New technology is difficult to use in the alcoholic beverage industry because old laws and regulations don’t accommodate new ideas. Today, however, we report a feel-good story.
Last year (2016) Governor Brown signed SB-1032, which prohibited wine supplier licensees from offering supplier-funded instant rebate coupons (“$1 Off at the register!”) at retail accounts. This brought wine suppliers into promotional equality with beer suppliers, who lost instant rebates in 2014. Point of sale instant rebates, it was argued, benefitted large suppliers at the expense of smaller, craft producers. Large retailer demand for IRC programs as a condition of carrying the product also worried the supplier tier. Dueling IRC’s were increasingly becoming a very expensive competitive weapon. The regulatory concern was that retailer redemption practices were prone to abuse because the redemptions went through the retailer.
This year, the California Legislature, recognizing that new technologies justify amendments to existing laws dealing with marketing promotions, added digital rebates to the list of permitted alcohol supplier marketing tools. Digital rebates differ from instant rebates in several ways; the most important being that redemption is accomplished without running the money through retail accounts.
On October 2, 2017, Governor Brown approved AB-1722 and it is now law in California. Business and Professions Code § 25600.3, which defines coupons and outlines what are permissible rebate practices, was amended to include “electronic or digital rebates” in the list of permitted alcohol supplier marketing tools. The “iBotta bill,” as some call it, refers to one new mobile application that offers electronic digital rebates that can be redeemed during a sale without retailer involvement. We expect there will be more digital coupon vendors very soon.
AB-1722 also closed a promotional work-around in the earlier law that allowed beer and wine suppliers to continue to fund instant rebate coupons for non-alcohol products.* New section 25600.3 now refines the definition of “coupon” to include a discount on the purchase of any item, whether it is an alcoholic beverage, or not.
Electronic digital rebates are a new and exciting tool for consumer engagement, and we expect more tools of this nature to come into existence as the technology to bring suppliers and consumers together at the point of sale develops. Think about the act of scanning a register receipt resulting in a consumers account being credited for a significant portion of the purchase price. Coupon clipping will be ancient history.
The new world of digital coupon clipping begins on January 1, 2018.
*We’ve received a few questions on whether this amendment impacts spirits suppliers, and their ability to offer cross-promotional instant rebate coupons for non-alcoholic products. Spirits suppliers can breathe a sigh of relief, as their privileges remain unchanged after this refinement of the definition of “coupon.” Spirits suppliers are still permitted to offer “discount[s] or rebate[s] on the purchase of any item so long as no nonalcoholic beer, beer, malt beverages, or wine products are advertised or promoted by these licensees in connection with the discount or rebate.” Business and Professions Code Section 25600.3(c)(4)(B).