California Code of Regulations › Title 3 - Food and Agriculture › Division 3 - Economics › Chapter 3 - Milk Stabilization and Marketing of Milk and Dairy Products › Subchapter 1 - Unlawful Practices in Marketing Milk and Dairy Products › Article 3 - Advertising and Sales Promotion › Section 1850 - Determining and Allocating Costs for Promotions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Handers, manufacturers, distributors, including any
						producer-distributor or non-profit cooperative association acting as a handler,
						manufacturer, or distributor, and wholesale customers must capture costs
						related to or resulting from all incentives, advertisements, marketing,
						sweepstakes, coupons, or any other activity intended to promote sales of dairy
						products. Such costs include expenses incurred and any and all value derived,
						gained, or realized.
(a) Advertising,
					 Incentives and Sales Promotions. Any person engaging in any activity regulated
					 by this section must define the benefit period of each sales or advertising
					 campaign that is directly a cost of selling the involved dairy product (the
					 "Defined Benefit Period"). For the purposes of calculating the cost of the
					 involved dairy product, all advertising and sales costs must be allocated to
					 each of the affected products over the applicable Defined Benefit Period.
					 Actual or imputed costs for slotting allowances, exclusive agreements or other
					 related agreements and activities shall be determined and allocated over the
					 appropriate Defined Benefit Period.
(b) Sweepstakes, Drawings, Instant Prizes,
					 and Other Such Sales Campaigns. Any person conducting any such activity shall
					 estimate the approximate costs of the awards actually distributed to winners
					 and allocate them over the Defined Benefit Period. The costs of actual
					 redemption shall be determined, and estimated costs shall be adjusted to
					 reflect actual costs incurred over the Defined Benefit Period.
(c) Coupons. Any person issuing a coupon
					 shall estimate the value of the expected redemption of the coupon and allocate
					 that value over a Defined Benefit Period. Estimated costs shall be adjusted to
					 reflect actual coupon redemption during that Defined Benefit Period.
(d) Compliance with Section. If, upon
					 determination of the actual costs of any activity regulated by this Section
					 1850, a handler, manufacturer,
					 distributor, or wholesale customer experiences an actual redemption rate for
					 that activity which results in an otherwise prohibited sale below cost, but
					 that handler, manufacturer, distributor or wholesale customer can demonstrate
					 that its estimates of the approximate cost of the redemption made according to
					 the preceding provisions of this Section were made in good faith, and according
					 to Generally Accepted Accounting Principles, and projected sales above its
					 cost, that handler, manufacturer, distributor or wholesale customer shall be
					 deemed to have complied with the Code and this Subchapter.
1.
						Repealer and new section filed 8-8-2005; operative 9-7-2005 (Register 2005, No.
						32). For prior history, see Register 79, No. 24.
Note: Authority cited: Sections
						  407
						  and
						  61341,
						  Food and Agricultural Code. Reference: Sections
						  61382,
						  61383,
						  61384,
						  61441,
						  61442
						  and
						  61443,
						  Food and Agricultural Code.