Tied House Laws & Advertising

If you’re a marketer within the alcohol industry, chances are you’re familiar with (and maybe shudder at the thought of) Tied House laws. 

Dating back to the pre-Prohibition era, Tied House laws continue to play a huge role in how alcohol brands operate today, particularly when it comes to the advertising of AlcBev products. 

‍Tied House history‍

The term “tied-house” originated in the UK and referred to a public house (think: pub, bar, saloon) that was required to purchase its beer from a particular manufacturer or brewery. A “free house,” on the other hand, was allowed to purchase its products from any company they chose.

Bars in the US in the late 19th/early 20th century often had exclusive brewery contracts, making them tied-houses. In many cases, these contracts meant the massive alcohol manufacturers could take advantage of supply arrangements, giving businesses cheap loans, providing free draft systems, and even offering payments for preferable treatment. This created fierce competition amongst local bars, resulting in the intentional lowering of prices to draw in customers, promoting excessive consumption, and eventually - you guessed it - Prohibition.

Prohibition was repealed in 1933, but alcohol remains heavily regulated throughout the US thanks to the 21st Amendment. This amendment, enforced today by the Alcohol and Tobacco Tax and Trade Bureau (TTB), allows each state to implement alcoholic beverage control laws - a.k.a. Tied House laws - on bars and retailers, in order to prevent a recurrence of such monopolies and oversaturation in the market.

Tied House and modern advertising

If Tied House laws didn’t already feel convoluted, social media (of all things) created a new layer of complexity, introducing the potential to violate alcohol regulations in often unforeseen ways. 

Websites and social media accounts are considered “advertising platforms” to federal and state regulators. Certain Tied House laws prohibit alcohol brands from providing anything of value - including advertising - to retailers that may directly or indirectly induce them to purchase their products. Free advertising from a brand, including listing a particular retailer’s name or logo in a social or display ad, is considered “valuable” and, therefore, constitutes a potential means to induce that retailer to purchase alcoholic beverages from the brand. 

Because Tied House regulations vary by state, the stringency of these regulations can differ depending on the location where the ads are being served. In some states, digital advertising of alcohol products at retailers is allowed as long as the brand lists two or more retailers (not controlled by the same company) within the ad placement. Other states impose stricter regulations, requiring a minimum of three or more retailer logos within an ad. 

While this all may feel extremely complicated, alcohol brands selling their products via ecommerce and retail today have been able to navigate Tied House regulations successfully, with many relying on modern marketing and advertising strategies to grow their businesses.   

Retail ecommerce platforms, like Pear Commerce, are here to help. ‍

Pear is the retail ecommerce platform that creates paths to purchase from brands to retailers, converting shoppable tools into actionable insights that fuel performance marketing.

For AlcBev brands navigating Tied House advertising laws and retail compliance, Pear is the most compliant shoppable media and where-to-buy solution:

1) Pear is the most fair and equitable solution

Pear’s proprietary technology can connect a brand’s shoppers to over 3,000 retailers across 165,000 locations with inventory in stock. Other shoppable media providers are only able to connect to 50 or 60 retailers in the space, which provides undue advantage to those retailers. 

Since Pear integrates with more than 50x the number of retailers (nearly all with ecommerce capabilities), Pear provides the most fair and equitable where-to-buy experiences on brands’ websites.

2) Pear offers compliance tools dedicated to AlcBev rules and regulation

In addition to being the most fair and equitable across all solutions, Pear has the most robust and sophisticated set of compliance tools available for shoppable media.

Alcohol brands on the Pear platform gain access to Pear unTied: compliance features specifically designed to help navigate Tied House regulations and ensure adherence to the unique marketing requirements surrounding AlcBev brands at retail.

Each state has requirements on how many retailers need to be displayed within a shoppable ad. Whether an aggregator like Minibar, ReserveBar, or Instacart is considered one of those retailers also differs, depending on each brand’s standards. Pear unTied allows brands to customize their shoppable media experience to fit their unique policies, while dynamically displaying the compliant number of retailers based on the state in which the ad is being served. Plus:

• Set the retailer list sorting to random to avoid showing preferential treatment to any retailers
• Pin certain retailers or aggregators to the bottom of the retailer list so other retailers always display first
• Add age gating to shoppable landing pages
• Add custom legal text or disclosures to shoppable tools
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3) Pear has created a new, compliant shoppable ad unit 

Pear’s one-click shoppable ad unit - Pear Connect - offers a powerful new social and display ad unit integration that takes shoppers from a social or display ad to a retailer’s website in a single click, making brands’ digital advertising 20x more effective. 

Here’s how it works:

• Pear has a one-time integration with each ad platform where it uploads its full database of product-retailer combinations; for the purposes of this example, we’ll use Meta. Then, Pear informs Meta which products are in-stock and available at which of the retailers in its network daily.
• Without any input from Pear or the brand, Meta’s technology chooses which product and retailer combination to display, based on what is most likely to get selected by the ad viewer.
• Meta selects based on the data it has on each person, none of which is available to Pear or the brand. Pear nor the brand see any PII throughout the process.
• Because neither the brand nor Pear have any influence over which retailers are selected, any sort of inducement is impossible. Instead, the retailers displayed are based on what is available for purchase at any time, as well as what each ad platform thinks is likely to be selected.
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Looking to leverage Pear as a compliant retail ecommerce solution for your AlcBev brand? Get in touch with our team →

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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.

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