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Alcohol Beverages Pricing: Drink Specials

  This policy  topic covers laws that restrict on-premises retailers from using price- and/or volume-related marketing tactics.  



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Expander Policy Description

Policy Description

(Period Covered: 1/1/2003 through 1/1/2016)
 
 
This policy topic covers laws that restrict on-premises retailers from using price- and/or volume-related marketing tactics.  
 
Low-Price, High-Volume Drink Specials restrictions prohibit, or limit on-premises retailers from using various price- and/or volume-related marketing tactics such as happy hours, two-for-one specials, and free drinks. 
 
A drink specials law may prohibit or restrict the following practices:
 
  • Free Beverages:  Providing customers with free beverages either as a promotion or on a case-by-case basis (e.g., on a birthday or anniversary, as compensation for poor services).
  • Multiple Servings at One Time:  Service of more than one drink to a customer at a time.
  • Multiple Servings for a Single Serving Price:  Offering additional drinks for the same price as a single drink (e.g., two-for-ones).
  • Happy Hours—Reduced Price:  Offering a discount or price promotion to customers at any time during normal hours of operation (such as reduced prices during “Happy Hours”).   
  • Unlimited Beverages for a Fixed Price or Period:  Instituting a fixed price for an unlimited amount of drinks during a fixed period of time (e.g., all-you-can-drink, or drinking games such as “beat the clock”).
  • Increased Volume without Increase in Price:  Offering drinks with increased amounts of alcohol at the same price as regular-sized drinks (e.g., double shots for the price of single shots).
 
Multiple Servings at One Time and Multiple Servings for a Single Serving Price are similar practices. For a law to be defined as a Multiple Servings for a Single Serving Price law, it must prohibit multiple servings for a single price, a price promotion that can occur even if the State prohibits providing the drinks to the customer at the same time (Multiple Servings at One Time). Multiple servings for a single price may be served separately, but with no charge for the second and subsequent drinks.
 
By the same token, Increased Volume without Increase in Price is similar to Multiple Servings for a Single Serving Price. However, the practice of increasing volume without increasing price involves adding alcohol volume in a single drink order (e.g., double or triple shots) rather than with multiple drinks.
 
An interesting illustration of this policy topic is a 2013 decision by the Massachusetts Alcoholic Beverages Control Commission. After holding hearings on the State’s drink specials law, the commission concluded that the law should be maintained in its current form (see the January 31, 2013 Report of the Alcoholic Beverages Control Commission to the Governor, et al.). Those who testified included licensees and hospitality industry groups. The overwhelming sentiment of those who testified was that the law should be maintained in order to prevent a “race to the bottom” in which retailers compete by making increasingly greater price concessions, reducing profits, and making price the primary competitive factor.
 
 

Expander Definitions for Drink Specials

Definitions for Drink Specials

 

Drink Specials

The marketing of alcoholic beverages at a reduced rate and/or increased volume by on-premise retailers.

On-Premises Sales

Retail sale of alcoholic beverages for consumption on the premises where they are purchased (e.g., bars, restaurants).

Business Hours/Hours of Operation

The total period of time during which an establishment offers service to the public on a given day.  May be a continuous period or multiple openings and closings (e.g., lunch and dinner service)

Happy Hour

Offering a discount or price promotion to customers during any subset of business hours during normal hours of operation

Full Day Price Reduction

Offering reduced prices during the total hours of operation on a given day

 

Expander Explanatory Notes and Limitations for Drink Specials

Explanatory Notes and Limitations Specifically Applicable to Drink Specials
This analysis does not consider or address the following:
  • Provisions that prohibit sales of alcoholic beverages below cost.
  • Laws that merely prohibit advertising a drink special or sale as opposed to conducting the drink special or sale itself.
  • Provisions regarding samplings or limited tastings of alcoholic beverages.
  • Provisions regarding promotional events, such as "pub crawls."
  • Provisions regarding private functions not open to the general public.
  • Exemptions, such as a statute that exempts promotions offered at military establishments.
  • Provisions that govern price promotions and discounts for off-premises consumption.

APIS does not interpret laws prohibiting “free beverages” or prohibiting the sale of drinks for a price “less than the price usually charged” for such drinks as also prohibiting such practices as 2-for-1 or 3-for-1 drink specials.  Rather, APIS requires a specific reference to multiple servings for a single price being prohibited for purposes of coding the Multiple Serving for Single Serving Price variable.

Explanatory Notes and Limitations Applicable to All APIS Policy Topics 

  1. State law may permit local jurisdictions to impose requirements in addition to those mandated by State law. Alternatively, State law may prohibit local legislation on this topic, thereby preempting local powers. For more information on the preemption doctrine, see the About Alcohol Policy page. APIS does not document policies established by local governments. 
     
  2. In addition to statutes and regulations, judicial decisions (case law) also may affect alcohol-related policies. APIS does not review case law except to determine whether judicial decisions have invalidated statutes or regulations that would otherwise affect the data presented in the comparison tables. 
     
  3. APIS reviews published administrative regulations. However, administrative decisions or directives that are not included in a State's published regulatory codes may have an impact on implementation. This possibility has not been addressed by the APIS research. 
     
  4. Statutes and regulations cited in tables on this policy topic may have been amended or repealed after the specific date or time period specified by the site user's search criteria. 
     
  5. If a conflict exists between a statute and a regulation addressing the same legal issue, APIS coding relies on the statute. 
     
  6. A comprehensive understanding of the data presented in the comparison tables for this policy topic requires examination of the applicable Row Notes and Jurisdiction Notes, which can be accessed from the body of the table via links in the Jurisdiction column. 

Expander Federal Law for Drink Specials

 Federal Law for Drink Specials
(Policies in effect on: 1/1/2016)
Our research identified no Federal statutes or regulations pertaining to the restriction or prohibition of price- and/or volume-related marketing tactics by on-premise retailers.
 
 

Expander Selected References for Drink Specials

Selected References for Drink Specials
1.   Babor, T., Mendelson J., Greenberg I., and Kuehnle J. Experimental analysis of the ‘happy hour’: Effects of purchase price on alcohol consumption. Psychopharmacology 58:35–41, 1978.
 
2.   Chaloupka, F., Grossman M., and Saffer H. The effects of price on alcohol consumption and alcohol-related problems. Alcohol Research & Health 26(1):22–34, 2002.
 
3.   Kuo, M., Wechsler, H., Greenberg, P., and Lee, H. The marketing of alcohol to college students: The role of low prices and special promotions. American Journal of Preventive Medicine 25(3):1–8, 2003.
 
4.   National Highway Traffic Safety Administration. Research report: Preventing over-consumption of alcohol – Sales to the intoxicated and “happy hour” (drink special) laws. Springfield, VA: National Technical Information Service, DOT HS 809 878, February 2005.
 
5.   Smart, R. The happy hour experiment in North America. Contemporary Drug Problems 23:291–300, 1996.
 
6.   Smart, R. and Adlaf, E. Banning Happy Hours: The Impact on Drinking and Impaired-Driving Charges in Ontario, Canada. Journal of Studies in Alcohol 47(3): 256–258, 1986.
 
7.   Wechsler, H., Lee, J., Nelson, T., and Lee, H. Drinking and driving among college students: The influence of alcohol control policies. American Journal of Preventive Medicine 25(3):212–218, 2003.
 
 

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