One Blog |June 19, 2017 | POS Tracking Software
Alcoholic Beverage Commission and Control Boards — How to Stay Out of Trouble
Mark Fullerton
If you’re unaware of their rules and regulation regarding the placement of POS marketing materials, you could be in a lot of trouble.
Do You Know Your ABC’s?
As far as I have been able to determine, nearly every state has an organization that is known to distributors as the “Alcoholic Beverage Commission” or “Alcoholic Beverage Control Board”.
These state “ABCs” have the authority to regulate the production, sale and distribution of alcoholic beverages, and to administer reasonable regulations relative to the traffic of alcoholic beverages.
Each State Is Different
State laws and regulations vary widely from state to state, so adhering to them presents a challenge to beverage alcohol wholesale distributors.
In some states, the ABC is kind of a “live-and-let-live” agency, rarely making waves with the state’s beverage alcohol distributors, or suppliers and retailers.
Generally speaking virtually every state’s ABC is chartered with some, most or all of the following functions - Implied or directly stated:
Regulation
ABC regulation refers to all phases of the alcoholic beverage industry in the state. The duties and responsibilities of the ABC include regulation of sales, taxation, importation, manufacturing, transporting, and advertising of alcoholic beverages.
Regulation is the key word here — even if some states are less aggressive in how they wield their regulatory authority.
Enforcement
Another word used in the “what we do” web pages of various state’s ABC sites is “enforcement”. Indeed, several states strongly believe and declare:
Enforcement of the state's liquor laws is one of the primary responsibilities of the ABC.
Compliance
Broad powers have been granted to many state departments of Alcoholic Beverage Control. These powers often stipulate what can be done to assure compliance with all laws and regulations pertaining to beverage alcohol products. Powers of the various ABC’s include the ability to determine if state guidelines, laws, rules and regulations are being followed and also the ability to levy and collect fines when non-compliance is discovered.
Don’t Mess With The ABC!
Even in states where the ABC behaves in a more-or-less perfunctory manner, the ABC is not an agency alcohol beverage suppliers, wholesalers and retailers want to cross. In a number of large populated states, the ABC perhaps ranks right up there with the IRS in terms of agencies you do not wanted to be audited by.
If your state’s ABC is currently less agressive, just remember that a more agressive ABC could be just one election away considering that a strict ABC is a good way to raise revenue without angering voters. Further, there are always voter blocs that will favor increased regulation, oversight and “punishment” via fines, or, in some cases liquor license revocation.
How Does This Relate to OnTrak’s POS Tracking Software?
Recently, with a number of our larger customers, their ABC has started to focus on the monitoring and managing of point-of-sale (POS) advertising and promotion of beverage alcohol. Under the banner of “Preventing Under-age Drinking” many state ABCs are making sure that the advertising of alcoholic beverages remains in compliance with either federal or state laws related to all aspects of POS advertising.
In some cases, the ABC is apparently going after beverage alcohol distributors who place large amounts of printed and permanent POS materials. Did the distributors fail to comply regarding what POS can be placed, where and for how-long? In addition, with permanent POS, the ABC may want proof that the rules regarding permanent POS placement and removal have been followed to a “T”.
Not Tracking POS Can Have Serious Consequences
Some wholesalers have expressed their concerns that expensive permanent POS, which has been "loaned" to customers, can’t be recovered by the wholesaler because it has simply vanished from the retail establishment — High cost items such as neon signs, mirrors, pool-table lights, and beach umbrellas.
Recently, big-screen TV’s have become an “attractive acquisition” for retail establishment customers and sometimes employees. After all, the rationalization goes: “These items were given to us at no-charge by the wholesaler’s sales rep.” Uh huh.
If a distributor has no-problem with placing hundreds of dollars-worth of POS materials in their customer locations and then ‘losing’ those assets, it is certainly the distributor’s prerogative to do so.
But there may be financial consequences for not retaining “control” over their alcoholic beverage advertising materials.
A Cautionary Tale
Even if you’re in a state that is relatively lax in their enforcement of ABC regulations and guidelines, the following should be a cautionary tale.
Most of OnTrak’s customers provide their retail customers with thousands of dollars-worth of permanent POS, sometimes called POS enhancers. Likewise, our customers consider the placement of permanent POS to reflect a loan from the distributor to their customer.
In some states, the dollar amount of the POS placed is limited by ABC regulation. In other jurisdictions, the ABC stipulates that permanent POS must not be loaned to a customer for more than a specific time-period.
Some ABC’s stipulate that permanent POS, on-loan from a distributor, must be rotated out every thirty-days. Failure to comply with the regulations risks the possibility of a warning, a citation or, increasingly, a fine.
Do You Want To Be A Source of Revenue For Your State?
Depending on the size of company, your territory can have hundreds or thousands of accounts that buy your products. Imagine if the rules stipulate fines that, if levied, could earn you a five or six-figure bill from your state’s ABC — just because you left some display enhancers in the same location for more than thirty days. Or imagine that you exceeded the dollar-limit of allowable POS at one customer location by a factor of three and were fined thousands of dollars — per customer.
An OnTrak customer, prior to their adopting PermaTrak found themselves in receipt of a six-figure bill for allowing permanent POS enhancers to remain at a customer longer than thirty days.
Another customer found themselves holding a similar fine because their permanent POS was “liberated” from several of their customers’ establishments. There was no paper trail, no order, delivery receipt, for the distributor to point to. They, literally, were left responsible for the original cost of their expensive permanent POS and the fine levied by the ABC because they could not prove they had taken every reasonable measure to demonstrate compliance and accountability for what was, in the ABC’s eyes, their advertising materials.
Customer Response to an OnTrak Solution
When both of these customers implemented PermaTrak, their CEOs said:
- “We are now able to implement the methods, procedures and tools that provide the required auditability and accountability required to comply with the ABC regulations that govern the use and placement of permanent POS and display enhancers within our customers’ facilities.”
- “With PermaTrak, we now have the tool to comply with and provide proof of our efforts to follow the ABC’s regulations — we consider the use of PermaTrak mandatory for our associates.”
Without PermaTrak, according to these customers, “You could be in big trouble.”
