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 regulations prohibit the use of many items featuring alcohol brand logos. These service-industry staples have been banned across the state for years, but now some businesses in Michigan are lobbying to change those rules.
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 can't use pint glasses featuring a beer brand, even if they've purchased them from a store or distributor. The items that are permitted, 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 labyrinthine 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?
In an interview with MLive.com, Mike Lashbrook, president of the Michigan Beer and Wine Wholesalers Association (MBWWA), an influential trade group that has opposed any changes to Michigan's liquor laws, said, "It gets into an issue of an even playing field at both the retail and wholesale and brewer level. 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."
Lashbrook's statement that promotional products serve as "commercial bribery" doesn't sit well with everyone. "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 Super Bowl ads, full-color ads in the Sports Illustrated swimsuit 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."
The promotional products community has resisted this characterization for years and has 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 California-based supplier 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 a 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."