For marketers in the alcohol industry, Tied House laws are a familiar, daunting, subject. Originating from the pre-Prohibition era, these regulations continue to influence how AlcBev brands operate, especially in advertising. Named "tied-house" laws because they prevent retailers from being tied to suppliers, they can appear complex. Yet, modern AlcBev brands have found innovative strategies to thrive within these regulatory constraints.
The term "tied-house" originated in the UK, referring to pubs or bars required to exclusively stock beer from a specific brewery. A “free house,” on the other hand, could purchase its alcohol supply from any producer they chose. The U.S. adopted similar practices in the late 19th and early 20th centuries, where bars often entered exclusive contracts with manufacturers. In many cases, massive alcohol manufacturers could take advantage of supply arrangements, giving businesses cheap loans, providing free draft systems, and even providing payments for favorable treatment. This created fierce competition amongst local bars, resulting in the intentional lowering of prices to draw in customers. These deals resulted in monopolistic practices, promoting excessive consumption and eventually leading to the start of Prohibition.
Prohibition ended in 1933, yet alcohol remains rigorously regulated in the US due to the 21st Amendment. This amendment, currently enforced by the Alcohol and Tobacco Tax and Trade Bureau (TTB), empowers each state to establish alcoholic beverage control laws, known as Tied House laws, for bars and retailers. These laws aim to prevent monopolies and market oversaturation.
Here’s the timeline:
Late 19th-early 20th Century:
Prohibition Era:
Post-Prohibition (21st Amendment):
Current regulations:
Fast-forward to today, and the world of alcohol advertising has grown exponentially more intricate—especially on online platforms. Social media has added layers of complexity, forcing brands to tread carefully to avoid violating regulations. For instance, federal and state laws prohibit alcohol brands from offering anything of value—like free advertising—to encourage retailers to stock their products.
Here’s where these laws can get tricky. A brand tagging a retailer in a social media post or including their logo in an ad could be interpreted as a violation unless the ad adheres to specific state requirements. Regulations can vary greatly; some states require brands to list a minimum of two retailers in a digital ad, while others require at least three.
Brands evaluating ad compliance solutions should look for these features while doing their research:
With these tools, the guesswork of regulatory compliance is removed, mitigating risks while running high-performing campaigns. Take a look at how JaM Cellars advertises on Meta with Pear:
Navigating Tied House laws might sound daunting, but it is achievable for modern alcohol brands with the right tools. By leveraging shoppable ad integrations, shoppers can click directly from an ad to purchase at a local retailer. Since ad platform algorithms dynamically determine relevant retailer pairings–brands hold no influence–eliminating compliance concerns.
For AlcBev brands navigating complex laws in a highly competitive market, Pear stands out as the most equitable retail ecommerce platform.
A powerful new social and display ad unit integration takes shoppers from a social or display ad directly to a retailer’s website, proving 29x more effective.
Here’s how Pear Connect works:
Read the enterprise brand Pear Connect case study here.
Tied House laws no longer need to feel convoluted or restrictive. With the combined power of Pear unTied and Pear Connect, alcohol brands can confidently execute innovative marketing strategies without risking regulatory violations.
Are you ready to elevate your campaigns while ensuring compliance? Get in touch with Pear to discover how we can help your AlcBev brand thrive within the rules.
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Legal Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended as legal advice. Pear Commerce and its contributors are not responsible for any legal claims or liabilities that may arise in connection with the interpretation or application of Tied House advertising laws. While we strive to provide accurate and up-to-date information, the complexities of legal matters may vary, and it is advisable to seek professional legal counsel for specific advice tailored to your situation. Reliance on the information contained herein is at your own risk, and Pear Commerce disclaims any responsibility for actions taken or not taken based on the content of this blog post. Always consult with qualified legal professionals to address your specific legal concerns.