happens to be a document that was created by a private company called DISCUS. Furthermore, according to the DISCUS website, this “Code of Responsible Practices” is not only voluntary but it was written and approved by its own members.

    You know what? DISCUS may call themselves the Distilled Spirits Council of the United States, and they may even have a President, but I assure you they have nothing to do with the federal government. Conversely, agencies of the federal government would NEVER try to enforce random, voluntary “rules” from a private company’s “Code of [Anything].” That would be crazy.

    Maybe next time you run across advertising that seems to appeal to underage drinkers, contact the liquor authorities of that state. You might actually find the teeth you’re looking for on this kind of issue. Cheers.