FTC Study on Alcohol Industry Self-Regulation

OMB Control No. [insert]
Expires [insert]1
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:

Deborah Platt Majoras, Chairman
Pamela Jones Harbour
Jon Leibowitz
William E. Kovacic
J. Thomas Rosch

FTC Matter No. P064505

ORDER TO FILE SPECIAL REPORT

Pursuant to a resolution of the Federal Trade Commission dated , entitled “Resolution
Directing Use of Compulsory Process,” a copy of which is enclosed, [insert target name],
hereinafter referred to as “the company,” is ordered to file a Special Report with the Commission
no later than the dates specified in Appendix A hereto, containing the information and documents
specified herein.
The information provided in response to the Special Report will assist the Commission in
preparing a report regarding beverage alcohol advertising expenditures and alcohol industry selfregulatory efforts.
The Special Report should restate each item of this Order with which the corresponding
answer is identified. If any question cannot be answered fully, provide the information that is
available and explain in what respects and why the answer is incomplete. The Special Report
and all accompanying documentary responses should be bates-stamped. For purposes of
this Special Report, the term “the company” includes any parent, subsidiary or affiliated
companies located in the United States.
Please supply the following information and documents, consistent with the Definitions
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For your information, under the Paperwork Reduction Act, as amended, an agency
may not conduct or sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number. For this information
request, that number is [insert].
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and Instructions contained on Appendix A:
1.

Provide the following background information:
A.
Identify by full name, business address, telephone number, and official
capacity, the officer of the company who has prepared or supervised the
preparation of the company’s response to this Order.
B.
Fully identify by name, address, and state of incorporation, the company.
In addition, identify each subsidiary, joint venture, affiliated company,
partnership, or operation under an assumed name that is owned in whole or in part
by the company that engages in the manufacturing, labeling, advertising,
promoting, offering, or sale of any beverage alcohol product in the United States.
C.
Identify by name each individual beverage alcohol brand or variety sold by
the entities identified in subparagraph 1.B. above, during the calendar year 2005,
and for each brand or variety, state total sales for calendar year 2005 in dollars and
in number of 9-liter or 2.25 gallon cases sold.
D.
Produce all documents dated, prepared, or received by the company on or
after January 1, 2003 that contain data not otherwise publicly available regarding
the demographics of persons under 21 who have tasted, used, or purchased any
brand advertised or sold by the company.

2.

Report the dollar amount expended during the calendar year 2005 by the
company, including the entities identified in question 1.B., above, on the
advertising, merchandising, or promotion of beverage alcohol products in the
United States in each of the categories set forth below (as defined in Appendix
A.I.):
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.

Television Advertising
Radio Advertising
Magazine Advertising
Newspaper Advertising
Transit Advertising
Outdoor Advertising
Direct Mail Advertising
Company-sponsored Internet Sites
Other Internet Site Advertising
Other Digital Advertising
Specialty Item Distribution
Public Entertainment Events: Not Sports-Related
Sponsorship of Sporting Events, Sports Teams, or Individual Athletes
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N.
O.
P.
Q.
R.
S.
T.
U.
V.
3.

Other Point-of-Sale Advertising and Promotions
Spring Break Promotions
Product Placements
Retail Value-Added Expenditures
Telemarketing
Promotional Allowances
Total Reportable Expenditures
Sports and Sporting Events
Social Responsibility Programs and Messages

Provide the information set forth below with regard to advertising placements.
A.

Describe fully the procedures used by the company, including the entities
identified in response to question 1.B., above, to facilitate compliance with
the guidelines contained in the voluntary advertising codes of the Beer
Institute, the Distilled Spirits Council of the United States, and the Wine
Institute, providing that television, radio, and print ads should appear only
in media where 70% or more of the audience consists of adults 21 and
over. In the response, indicate which of the 3 voluntary codes the
company follows; whether the company follows another code, such as a
company code, that addresses advertising placement; what databases are
relied on in making placement decisions; how often post-placement data
are reviewed to verify that a placement complied with the guideline and
what steps are taken if a compliance shortfall is identified; and, what
additional safeguards are in place (such as use of “no buy” lists, use of
higher placement standards, media content review, or others) to reduce the
likelihood that a non-compliant placement will occur.

B.

With regard to each instance of dissemination by the company, including
the entities identified in response to 1.B., above, of an advertisement
during the period January 1, 2006 to June 30, 2006, on television, on radio
in measured markets, in magazines, and in newspapers, provide the
advertisement’s name; the brand advertised; the name of the media and
location of dissemination; the date and time that the advertisement
appeared; the name of the show during, or in conjunction with, which the
advertisement appeared; and the actual demographics of the audience
(persons under 21, and persons 21 and over), in absolute numbers and
percentages, for that dissemination, consistent with the directions in
Appendix A.II. In responding to this question, please mark by use of an
asterisk each dissemination that was targeted specifically to Hispanic
consumers and mark by the use of a pound sign each dissemination that
was targeted specifically to African-American consumers.

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C.

Based upon the responses to question 3.B., provide the following summary
information regarding the code compliance of placements made by the
company during the period January 1, 2006 to June 30, 2006 in each of the
four advertising categories (all television ads; all radio ads in measured
markets; all magazine ads; and all newspaper ads):
i.
ii.
iii.

iv.

4.

The total number of advertisement disseminations;
The total number of persons reached;
The number of advertisement disseminations that complied with
the 70% guidelines, and, with regard to these compliant
disseminations, the total number of persons reached, the number of
persons 21 and over reached, and the number of persons under 21
reached; and
The number of advertisement disseminations that did not comply
with the 70% guideline and, with regard to these noncompliant
disseminations, the total number of persons reached, the number of
persons 21 and over reached, and the number of persons under 21
reached.

D.

Repeat the analysis performed in question 3.C.:
i.
With regard to those disseminations identified in question 3.B. as
targeted specifically to Hispanic consumers; and
ii.
With regard to those disseminations identified in question 3.B. as
targeted specifically to African-American consumers.

E.

Provide copies of all documents relied on to support the company’s
responses to questions 3B., 3C., and 3D., above.

Describe in detail the enforcement mechanism(s) available as of December 31,
2006 regarding possible violations of the voluntary advertising codes of the Beer
Institute, the Distilled Spirits Counsel of the United States, and the Wine Institute.
With regard to each complaint about the company’s advertising, promotion, or
marketing forwarded for independent review under the procedures set forth by the
Beer Institute, Distilled Spirits Council of the United States, or Wine Institute at
any time between January 1, 2006 and December 31, 2006, provide a copy of the
complaint, any document reflecting the recommendation or decision of the
reviewer, and describe what action, if any, the company took in response to the
recommendation or decision of the reviewer.

Penalties may be imposed under applicable provisions of federal law for failure to file
Special Reports or for filing false reports.

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The Special Report called for in this Order is to be filed on or before ____, 2006.
By direction of the Commission.
Deborah Platt Majoras
Chairman
SEAL

Date of Order:

The Special Report required by this Order,
or any inquiry concerning it, should be
addressed to the attention of:
Janet M. Evans
Division of Advertising Practices
Federal Trade Commission
Washington, D.C. 20580
(202) 326-2125 phone
(202) 326-3259 facsimile
jevans@ftc.gov

Appendix A
Definitions and Instructions
I.

Reportable Expenditure Definitions

These definitions of reportable advertising, merchandising or promotion expenditures
track the 22 Categories set forth in question 2 of the Order to File Special Report. Please provide
information for each Category in thousands of dollars. Expenditures may be rounded to the
nearest thousand dollars. In responding to question 2, exclude expenditures targeted to the trade,
such as expenditures for promotions in trade magazines or password-protected Internet sites
targeted to the trade.
A.

Television Advertising
Definition: Television advertising on broadcast, cable, or satellite channels, including
spot ads, long-form commercials, and sponsored programming (such as televised events bearing
the name of, or stated to be sponsored by an alcohol brand or company); allocate such
expenditures among: (a) advertising placed for national distribution on (i) broadcast, (ii) cable, or
(iii) satellite television; and (b) spot advertising placed on (i) broadcast, (ii) cable, or (iii) satellite
television. This category excludes expenditures in connection with product placements (defined
in Category P).
B.

Radio Advertising
Definition: Radio advertising including spot ads, long-form commercials, and sponsored
programing (such as radio broadcast events bearing the name of or stated to be sponsored by an
alcohol brand or company); allocate such expenditures among: (a) advertising on subscriptionbased satellite radio channels; (b) advertising in markets where the audience is measured by a
syndicated data source (such as Arbitron); and, (c) advertising in unmeasured markets. This
category excludes expenditures in connection with product placements (defined in Category P).
C.

Magazine Advertising
Definition: Advertising placed in magazines or other print media; this category excludes
newspaper advertising (defined in Category D) and direct mail advertising (defined in Category
G).
D.

Newspaper Advertising
Definition: Advertising placed in newspapers, including national, regional, and local
papers, and advertising placed in free-standing inserts to newspapers. This category excludes
expenditures for magazine advertising (defined in category C) and direct mail advertising
(defined in Category G).
E.

Transit Advertising
Definition: Advertising on or within private or public vehicles and all advertisements
placed at, on or within any bus stop, taxi stand, transportation waiting area, train station, airport
or any other transportation facility.

F.

Outdoor Advertising
Definition: Advertising on billboards; signs, placards or posters placed on outdoor street
furniture, kiosks, shopping malls (whether open-air or enclosed), pay telephone booths, parking
space bumpers or other advertising in parking lots or garages, or trash receptacles; airplane
banners; and, any other advertisements placed outdoors regardless of their size. This category
excludes expenditures in connection with transit advertising (defined in Category E), public
entertainment events: not sports-related (defined in Category L), sponsorship of sporting events,
sports teams, or individual athletes (defined in Category M) or other point-of-sale advertising and
promotions (defined in Category N).
G.

Direct Mail Advertising
Definition: Advertising circulars or other printed matter that is sent directly through the
mail to consumers. This category excludes expenditures in connection with magazine
advertising (defined in Category C) and newspaper advertising (defined in Category D).
H.

Company-sponsored Internet sites
Definition: Any company-sponsored Internet site that contains information about the
company’s beverage alcohol brands or beverage alcohol products, and that can be accessed by
computers located in the United States, regardless of where the site is located or the Internet
address of the site or page.
I.

Other Internet Site Advertising
Definition: Advertising on Internet sites other than company-sponsored Internet sites,
including, but not limited to, hyperlinks, banner or pop-up advertisements, sponsored-text
advertising, search keywords, and advertising in chat rooms, weblogs, bulletin boards, listserves,
and on social networking sites.
J.

Other Digital Advertising
Definition: Advertising and promotional content visible on personal computers and other
digital devices, including PDAs (personal digital assistants) and mobile phones, whether or not
Internet-enabled. This category includes but is not limited to expenditures for electronic mail
(email) messages, short message service (SMS or “text”) messaging, instant messaging (IM),
picture messaging, multimedia messaging, mobile broadcasts, and downloads or podcasts.
K.

Specialty Item Distribution
Definition: All net costs (deducting payments by consumers) of distributing items other
than beverage alcohol products, whether distributed by sale, redemption of coupons, or
otherwise. Allocate among expenditures for items that (a) bear the name, logo, or any portion of
the package of any brand or variety of beverage alcohol product sold by the company and (b) do
not bear the name, logo, or any portion of the package of any brand or variety of beverage alcohol
products sold by the company. Exclude costs associated with distributing non-alcohol items in
connection with retail value-added programs (defined in Category Q).
L.

Public Entertainment Events: Not Sports-Related
Definition: Public entertainment events that are not sports-related, such as appearances

by musicians, comedians, celebrities, or other entertainers or public figures, bearing or otherwise
displaying the company name or logo, the name, logo, or any portion of the package of any of the
company’s beverage alcohol brands, or otherwise referring or relating to beverage alcohol,
including all expenditures made by the company in promoting and/or sponsoring such events;
allocate these expenditures among (a) adult-only facilities and (b) general audience facilities.
This category excludes expenditures in connection with television or radio advertising (defined
in Categories A and B), Internet or digital programming (defined in Categories H, I, and J)
sponsorship of sporting events, sports teams, or individual athletes (defined in Category M) and
other point-of-sale advertising and promotions (defined in Category N).
“Adult-only facility” means a facility or restricted area (whether open-air or enclosed)
where the operator ensures or has a reasonable basis to believe that no underage person is present
and includes company-sponsored private parties and event hospitality tents. A facility or
restricted area need not be permanently restricted to adults in order to constitute an adult-only
facility, provided that the operator ensures or has a reasonable basis to believe that no underage
person is present during the event or time period in question. Furthermore, for purposes of this
Order, the term “underage” means younger than twenty-one (21) years of age.
M.

Sponsorship of Sporting Events, Sports Teams, or Individual Athletes
Definition: Sponsorship of sporting events, sports teams, or individual athletes. “Sports
teams or individual athletes” includes but is not limited to competitors in football, basketball,
baseball, soccer, hockey, tennis, wrestling, golf, karate, judo, weight lifting, volleyball, skiing,
skating, sailing, boating, equestrian, rodeo, automobile, race car, funny car, motorcycle, bicycle,
truck, monster truck, tractor-pull, fishing, and hunting events, competitions, tournaments, and
races. This category excludes expenditures in connection with television and radio advertising
(defined in Categories A and B), Internet or digital programming (defined in Categories H, I, and
J), public entertainment events: not sports-related (defined in Category L), and other point-of-sale
advertising and promotions (defined in Category N).
N.

Other Point-of-Sale Advertising and Promotions
Definition: Expenditures for advertising and promotions at on-premise or off-premise
locations where beverage alcohol can be purchased. This category excludes expenditures in
connection with specialty item distribution (defined in Category K), public entertainment events:
not sports-related (defined in Category L), spring break promotions (defined in Category O), and
retail value-added expenditures (defined in Category Q).
O.

Spring Break Promotions
Definition: Expenditures for advertising and promotion of college “spring break” events,
including vacation trips, cruises, beach or pool parties, and on-premise and off-premise events
where beverage alcohol can be purchased. This category may include expenses reported in
response to other categories; if so, indicate which expenses also are reported elsewhere.
P.

Product Placements
Definition: The dollar value of consideration provided in connection with permitting,
promoting, or procuring the integration of any beverage alcohol product, logo, signage, trade

name, or package into a television or radio program, motion picture, music video, music
recording, electronic game, or other form of entertainment programming; such expenditures
would include, for example, the dollar value of alcohol beverages or logoed items (such as
clothing or signage) provided, or expenditures by the company to cross-promote a film or
program in which a placement occurs.
Q.

Retail Value-Added Expenditures
Definition: Expenditures for promotions involving: (1) free beverage alcohol products
(e.g., buy two, get one free), whether or not the free beverage alcohol products are physically
bundled together with the purchased beverage alcohol products, including all expenditures and
costs associated with the value added to the purchase of beverage alcohol products (e.g., all
associated excise taxes paid on the free beverage alcohol products); and (2) free non-alcohol
products items (e.g., buy two, get a can opener) including all expenditures and costs associated
with the value added to the purchase of beverage alcohol products.
R.

Telemarketing
Definition: Expenditures associated with the placement of telephone calls for the purpose
of selling a good or service or the maintenance or operation of incoming telephone lines that
allow consumers to participate in any promotion or hear pre-recorded product messages, but
excluding costs associated with having customer service representatives available for responding
to consumer complaints or questions.
S.

Promotional Allowances
Definition: Allowances paid to retailers or wholesalers/distributors for development and
distribution of consumer-directed advertising and promotional efforts, but excluding
expenditures specifically designated to be expended for advertising and promotions in categories
A-R above, which expenditures should be reported in the appropriate category. Allocate such
expenditures among payments to (a) retailers and (b) wholesalers/distributors.
T.

Total Reportable Expenditures
Definition: The figure provided for total reportable expenditures should equal the sum of
the expenses listed in Categories A-S above.
U.

Sports and Sporting Events
Definition: “Sports and sporting events” include but are not limited to football,
basketball, baseball, soccer, hockey, golf, tennis, wrestling, karate, judo, weight lifting,
volleyball, skiing, skating, sailing, boating, equestrian, rodeo, automobile, race car, funny car,
motorcycle, bicycle, truck, monster truck, tractor-pull, fishing, and hunting events, competitions,
tournaments, and races. Report all items including but not limited to all expenditures connected
with or related to the sponsoring, advertising, or promotion of sports or sporting events,
including support of an individual or a group sports or racing team, and purchase of, or support
for, sports or racing equipment, uniforms, sports or racing facilities and/or training facilities, and
all expenditures for advertising including but not limited to print, television, radio, billboards, or
banners in the name of the company or any of its beverage alcohol products in a sports or racing
facility, on a scoreboard or in conjunction with the reporting of sports or racing results; and all

expenditures connected with the production, offer, sale, or provision without fee of all functional
promotional items at or in connection with a sporting or racing event, including but not limited
to, clothing, hats, bags, posters, sporting or racing goods, and equipment. Allocate among (a)
expenditures for college sports and sporting events and (b) all others. The expenditures reported
in this category are intended to be duplicative of expenditures listed above for Categories A-S
and totaled in Category T. For example, televised ball games sponsored by an alcohol brand,
reported in Category A, and untelevised events for a sponsored sports teams, reported in
Category M, would also be reported in Category U. Do not report any expenditures in this
Category that have not also been reported in Categories A-S.
V.

Social Responsibility Programs and Messages
Definition: Expenditures for social responsibility programs and messages. The
expenditures reported in this category may be duplicative of expenditures listed for Categories AS and totaled in Category T.
II.

Audience Demographics Definitions

These instructions shall be used in responding to question 3.B.’s request for the actual
demographics of the audience for an advertisement:
A.
Television ads. Provide, for the program in which or adjacent to which the ad appeared,
the quarterly average demographic data for that program in that timeslot; if program-specific data
are not available, provide the quarterly average demographic data for the daypart in which the ad
appeared.
B.
Radio ads. Provide the quarterly average demographic data for the daypart during which
the ad appeared. In responding to this question, use Arbitron standard dayparts unless data for a
shorter period of time is available.
C.
Magazine ads. Provide average demographic data for the 12-month period during which
the ad appeared, if the ad was placed in the standard national edition. If the ad was placed in a
21+ or other specialized edition, identify the edition and explain its demographics.
D.
Newspaper ads. Provide average demographic data for the 12-month period during
which the ad appeared.
III.

Due Dates for Responses
Responses to this Order are due on a rolling basis, as follows:
A.
B.
C.
D.

Response to question 1: 30 days after the issuance of this order.
Response to question 2: 45 days after issuance of this order.
Response to question 3A.: 30 days after issuance of this order.
Response to question 3B.: as to television advertisements, responses are due 30
days after issuance of this order; as to radio advertisements, responses are due

E.
F.

G.
IV.

________ (will be 30 days after the updated demographic data for radio stations is
released); as to magazines and newspapers, responses are due ______________
(will be 30 days after the updated demographic data for print media is released).
Response to questions 3C. and 3D.: _________ (will be 15 days after the last date
in D).
Response to question 3E.: Within 5 days following receipt from the FTC staff of a
written request to provide such documents (but not before timely submission of
audience composition data for the applicable media in response to question 3B).
Response to question 4: January 10, 2007.

Instructions for Production of Responses

All responses should be provided in electronic form (by DVD or as email attachments),
formatted as Word or Word Perfect documents, with the exception of the responses to questions
1C., 2, and 3B., C., and D., which should be provided electronically (by DVD or as email
attachments) on an Excel Spread Sheet, labeled fully to indicate the question to which the
provided data responds; and responses to question 1D., which should be provided in electronic
form (by DVD or as email attachments), formatted as Word, Word Perfect, or PDF documents.