May 2, 2012

Nothing Like A Good FTC Probe To Bring ANOTHER Headache To Wineries

Yep, woke up this morning to read my Twitter stream and Alex Howell (someone I follow) reminded me of one of the most frustrating parts of my job, the insanity of regulation that comes from working in the wine industry.  Today there was a story in the Kansas City Star titled, “US to review online marketing of beer, liquor and wine.”  It’s always bad news for wineries when you see us lumped into the same category as beer and liquor.  Of course reading the article was even more depressing.  In essence the FTC is writing a report to “recommend how the alcohol industry should regulate itself both on- and offline.”  However it seems to be particularly focused on digital marketing but especially social media.  Of course all the anti-drinking lobbyists jump in about the elicit practices, “They’re everywhere.  They’re blanketing online.”  Also contributing idiotic recommendations like “age verfication” or “age-walls.”  It demonstrates the lack of understanding of modern communication tools like Twitter, Instagram, etc. and the difference in consumers of wine vs. other alcohol beverages.  Regardless of what they find or recommend I can only empathize with the new wave of challenges it will bring to wineries for marketing online and especially in social media.

These antiquated concepts of marketing laws written decades ago have been part of the bane of anyone in the wine industry trying to do anything in the digital arena.  Complex e-commerce systems to accomodate shipping and tax regulation, inability to use typical online marketing techniques like “free shipping,” major wine groups not participating on a site unless they can prove 70%-80% of users are over 21 (which excludes sites like Twitter), the challenges with “marketing agents,” inability to activate affiliate networks, age-gating a website that destroys SEO, and on, and on, and on.  No wonder it is hard for a winery digital manager.  So much complexity.  No wonder it is so hard for a wine tech company, you have to build features that are unique to the wine industry and not enough PAYING wineries to support the cost to build them.

Let’s not forget that it is ALSO challenging to the consumer with all this complexity.  Have you ever tried to buy from your own e-commerce store in a state with shipping restrictions? #FAIL.  Or how about being forced to age-gate your Twitter account? #FAIL.  Or even the inconvenience of visiting a website with an age-gate?  #FAIL. Ughghg, consumers hate all these idiotic extra steps and with the exception of the ones you have to do for e-commerce, they don’t really prove anything other than you are making extra effort to not act like “BIG ALCOHOL.”  Personally, even at our worst behavior (and we have done some goofy things) I don’t ever remember a company in the wine industry behaving like “BIG ALCOHOL” or as the public fears, that comparison to “Big Tobacco” (which really did some horrible things).

Please understand I fully support not advertising to minors but making it virtually impossible to do basic digital marketing through ignorance of the platform is yet one other friction point to a business that already has so many challenges.

To get more perspective, I reached out for the top beverage lawyers in the wine industry: John Hinman from Hinman & Carmichael LLP and Kristen Techel from Strike & Techel.  They are both, without question, my most trusted sources for wine law and especially where it relates to digital.  I asked them their thoughts on this news.

“The wine industry should welcome this FTC review of social media uses by industry members because the findings will show that wineries and other producers are increasingly using social media to educate consumers generally and their customers specifically to the nature, history, characteristics and use of the products they make and sell. The industry wants and needs educated consumers. This is a good thing.” says John A. Hinman

“The alcohol beverage regulatory agencies in each state don’t yet have advertising rules specific to social media, so alcohol advertisers need to do their best to apply the rules applicable to non-social media advertising. It can be confusing for advertisers when the social medium doesn’t lend itself to rules drafted for more traditional media buys, or when the platform is so new that it’s difficult to determine its exact reach. In the current social media investigation by the FTC, I expect them to focus on whether social media alcohol advertisements are reaching kids. They’ll look at the demographics of the various platforms and the content of the messaging, to make sure advertisers aren’t inadvertently targeting minors. Smart wineries should audit their social media presence in advance of any further action by the FTC..” states Kristen Techel.  

I agree with both of them and hope that like the FTC report of the 90′s about e-commerce, the wine industry will shine positively.  However, I also fear that it will be the catalyst for states to try to add their own individual spin on how wineries are allowed to use social media and we will then be subject to 50 sets of rules that are impossible to manage. In that case it will be just another headache for wineries.

  • http://wineguysradio.com/2012/05/02/the-wine-business-2/ The Wine Business « Wineguys Radio

    [...] Nothing Like A Good FTC Probe To Bring ANOTHER Headache To Wineries (vintank.com) [...]

  • http://blog.terroirist.com/?p=10068 Terroirist: A Daily Wine Blog » Daily Wine News: Hallowed Ground

    [...] Paul Mabray responds forcefully to the news that the Federal Trade Commission is “requiring the major alcoholic beverage [...]

  • http://sfwine.wordpress.com/2012/05/04/ramblings-ftc-social-media-advertising/ Ramblings: FTC & Social Media Advertising | SF Wine Blog: having fun with wine

    [...] a sign of Big Brother  “spying on winery tweets.” Others worried that this would result in onerous regulations governing digital advertising by wineries. As a lawyer with experience dealing with regulatory agencies, I found very little to get worked up [...]

  • http://splendidgrape.com/2012/05/05/winery-advertising-social-media-and-the-ftc/ Winery Advertising, Social Media and the FTC « The Splendid Grape

    [...] this does pose some challenges to wineries, summarized nicely by Vintank’s article – Nothing Like a Good FTC Probe to Bring Another Headache to Wineries, I really don’t see too much of a shift in how wineries are interacting with [...]

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