BOOZE AND CONTESTS DON'T MIX, STATE SAYS.

Byline: Robert D. Davila Sacramento Bee

The big game this weekend marks the last hurrah in California for two fierce Super Bowl rivals: Budweiser and Miller Lite.

In a little-noticed move, state regulators have adopted rules banning virtually all sweepstakes and prizes linked to beer, wine and distilled spirits. The bureaucratic action, which reverses decades of practice, is blacking out a huge consumer market and shaking up the highly competitive alcoholic beverage industry.

Time is running out in the biggest beer-guzzling state in the nation for promotions like the Bud Bowl and the Miller Lite Super Bowl Sweepstakes, two giveaways tied to the highest holy day in sports. Besides the usual beer gear of coasters and coolers, prizes include free trips and tickets to the game in Miami.

In a hard irony, the state action also is pulling the rug out from under California's winemakers on the eve of their biggest promotional event ever, the millennium.

``We have a huge, yearlong sweepstakes going on'' with prizes like vacations, air travel, cruises and big-screen TVs, said Margie Healy of Korbel Champagne Cellars in Guerneville. ``But we can't even hold it in the state where we produce our champagne, pay taxes and employ 500 people.''

The state Department of Alcoholic Beverage Control has sent reminders to suppliers and retailers that sweepstakes in California are subject to strict limitations.

While few states also regulate such contests, only California limits the value of prizes. State law bans the offering of free goods - in sweepstakes, drawings, prizes or discount coupons for nonalcoholic products - that are worth more than 25 cents for beer-related contests, $1 for wine and $5 for distilled spirits.

Californians may still see ads and entry forms for such sweepstakes in national media. But while Americans elsewhere dream of winning free travel, sunny vacations and 50-yard-line seats, consumers in the most populous state in the country will be left squinting at fine print advising ``Void Where Prohibited.''

Void in California

``Technically, they can have them in California, but they can't give prizes that are worth a damn,'' said John Peirce, Alcoholic Beverage Control staff counsel. ``There aren't many Bermuda cruises that fall within the financial limits of the law.''

The statute, which has been on the books since the end of Prohibition, is intended to prevent unfair competition among beverage makers and to promote ``temperate use and consumption'' of alcohol, officials said.

But the law has gone largely unenforced. For many years, Peirce said, state officials issued ``guidelines'' that permitted most beer, wine and liquor sweepstakes. Eventually, he said, the department's lawyers determined those provisions were ``underground and unenforceable.''

Bud Gear controversy

Regulators suddenly shifted course about two years ago, when Anheuser-Busch Cos. introduced Bud Gear - a controversial promotion that encouraged consumers to collect and redeem Budweiser bottle caps for merchandise ranging from coasters to pool tables.

The company said the campaign rewarded customer loyalty. But critics called it a frequent-drinker program and said the ads, which featured college-age partygoers, promoted heavy drinking among young people.

``Some of these sponsorships are clearly targeted at young people and make drinking look cool,'' said Harvey Chinn of the California Council on Alcohol Problems, which lobbied Alcoholic Beverage Control officials to restrict sweepstakes. ``We think the state has a responsibility to protect the welfare of its citizens.''

A lawsuit by the Alcoholic Beverage Control Department accused Anheuser-Busch of violating the state limit on prize values. The two sides reached a consent agreement last year forbidding the brewer to sponsor campaigns offering prizes for proofs of purchase, Peirce said. Meanwhile, regulators began drafting new rules and notified the industry that the statutory ban on sweepstakes would be strictly enforced.

Last month, the department won a temporary restraining order against Miller Brewing Co. over plans to sponsor a Super Bowl sweepstakes. But a state appeals court lifted the order after Miller successfully argued that the department didn't follow the proper procedure in issuing an emergency regulation to enforce the ban.

The action won a reprieve for marketers during the holiday season, including Super Bowl Sunday. Because the state is now reversing a longtime practice, Peirce said, regulators are giving suppliers and distributors until April 1 to end sweepstakes in California.

Marketing tool

Sweepstakes are an increasingly important marketing tool in the fiercely competitive alcoholic beverage industry, which faces declining per-capita consumption in California and the United States, industry officials and regulators said.

``These kinds of promotions are a legitimate way for consumer products to compete brand-to-brand in the marketplace,'' said Judy Blatman of the Distilled Spirits Council of the United States, a Washington trade group. ``There's no justification whatsoever for this radical reversal by California.''

Officials at Anheuser-Busch in St. Louis, the top U.S. brewer, did not return calls for comment. At Miller in Milwaukee, spokesman Scott Bussen said promotions linked to popular social events - including splashy store displays, catchy slogans and heavy TV advertising - are a key tool for the No. 2 brewer.

``It's a good way to let people know that Miller Lite is the official beer sponsor of the Super Bowl,'' Bussen said.

Only about 5 percent of California wineries are big enough to sponsor expensive giveaways, said Mike Falasco of the Wine Institute, a trade organization. But those that do, he said, will find the sweepstakes ban awkward to live with in their own back yard.

Korbel, which also owns three Sonoma County wineries, relies on contests and cross-merchandising promotions - such as buy a bottle of wine, get $3 off a box of chocolates - to stand out from mayonnaise, cereal and detergent on crowded supermarket shelves, spokeswoman Healy said.

The champagne maker is sponsoring two nationwide contests this year. ``The Ultimate Toast Contest'' is linked to romantic occasions throughout the year, such as Valentine's Day, weddings and anniversaries. The other is tied to the mother of all champagne occasions: New Year's Eve 1999.

``We've got a trip to Times Square for New Year's Eve and big-name partners like Delta Air Lines and Royal Cruise Lines,'' Healy said. ``It's a huge, huge sweepstakes for the millennium. But now we won't be able to offer it in California. We don't feel that's right.''

Industry officials also are worried that, as often happens, California will set a national trend. A key fear is that alcohol, like tobacco, will become an inviting target for scrutiny and tighter control by state regulators.

``We're getting calls from groups that have the same concerns in other states,'' said Chinn, of the alcohol watchdog group. ``California is a pioneer.''