Bars and Restaurants Challenge Michigan Law Banning Promotional Products, Part 1
Decorated glassware, imprinted coasters and branded chalk boards are effective promotional products and staples in bars and restaurants across the country—except in Michigan, where local law prohibits the use of many items featuring alcohol brand logos. Several of the service industry's mainstays have been banned across the state for years, but now some businesses in Michigan are lobbying to change those laws.
The Michigan Liquor Control Code Act (MLCCA) of 1998 prohibits a liquor manufacturer or vendor from providing anything with a "secondary value" to a retailer, a definition that extends to bars and restaurants. Logoed coasters, glassware, uniforms, ashtrays, napkins and more all provide another function beyond advertising, and therefore cannot be given to the local watering hole.
It isn't just the giveaways that are regulated. Tavern owners can buy these products either blank or with the name of their own establishment printed on them, but they can't use pint glasses featuring a beer brand, even if they've purchased them from a store or distributor. Even permitted items, like posters and point-of-sale displays, are limited to specific dimensions and uses. No items under any circumstances can be co-branded with the name of both a bar and a beer.
The labyrinthian laws exist for two reasons: one, to discourage the over-consumption of alcohol, and two, to support the "three-tier system," a state-mandated business model designed to control liquor sales by separating the market. Under the rules, governed by the Michigan Liquor Control Commission, a business can register only as a supplier (brewers, vintners and distillers), a retailer (bars and restaurants) or a wholesaler that acts as a middleman between the other two. The relationships flow one way: Suppliers can only sell to wholesalers, who can only sell to retailers, who can only sell to the public.
Many states have strict and often archaic laws regulating the sale and distribution of alcohol, yet Michigan is alone in its level of control over promotional products, preventing retailers not only from receiving logoed merchandise but also from buying it. The question is, why?
"It gets into an issue of an even playing field at both the retail and wholesale and brewer level," said Mike Lashbrook, president of the Michigan Beer and Wine Wholesalers Association (MBWWA), an influential trade group which has opposed any changes to Michigan's liquor laws. "If you get into what essentially becomes a game of commercial bribery, as in who can give away the most and who has the deepest pockets, those particular brands would then be favored on tap or featured at given licensees."
The MBWWA is concerned that the superior marketing power of larger businesses could influence the products sold by retailers, but Lashbrook's observations mischaracterize promotional items as a means of bribing businesses. Not only does the MBWWA describe the use of branded merchandise as "commercial bribery," but the state's laws reinforce that stereotype: Regarding the limited circumstances when promotional items are allowed in restaurants, the regulations explicitly state that "under no circumstances may these items be given to the retail licensee or their employees" and must be retrieved by the vendor at the end of the campaign.
"Is our media that much more powerful than any other advertising medium?" asked Paul Kiewiet, the executive director of the Michigan Promotional Products Association (MiPPA) and a marketing industry expert with more than 30 years of experience. "Regulators are suggesting that a microbrewery supplying a few dozen imprinted beer mugs to a retailer is more powerful than SuperBowl ads, full color ads in the Sports Illustrated Swim Suit issue, or a full flight of ads on the radio broadcast of the World Series. It's a nice compliment, but one that they have no business trying to regulate."
Members of the promotional products community have resisted this characterization for years and have statistics showing the effectiveness of imprinted items. In a 2010 study, the Advertising Specialty Institute found that promotional products have a better-cost-per impression than prime time television and national magazines, research conducted by the Promotional Products Association International in 2009 found that 78 percent of businesses found promotional products to be "very effective" or "somewhat effective" in meeting their advertising needs.
According to Jim Wysopal, president of supplier California-based Openers Plus, who has worked with the country's largest beverage brands for more than 20 years, "the alcohol industry is the stereotypical reason why promotional products work and why advertising in general works."
"Promotional products are effective marketing to end-users," Wysopal explained. "Every bar owner is looking to sell more product, to make more money. Giveaways are used to sell brand. A brand that gives bottle openers, decorated pint glasses and coasters to each bar is helping that bar sell more brand, [and] in turn make more money."
- Companies:
- Openers Plus
- Places:
- Michigan
Kyle A. Richardson is the editorial director of Promo Marketing. He joined the company in 2006 brings more than a decade of publishing, marketing and media experience to the magazine. If you see him, buy him a drink.