Alcohol Study - SS - 2011- FINAL

Supporting Statement for a Paperwork Reduction Act
Submission to OMB
FTC Study on Alcohol
The Federal Trade Commission (“FTC” or “Commission”) proposes to conduct an
analysis of alcohol industry self-regulatory code compliance. This analysis will look at sales of
beverage alcohol, expenditures to advertise and promote alcohol, industry compliance with
advertisement placement standards contained in self-regulatory codes, use of digital media and
data collection, and use of lesser-known promotional methods. The Commission will seek this
information through compulsory process under Section 6 of the FTC Act, 15 U.S.C. § 46
(hereinafter “proposed Section 6 Orders”).
1. & 2.

Necessity for Information Collection and How the Data Will Be Used

In 1999, 2003, and 2008, the Commission conducted studies to evaluate alcohol industry
self-regulation. In September 1999, the Commission issued a report to Congress, SelfRegulation in the Alcohol Industry,1 which reported on information provided by eight key
industry members in response to Section 6 Orders. The 1999 Report included Commission
recommendations for measures to strengthen the industry’s advertising placement standard and
compliance. The Commission’s second report, Alcohol Marketing and Advertising,2 issued in
September 2003, evaluated the industry’s response to these recommendations. The 2003 Report
announced that the industry had adopted an improved standard for advertising placement,
limiting ads to television shows, radio dayparts,3 and magazines with no more than 30%
underage persons in the audience, such that the minimum adult audience composition is 70%
(the “70% placement standard”). It also announced that some industry members had adopted
external review of code compliance, as requested by the Commission in 1999. In June 2008, the
Commission issued its third report, Self-Regulation in the Alcohol Industry,4 which reported on
Section 6 Order responses provided by twelve major alcohol suppliers and also evaluated the
industry’s response to the FTC’s prior recommendations. The report announced that the industry
had been largely successful at meeting the 70% placement standard, and consequently, more than
85% of the audience for alcohol advertising placed by those twelve suppliers during the relevant
period consisted of persons 21 and older. It also included Commission recommendations to
facilitate better advertising placement management by the industry, extend the 70% placement
standard to Internet advertising, and expand suppliers’ age-screening and verification processes
to new, emerging digital media such as email and mobile marketing.
Since publication of the 2008 Report, the Commission staff has engaged in both formal
and informal monitoring of alcohol self-regulatory efforts, but it has not conducted a

1

Available at http://www.ftc.gov/reports/alcohol/alcoholreport.htm.

2

Available at http://www.ftc.gov/os/2003/09/alcohol08report.pdf.

3

 In radio and TV broadcasting, “daypart” is the standard practice of dividing the day into several parts, during each
of which different type of programs and commercials (based on audience composition) are used.  

4
Available at http://www.ftc.gov/os/2008/06/080626alcoholreport.pdf.

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comprehensive analysis of these practices. For example, between 2009 and 2010, the
Commission issued 6(b) Orders to six mid-sized alcohol companies. Consumer advocacy
organizations, state attorneys general, and others have urged the Commission to conduct an
updated analysis of alcohol industry self-regulatory code compliance, including compliance with
the 70% placement standard and efforts to protect youth from alcohol marketing in digital and
social media. The Commission believes that it is appropriate to do so now. The proposed
information requests will facilitate such a study.
The proposed information requests will seek, among other things, information regarding:
(1) sales of beverage alcohol; (2) expenditures to advertise and promote beverage alcohol in
measured and non-measured media; (3) compliance with the 70% placement standard contained
in the industry’s self-regulatory codes; (4) digital marketing practices and data collection,
including efforts to avoid collection of data from youth under the legal drinking age of 21; and
(5) descriptions of lesser-known media programs, such as point-of-sale advertising, product
placements, and social responsibility programs.
The Commission will aggregate the information it receives before incorporating it into its
prospective publication on alcohol industry self-regulation of advertising and marketing. Except
for a limited portion of the product sales and advertising expenditure data, the information the
report will share is not publicly available from other sources, to the agency’s knowledge.
3.

Information Technology

Improved information technology may assist in gathering and producing this information.
Consistent with the aims of the Government Paperwork Elimination Act, 44 U.S.C. § 3504, the
FTC will allow the submission of information through electronic or automated collection
techniques. In addition, FTC staff will use database software to compile information and thereby
facilitate their review and analysis.
4.

Efforts to Identify Duplication/Availability of Similar Information

Specification 1 of the proposed information requests seeks information on sales by
number of cases and dollar value, exclusive of taxes, for each brand sold by the 14 companies
(the “target companies”) that will receive an order. Although two sources (The Beverage
Information Group and M. Shanken Company5), provide information on sales of the top beer,
wine, and spirits brands, these sources do not provide information on many additional smaller
brands that may be owned by the target companies. Specification 2 of the proposed information
requests seeks data in 22 categories of promotional expenditures. Although Beverage
Information Group and M. Shanken Company publish some information on television, radio,
print, and magazine advertising expenditures, they do not provide information on the other
categories identified in the specification. Further, in the past, it has been the FTC’s experience

5

The Beverage Information Group, formerly known as Adams Business Media, is a division of M2MEDIA360,
LLC. The Beverage Information Group’s publications are the Beer Handbook, Liquor Handbook, and Wine
Handbook, issued annually. Shanken’s publications are The U.S. Wine Market: Impact Databank Review and
Forecast, The U.S. Beer Market: Impact Databank Review and Forecast, and The U.S. Distilled Spirits Market:
Impact Databank Review and Forecast, also issued annually.

2

that the data provided by the target companies has differed from the data provided by these two
publishers, perhaps because the publisher information is based on assumptions regarding
advertising purchase costs. The remainder of the information sought by the proposed
information requests (including information on compliance with the placement standards, use of
digital media and data collection, and use of lesser-known media programs to promote alcohol,
requested in Specifications 3, 4, and 5, respectively) – is not, to the agency’s knowledge,
available from any other source. Efforts to identify duplicate sources of information included a
review of trade journals, government publications, and other published sources.
5.

Efforts to Minimize the Burden on Small Organizations

The requests to the fourteen largest advertisers of beverage alcohol products will not have
a significant impact on a substantial number of small entities. Wherever possible, the FTC will
attempt to minimize the time commitment necessary to respond to the proposed Section 6
Orders. The FTC will consider proposals for use of information technology that may reduce
burden.
6.

Consequences to Federal Program and Policy Activities/Obstacles to Reducing Burden

If the information is not collected, the FTC will not have the data necessary to prepare the
forthcoming report on alcohol industry self-regulatory efforts. The burden of the information
collection has been reduced as much as possible.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The reporting requirements are consistent with all applicable guidelines contained in 5
C.F.R. § 1320.5(d)(2).
8.

Public Comments/Consultation Outside the Agency and Actions Taken

As required by 5 C.F.R. § 1320.8(d), the FTC published a notice seeking public comment
on the proposed collections of information, 76 Fed. Reg. 10596 (Feb. 25, 2011) (“60-Day
Notice”), and is doing so again contemporaneously with this submission.
The FTC received 71 comments in response to the 60-Day Notice. Of these, four
comments favored and substantively addressed the proposed data collection. These comments
were submitted by: (1) State Attorneys General representing 23 states and one territory6 (“State
AG”); (2) the Center for Alcohol Marketing and Youth (“CAMY”); (3) the Center for Digital
Democracy (“CDD”)7; and (4) University of Connecticut School of Medicine (“UConn Medical
School”). One comment, submitted by The Marin Institute, offered substantive

6

The State AGs represented: Arizona, Connecticut, Delaware, Guam, Hawaii, Idaho, Illinois, Iowa, Maryland,
Massachusetts, Mississippi, Nevada, New Hampshire, New Mexico, New York, Oklahoma, Oregon, Rhode Island,
South Carolina, Tennessee, Utah, Vermont, Washington, and Wyoming.
7

CDD, Alcohol Marketing in the Digital Age (May 2010) (“CDD White Paper”). A private citizen also submitted
the CDD White Paper as an attachment to her comment.

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recommendations but also expressed concerns about self-regulation.8 Two additional comments
offered limited recommendations regarding the proposed data collection.9 The remaining 64
comments did not substantively address the proposed data collection.10
A.

General Support for the Data Collection

In its 60-Day Notice, the FTC sought comments regarding whether the proposed
collection of information is necessary for the proper performance of the functions of the FTC.11
The State AG and CAMY comments expressed strong support for the FTC’s proposed data
collection. Specifically, they stated that this information was essential to the FTC’s performance
of its regulatory duties and in the public interest.
B.

Suggestions for Improvements to Proposed Information Collection

In its 60-Day Notice, the FTC invited comments regarding ways to enhance the quality,
utility, and clarity of the information to be collected.12 The FTC received substantive
suggestions for enhancing its proposed collection of alcohol advertising data regarding the
following specifications: (1) expenditure data; (2) advertising placement; and (3) digital
marketing and data collection. The FTC also received several suggestions that did not fall within
a particular specification.
i.

Expenditure Data

In its 60-Day Notice, the FTC stated that it would seek company data regarding
expenditures to advertise and promote beverage alcohol in measured and non-measured media.
The State AG and CAMY comments exhorted the FTC to seek advertising and promotional
expenditures from the alcohol industry on an “ongoing and regular basis,” rather than
intermittently. Both comments explained that the media landscape is changing daily. In order to
understand how and where industry is advertising and to what extent the youth are exposed, the
comments argued, the FTC should obtain this data from industry every two to three years, if not
annually. The FTC will consider this recommendation in the course of developing its report.
ii.

Advertising Placement Issues

Until very recently, the voluntary codes of the Beer Institute, the Distilled Spirits Council
of the United States, and/or the Wine Institute (collectively, “voluntary codes”) each stated that

8

See further discussion about The Marin Institute comment at Section 8.B.iii, below.

9

These were submitted by a private citizen in Michigan (also referenced in note 6, above) and the Mesilla Valley
DWI Resource Center in New Mexico. The recommendations in these comments are discussed in notes 13 and 15,
below.

10

See discussion at Section 8.C., below.

11

See 60-Day Notice, 76 Fed. Reg. 10596, 10597 (Feb. 25, 2011).

12

See 60-Day Notice, id. at 10597.

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alcohol advertising should be placed in television, radio, and print communications only where at
least 70% of the audience is reasonably expected to be above the legal purchase age (the “70%
placement standard”).13 In the 60-Day Notice, the FTC stated that it planned to seek data on
advertising placement, including industry compliance with the 70% placement standard.
The State AG and CAMY comments encouraged the FTC to recommend that the
voluntary codes increase their placement standard from 70% to 85%.14 Citing a 2004
recommendation by the Institute of Medicine’s Committee on Developing a Strategy to Reduce
and Prevent Underage Drinking, the State AG and CAMY comments argued that youth exposure
to alcohol advertising on television has grown since 2004 at a rate faster than that of adults or
young adults. The State AG and CAMY comments also highlighted as an example Beam Global
Spirits & Wine Inc., an alcohol company that since 2007 has voluntarily, and gradually,
increased its placement standard to 85% for its aggregate average by brand and by medium. The
FTC will consider these recommendations in the course of developing its report.
The State AG and CAMY comments recommended that the FTC seek brand-specific
placement data and provide a brand analysis in its upcoming report. The UConn Medical School
comment also recommended that the FTC seek data in connection with specific ads or ad
campaigns. The Commission’s compulsory process orders to alcohol companies will, as they
have in the past, collect advertising placement data for each individual ad, for individual brands.
In the course of reviewing these data, the staff will evaluate whether specific brands are more
likely to have placement compliance problems. Nonetheless, because the Section 6(f) of the
FTC Act protects confidential commercial information that is submitted to the agency, the FTC’s
reports do not discuss advertising data on particular brands or companies.
iii.

Digital Marketing and Data Collection

In its 60-Day Notice, the FTC stated that it would seek information from the alcohol
industry about data collection efforts, including data collection in connection with digital and
social media marketing, and efforts to avoid collection of data from youth under the legal
drinking age of 21. The FTC received extensive and detailed recommendations regarding its
proposed collection of digital marketing and data collection. These recommendations were
provided by the CDD, the State AGs, CAMY, and The Marin Institute.

13

On May 26, 2011, the Beer Institute and the Distilled Spirits Council of the United States (“DISCUS”) each
announced that they would increase their placement standard from 70% to 71.6% to reflect the recently-published
results of the 2010 U.S. Census data, which showed that 71.6 percent of the U.S. population is 21 years of age and
older. See Beer Institute press release, “Beer Institute Revises Advertising Standard Based on New U.S. Census
Data” (May 26, 2011), available at
http://www.beerinstitute.org/BeerInstitute/files/ccLibraryFiles/Filename/000000001167/Updated%20Ad%20Code%
20with%20Census%20Data%20-%20FINAL%205-26-11.pdf; DISCUS, “Distilled Spirits Industry Updates
Advertising Guidelines Based on Newly-Released Census Data” (May 26, 2011), available at
http://www.discus.org/media/press/article.asp?NEWS_ID=631. To date, the Wine Institute has not announced any
changes to its placement standard.
14

This recommendation to increase the placement standard to 85% was echoed by a private commenter from
Michigan.

5

The CDD White Paper expressed concern that online advertising has evolved without
sufficient public analysis or regulatory oversight. It outlined key concepts and practices that
have been guiding the growth of interactive marketing in the alcohol industry, including the
creation of a “high-definition media and marketing ecosystem”15 that integrates advertising,
editorial content, audience measurement, and content delivery; the growth of distribution
platforms such as social media, online video channels, and virtual worlds; and targeted
marketing to the African-American and Latino communities.
The State AG comment observed that alcohol advertising has substantially increased its
presence online. The comment identified one brand that advertises solely in social media and
another company that employed “extensive, world-wide use of social media” for a recent World
Cup-related advertising campaign.16 The CAMY comment echoed the concerns cited by the
State AG comment.
Accordingly, the CDD, State AG, CAMY, and The Marin Institute comments requested
that the FTC seek a variety of information regarding digital marketing and data collection
practices. These practices included: marketing and data collection on both corporate-sponsored
websites as well as websites operated by third parties, age verification mechanisms on such
websites, and marketing practices on social media sites.
The FTC’s information requests will take account of the comments and changing
technology and seek information about alcohol companies’ digital marketing and data collection
practices, including data collected about consumers on corporate-sponsored websites and those
operated by third parties. The FTC will also consider these commenters’ recommendations
about digital marketing and data collection in the course of developing its report.
iv.

Lesser-Known Media Programs

The UConn Medical School comment recommended that the FTC specifically seek
expenditure data for product placements in television and film, including the type of product
depicted and to whom the compensation was paid. The FTC’s information requests will seek
expenditure data for product placements in general as well as the type and title of the
entertainment vehicle in which such product placement appeared, and whether compensation was
made in the form of monetary payment or an in-kind provision (e.g., products or other logoed
items).

15

It particularly noted three aspects of the high-definition media and marketing ecosystem: (a) engagement, i.e., the
creation of a marketing environment where consumers interact with brands and integrate them into their personal
and social relationships; (b) data collection and behavioral targeting, such as digital advertising campaigns that
encourage users to provide their personal information in order to participate in a design contest; and (c) a “360degree strategy” that aims to keep consumers continuously plugged into their advertising campaigns, whether they
are online or in the real world.

16

Similarly, the Mesilla Valley DWI Resource Center comment stated that the FTC should seek information
regarding the extent to which the alcohol industry is shifting its advertising to the Internet and to what extent those
websites and social media sites are following the voluntary codes.

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v.

Other Recommendations About Data Collection

The UConn Medical School comment offered many recommendations for the types of
data the FTC should seek in its data collection. In particular, the comment suggested gathering
specific data about the voluntary codes’ complaint review procedures and the composition of
their complaint review boards. For example, the comment recommended that the FTC seek data
regarding the complaint review process, such as procedures for evaluating complaints. The
comment also recommended that the FTC seek information regarding the qualifications,
compensation, and conflicts of interest of complaint review board members.17
The Commission agrees that complaint review procedures are a critical component of
self-regulation. In past studies, the compulsory process orders specifically sought information
about the complaint review process from individual companies; ultimately, the information was
provided voluntarily by the three alcohol trade associations. Similarly, for this study, the
Commission plans to seek information about the complaint review process and related issues
from the trade associations.
C.

Other Comments

As noted earlier, the FTC received 64 comments in response to the 60-Day Notice that
did not address the proposed data collection. These comments fall into three broad categories:
(1) comments opposing the FTC’s study concept in general; (2) comments seeking stricter selfregulation; and (3) comments calling for an end to self-regulation, to be replaced by a
government ban or curtailing of alcohol advertising.
i.

Comments Opposing Study Concept

Three comments expressed disagreement with the general concept of studying the alcohol
industry. These were submitted by: (1) one university; (2) one non-governmental organization;
and (3) one anonymous commenter. Each of these commenters offered a different reason: one
argued that there was no causal connection between alcohol advertising and youth drinking;
another argued that the damage already had been done, so the FTC’s study would come too late;
and the final one argued “we are taxed enough” without adding anything further other than
requesting confidential treatment. As noted earlier, the FTC believes that its information
requests are in the public interest and essential to the agency’s performance of its regulatory
duties.
ii.

Comments Seeking Stricter Self-Regulation

Two comments advocated for more “teeth” in self-regulation. First, the Cambridge
Prevention Coalition and Bluegrass Prevention comments advocated for objective standards to
judge the content of alcohol advertising. Second, the Bluegrass Prevention comment stated that

17

The UConn Medical School comment also suggested that the FTC gather specific information about advertising
strategy, content, and substantiation. The comment recommended that the FTC seek a variety of data, ranging from
the ages of actors who appeared in alcohol advertising for television and print to substantiation for health benefits
claims made about low-carbohydrate beers. The Commission believes the level of specificity in these
recommendations exceeds the scope of the current study.

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the alcohol industry should be required to take reasonable steps to ensure that their brands are not
promoted by fans and other third parties online (e.g., social media) in a way that violates the
voluntary codes. The FTC will consider these recommendations in the course of developing its
report.
iii.

Comments Calling for an End to Self-Regulation

The vast majority of comments received – 60 – called for an end to alcohol industry selfregulation and advocated for more active government regulation. These were submitted by: (1)
five local government agencies; (2) 24 non-governmental agencies; (3) two religious
organizations; (4) one research institute; and (5) 28 individuals. The Marin Institute comment
described industry self-regulation as a “complete failure.” Marin, along with an individual
commenter, called for the existing compliance review boards to be replaced by a “truly
independent third party review board that includes public interest representatives.” Other
comments, including many submitted by individuals, called for alcohol advertising to be banned
or curtailed to reduce the likelihood of youth exposure to the ads. The FTC will consider these
recommendations after conducting its review of the information submitted.
9.

Payments and Gifts to Respondents
There is no provision for payments or gifts to respondents.

10. & 11. Assurances of Confidentiality/Matters of a Sensitive Nature
In connection with its requests, the Commission will receive information of a confidential
nature. Under Section 6(f) of the FTC Act, such information is protected from disclosure while
it remains confidential commercial information. 15 U.S.C. § 46(f).
12.

Estimated Hours and Labor Cost Burden
A.

Estimated Hours Burden: 8680 hours

The staff’s estimate of the hours burden is based on the time required to respond to each
information request. Because beverage alcohol companies vary in size, the number of products
they sell,18 and the extent and variety of their advertising and promotion efforts, the staff has
provided a range of the estimated hours burden. As noted above, each company will receive
information requests pertaining to five categories of information.
Based upon its knowledge of the industry, the staff estimates, on average, that the time
required to gather, organize, format, and produce responses to the proposed Section 6 Orders will
range between 300 and 620 hours per company. The total estimated burden per company is
based on the following assumptions:

18

 In 2007, the top 12 alcohol suppliers alone reported selling 1,133 brands. See 2008 FTC Alcohol Report,
available at http://www.ftc.gov/os/2008/06/080626alcoholreport.pdf.

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(1) Identify, obtain, and organize sales information,
prepare response:

30 - 70 hours

(2) Identify, obtain, and organize information on
advertising and marketing expenditures, prepare response: 50 - 130 hours
(3) Identify, obtain, and organize placement information,
prepare response:
120 - 280 hours
(4) Identify, obtain, and organize information regarding
digital marketing practices and data collection,
prepare response:

80 - 100 hours

(5) Identify, obtain, and organization information regarding
lesser-known media programs:
20 - 40 hours
Conservatively, the staff estimates that the burden per company for each of up to fourteen
intended recipients will be 620 hours. Accordingly, the staff estimates a total burden for these
companies of approximately 8,680 hours (14 companies × 620 average burden hours per
company). These estimates include any time spent by separately incorporated subsidiaries and
other entities affiliated with the ultimate parent company that has received the information
request.
B.

Estimated Cost Burden: $186,000

It is difficult to calculate with precision the labor costs associated with the information
requests, as the costs entail varying compensation levels of management and/or support staff
among companies of different sizes. Financial, legal, marketing, and clerical personnel may be
involved in the information collection process. The staff has assumed that professional
personnel and outside legal counsel will handle most of the tasks involved in gathering and
producing responsive information, and has applied an average hourly wage of $300/hour for their
labor. Thus, the staff estimates that the total labor costs per company will range between
$90,000 ($300 × 300 hours) and $186,000 ($300 × 620 hours).
The staff estimates that the capital or other non-labor costs associated with the
information requests will be minimal. Although the information requests may necessitate that
industry members maintain the requested information provided to the Commission, they should
already have in place the means to compile and maintain business records.
13.

Estimated Annual Capital or Other Non-labor Costs

FTC staff believes that the capital or other non-labor costs associated with the
information requests are minimal. Although the information requests may require industry
members to maintain the requested information the Commission seeks, they should already have
in place the means to compile and maintain it.

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14.

Estimate of Cost to the Federal Government

FTC staff estimates that the current year’s cost to the FTC Bureau of Consumer
Protection of collecting this information is approximately $300,000 for fiscal year 2012 and
$150,000 for fiscal year 2013, including benefits and operational expenses (such as equipment,
overhead, printing). For fiscal year 2012, this estimate reflects approximately one attorney work
year, and one support staff work year, devoted to collecting, processing, and analyzing the
requested information. For fiscal 2013, this includes approximately one half of an attorney work
year, and one half of a support staff work year, devoted to devoted to collecting, processing, and
analyzing the requested information.
15.

Program Changes or Adjustments
Not applicable. This is a new collection of information.

16.

Plans for Tabulation and Publication of Information

The information provided by the respondents will be used to prepare a report that will be
publicly released. The collection of the information will begin after the completion of the OMB
review process. The estimated date for the completion of the report is January to September
2013.
17. & 18.

Failure to Display the OMB Expiration Date/ Exceptions to Certification

Not applicable.

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