Since Prohibition’s repeal, the states have implemented and enforced laws ostensibly designed to promote temperance, including laws limiting wine, beer, and liquor manufacturers’ ability to coerce or even subtly influence retailers to exclude competitors’ products. To that end, California law prohibits licensed winegrowers and their agents from directly or indirectly giving anything “of value” to a retail licensee. This broad prohibition embraces free merchandise—winery schwag—whether for the retailer’s own use or for distribution to consumers.
Consumers love freebies, of course, but a corkscrew or wineglass bearing a winery’s logo can do far more than motivate a one-time purchase. The item serves as an advertisement, exposing the consumer’s friends, family, and household guests to the winery’s name and habituating the consumer to the brand. Free schwag can be a powerful promotional tool. For that reason, these items are formally known as “advertising specialties”.
The general prohibition on giving anything of value to retailers is riddled with exceptions, including exceptions for distributing advertising specialties. A winegrower may provide advertising specialties to a retailer for the retailer’s own use if: (1) the items “bear conspicuous advertising required of a sign”—that is, conspicuous notice of the winegrower’s identity, whether by its name, brand name, trade name, slogans, markings, trademarks or other symbols commonly associated with and generally used by the winegrower in identifying its name or product; (2) the total value of all items provided in a given calendar year does not exceed $50 per wine brand, per retail premises; and (3) the items’ donation is not conditioned on the retailer’s purchase of the winegrower’s products.
The ABC Regulations contain a rather wider exception for free merchandise provided to a retailer for distribution to consumers. A winegrower may provide advertising specialties to a retailer for distribution to consumers if: (1) the items “bear conspicuous advertising required of a sign”; (2) the items’ per-unit cost to the winegrower does not exceed $1.00; (3) the items are not likely to appeal to minors—e.g., no balloons, toys, candy, etc.; and (4) the winegrower places no conditions on the retailer’s distribution of the items.
In either case, whether specialties are provided for the retailer’s benefit or for distribution to consumers, the winegrower must maintain records for 3 years of all items so provided. These records must show: (1) the name and address of the retailer receiving an item; (2) the date furnished; (3) the item furnished; (4) the price per item paid by the winegrower to the item’s manufacturer; and (5) charges to the retailer for any item.
Provided they adhere to the forgoing limitations and requirements, California winegrowers can utilize advertising specialties in their marketing strategies.


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