In October, the FDA issued its final guidance on the sampling of premium cigars and other covered tobacco products. The sampling restrictions apply to all covered tobacco products, cigars, roll-your-own and pipe tobacco. In general, the FDA’s final guidance reflects the draft guidance that the agency published in January.
The release prohibits distribution of free samples of tobacco products. While that sounds dramatic, the definition of “free samples” outlined in the document gives retailers and manufacturers some leeway. In fact, the FDA outlines several examples of situations that would not violate the free sample ban in the guidance document, giving specific instructions on how to handle non-monetary transactions, membership and rewards programs, contests and games of chance, and business-to-business exchanges.
Essentially, free samples are not allowed unless there is an exchange of money. “This means that retailers must charge consumers money for tobacco products and may not, for example, distribute tobacco products in exchange for providing contact information or signing up for a mailing list,” states the document. However, “there are situations in which the sale of tobacco products to consumers at less than full price does not violate the ban.”
The free sample ban will not prevent manufacturers, distributors and retailers from selling tobacco products at a discount or accepting coupons that allow consumers to purchase tobacco products at a discount—as long as the coupon in question is for less than the purchase price of the item. Buy-one-get-one-free promotions are also allowed, since money is exchanged.
In the case of loyalty programs, where points are awarded for purchases and can be redeemed for free merchandise, retailers can continue to offer merchandise rewards as long as they require that those items are redeemed during a tobacco product purchase so that a transaction also takes place. “Rewards programs that offer a tobacco product as a ‘reward,’ such as punch card programs (i.e., get a hole punched in the card for each purchase and receive a tobacco product when all the holes have been punched), are prohibited except where the ‘reward’ is distributed as part of a tobacco product sales transaction that requires monetary payment,” states the guidance document.
Clubs are also permitted, although manufacturers or retailers selling club membership should not distribute free products as part of membership benefits. “For example, the ban would not prohibit the sale of membership to a club that provides a 10 percent discount on all tobacco product purchases, but a retailer could not sell membership to a club that provides free samples of tobacco products outside of tobacco product sales transactions that require payment of money,” states the guidance document.
Contests and games of chance are not prohibited under the free sample ban, but as with other promotions, contest prizes may not consist of tobacco products unless those products are distributed as part of a tobacco product sales transaction that requires monetary payment and is subject to minimum age and ID requirements. “For example, the ban does not prohibit a retailer from allowing customers to enter into a drawing or raffle and give a prize of a tobacco product discount or a coupon redeemable for a ‘free’ tobacco product at the time of another tobacco product purchase,” states the FDA, “but the retailer could not distribute a free tobacco product as a prize outside of a tobacco product sales transaction that requires monetary payment and is subject to minimum age and ID requirements.”
While contests and games of chance that do not result in the distribution of free samples of tobacco products are not prohibited by the free sample ban, tobacco manufacturers, distributors and retailers seeking to have a contest or game of chance with a tobacco product as a prize should be aware that a number of state and federal laws restrict how these promotions may be held.
And finally, fortunately for the industry, the FDA is apparently not interested in banning business-to-business sampling. The FDA “does not consider this regulation to apply to businesses distributing free samples in a limited quantity (i.e., no more than necessary to achieve a business or market goal, such as awareness of and exposure to the product for the purposes of product or inventory selection) to another business as part of a genuine effort to sell or market a tobacco product to that business,” stated the guidance document. In other words, thankfully, cigar makers may continue to offer retailers cigars to try for free in order to promote their products.
This story first appeared in the November/December 2017 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.