DIRECT2015 Social Media Compliance Panel

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1 DIRECT2015 Social Media Compliance Panel Moderator: John Trinidad, Dickenson, Peatman & Fogarty Panelists: Susan Evans, TTB Kristen Techel, Strike & Techel

2 Agenda 1. Introduc+on & Overview 2. Social Media Marke+ng a. TTB Social Media Guidelines b. Other Regula9ons and Guidelines 3. Other Internet Related Issues a. Online Sales / Third Party Marke9ng b. Blending Sales and Social Media 4. Q&A

3 Disrup?ve Technologies Innova9ons that disrupt a market s value network. Can alter rela9onship between exis9ng players in the market. Allows for new entrants that market may not have expected. Impact of disrup9ve technologies may be muted (or delayed) in highly regulated industries.

4 Internet as Disrup?ve Technology INTERNET SALES MARKETING

5 Sales: Three Tier System Winery Wholesaler It is tougher than ever in the 3-2er channel. We have a hard 2me ge9ng distributor a;en2on as they have way too many brands, not enough people and we are just too small to ma;er. Retailer Consumer

6 Sales: Distributor Consolida?on Winery Wholesaler Retailer Consumer

7 Sales: DTC Shipping Barriers xxx

8 Sales: Granholm and E- Commerce

9 Sales: The Granholm Effect ( ) Wineries can ship directly to 83% of adult Americans but produc:on caps, on- site requirements, and other impediments s:ll remain.

10 Sales: Uncertainty re New Players Winery Fulfillment Shipping Wholesaler Retailer Order Processing Compliance Consumer TPP / TPM

11 Marke?ng: Social Media Ability to interact with customers instantly & consistently. No need to wait for them to walk into tas:ng room. Build rela:onship with customers, build brand loyalty. Poten:al for increased communica:on / cross promo:on ver:cally in any industry.

12 Marke?ng: Social Media Ability to interact with customers instantly & consistently. No need to wait for them to walk into tas:ng room. Build rela:onship with customers, build brand loyalty. Poten:al for increased communica:on / cross promo:on ver:cally in any industry. Should this be considered adver:sing? Should regulators be more vigilant of social media because of interac:ve nature of the medium? How do :ed house regula:ons meant to separate :ers and prevent undue influence apply?

13 Summary 1. Disrup+ve technologies can create rapid changes in business models and industry rela+onships 2. Regulatory system moves slowly. 3. Applying regula+ons to disrupted industries can create uncertainty and confusion.

14 Hypothe?cal 1 John Doe Excited for our Winemaker - a James Beard Award nominee!!! John Doe Congratula9ons for their James Beard Award nomina9on! Well deserved!

15 Hypothe?cal 2 Winery maintains an official Facebook fan page. Winery fan posts a link on Winery s FB page to an ar9cle praising it s newest Chardonnay release. Same ar9cle also calls compe9tor s latest Chardonnay disappoin9ng and flawed. If winery doesn t take down the link, is this a viola9on against TTB social media guidelines, prohibi9on against disparaging statements?

16 Hypothe?cal 3 John Doe

17 For any addi2onal informa2on, please contact John Trinidad. law.com Linkedin -

18 Social Media Guidelines SUSAN EVANS EXECUTIVE LIAISON FOR INDUSTRY AND STATE MATTERS ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

19 Social Media Adver?sing TTB Industry Circular Social media is adver9sing Mandatory informa9on requirements apply 27 CFR 4.62 Legibility requirements apply 27 CFR 4.63 Prohibited prac9ce rules apply 27 CFR 4.64 ALCOHOL & TOBACCO TAX & TRADE BUREAU 19

20 Social Media Adver?sing Sources of TTB Social Media Reviews Voluntary pre- clearance Other programs (e.g. ABSP) Referrals and Complaints ALCOHOL & TOBACCO TAX & TRADE BUREAU 20

21 Social Media Adver?sing ALCOHOL & TOBACCO TAX & TRADE BUREAU 21

22 Social Media Adver?sing Types of Social Media Adver9sing: Social Network Services (e.g. Facebook) Video Sharing Sites (e.g. YouTube) Blogs Microblogs (e.g. Twiier) Mobile Applica9ons Links and QR Codes ALCOHOL & TOBACCO TAX & TRADE BUREAU 22

23 Social Media Adver?sing Third party or user generated content Repos9ng or Retwee9ng ALCOHOL & TOBACCO TAX & TRADE BUREAU 23

24 Social Media Adver?sing Trade Practice Issue Tied House Listing a retailer on an industry member s social media site is considered providing a thing of value and may be an unlawful inducement Exception where two or more unaffiliated retailers selling the industry member s products are listed on the site ALCOHOL & TOBACCO TAX & TRADE BUREAU 24

25 Social Media Adver?sing 27 CFR 6.98 Advertising service. The listing of the names and addresses of two or more unaffiliated retailers selling the products of an industry member in an advertisement of that industry member does not constitute a means to induce within the meaning of section 105(b)(3) of the Act, provided: ALCOHOL & TOBACCO TAX & TRADE BUREAU 25

26 Social Media Adver?sing 27 CFR 6.98 Advertising service. (a) The advertisement does not also contain the retail price of the product (except where the exclusive retailer in the jurisdiction is a State or a political subdivision of a State), and (b) The listing is the only reference to the retailers in the advertisement and is relatively inconspicuous in relation to the advertisement as a whole, and (c) The advertisement does not refer only to one retailer or only to retail establishments controlled directly or indirectly by the same retailer, except where the retailer is an agency of a State or a political subdivision of a State. ALCOHOL & TOBACCO TAX & TRADE BUREAU 26

27 Contact Advertising, Labeling and Formulation Division Market Compliance Office ALFD (2533) Option 5 for Advertising market.compliance@ttb.gov Website: ALCOHOL & TOBACCO TAX & TRADE BUREAU 27

28 Disclaimer This information is being issued to help the public to understand and comply with the laws and regulations that the Alcohol and Tobacco Tax and Trade Bureau administers. It is not intended to establish any new, or change any existing, definitions, interpretations, standards, or procedures regarding those laws and regulations. ALCOHOL & TOBACCO TAX & TRADE BUREAU 28

29 Adver?sing Wine on Social Media: Too Regulated to be Worth It? KRISTEN TECHEL, PARTNER STRIKE & TECHEL MAY 27, 2015

30 Sources of Regula?on on Social Media TTB FTC Class Ac9ons Industry Guidance Plakorm Policies State Alcohol Regulatory Authority

Federal Trade Commission (FTC) Self- Regula9on in the Alcohol Industry - March 2014 71.

31 Federal Trade Commission (FTC) Self- Regula9on in the Alcohol Industry - March % Use age gates (DOB) Friendly Privacy Policy Careful with User Generated Content (UGC)

32 FTC Expects Truth in Adver?sing Green guides Tes9monials

33 Class Ac?ons Dist. Ct in Florida:

34 Industry Guidance

35 Pla`orm Policies

36 State Law (California)

37 State Law: Louisiana

38 Save Mart Grape Escape - June 2014 California B & P re. thing of value

40 SAVE MART Grape Escape What if it was just the Grape Escape? What if a winery par9cipated but didn t tweet? Are you coopera9vely adver9sing if you adver9se an event with the retailer in the name? If you show up? What is the evil we are regula9ng against?

41 Napa Valley Bocle Rock Weekend!

43 Best Prac?ces for Wineries Adver?sing on Social Media S9ll an adver9sement Learn the Rules Ownership Watch

44 Third Party Providers: The Next Wrinkle What they do Why regulators are watching

45 Third Party Providers and Social Media People who work with licensees, but are not licensees, but connect to consumers be;er than licensees, very omen via social media

46 Current Trend: Alcohol Delivery

47 Advice for Wineries on Working with a Third Party Provider: Look at the contract Don t let someone else do something you can t do directly Be thoughkul- esp. about adver9sing involvement

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