The partners at Strike & Techel are pleased to announce the elevation of Tom Kerr from Senior Associate to Partner in the firm! Tom spent his first few years after law school practicing commercial litigation, but once he joined Strike & Techel in 2011, he quickly realized alcohol law was much more fun. Tom’s diverse practice includes advising supplier and retailer clients on trade practice issues, distribution, promotions, advertising, marketing, and tied-house issues. Tom has particular expertise in ecommerce and he advises many third party providers and others on emerging industry practices. If you have questions in these areas, or regarding foreign travel, the Denver Broncos, or Star Wars, Tom’s probably got the answers. To learn more about Tom and Strike & Techel, visit us at www.alcohol.law.
Last week, California Governor Jerry Brown signed Senate Bill 1032 (“SB 1032”) into law. SB 1032 amends Section 25600.3 of the California Business and Professions Code, and extends the recent prohibition on supplier-funded beer, cider and perry coupons to wine. You can read more about the prohibition of supplier-funded beer coupons in our prior blog post here. What is permitted post-SB 1032? The law still permits discounts on alcoholic beverages in other forms, including mail-in rebates by wine and beer suppliers, all retailer-funded coupons, and instant coupons funded by distilled spirits suppliers for distilled spirits (provided the coupon does not also discount beer or wine). Furthermore, beer manufacturers and winegrowers can still offer instant rebates at their premises, and can offer rebates direct to consumer on internet sales. When are the changes effective? The new law takes effect on January 1, 2017. Supplier-funded wine coupons can continue to be accepted at retail until December 31, 2016, and suppliers will be able to continue redeeming coupons accepted by a retailer until March 31, 2017. Who can do what?
Effective January 1, 2016, the California ABC Act contains a new section that loosens the restrictions suppliers face when mentioning a retailer in a social media post. Newly added Business and Professions Code § 23355.3 is aimed at clarifying how suppliers and retailers can co-sponsor nonprofit events. It was drafted, in part, as a response to the backlash that occurred after the ABC filed accusations against several wineries for advertising sponsorship of the “Save Mart Grape Escape” charity fundraising event in 2014. In that instance, several wineries posted or tweeted their support and sponsorship of the event on social media. The ABC reasoned that the suppliers were impermissibly advertising for Save Mart, a retailer, even though the event was held under a nonprofit permit issued to a bona fide nonprofit organization. The ABC alleged that by posting or tweeting about the event, the suppliers were giving a thing of value to the retailer, a practice that has long been considered a violation of California’s tied house restrictions. California law has long permitted supplier licensees to sponsor nonprofit events if the nonprofit gets an event license, and the new law does not fundamentally change that. However, the new section clarifies that a supplier may advertise sponsorship or participation in such events even if a retailer is also a named sponsor of the event. Payments or other consideration to the retailer are still considered a thing of value, and are not allowed, but social media postings no longer fall under that broad category. There are restrictions on what the supplier is permitted to post about the retailer; posts cannot contain the retail price of alcoholic beverages and cannot promote or advertise for the retail licensee beyond mentioning sponsorship or participation in the event. The supplier can share a retailer’s advertisement for the event on social media, but the supplier is not permitted to pay or reimburse the retailer for any advertisement and cannot demand exclusivity of its products at the event. In short, the new section will allow exactly the type of supplier social media support that occurred in the Save Mart Grape Escape situation.
In December 2014, the California ABC posted a new Industry Advisory about merchandising services. Free services provided by suppliers to retail licensees, such as stocking shelves, pricing inventory, rotating stock, etc., are prohibited things-of-value under California Business & Professions Code sections 25500 and 25502. However, a number of permitted exceptions are separately provided for in Section 25503.2. The Advisory was posted in response to inquiries and complaints about the scope of permissible activity. When ABC receives multiple complaints about impermissible conduct, investigations and license accusations may well follow, so it would be prudent for suppliers to review the scope of permissible merchandising activities. Permitted activity varies depending on the type of retailer and the products involved so we created a simple chart below to help keep it straight. Note that in all cases, any merchandising activities can only be done with the retailer’s permission. In no case can a supplier move the inventory of another supplier, except for “incidental touching” to access the space allocated to the licensee providing the merchandising service. Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2015 · All Rights Reserved ·
The Arizona Department of Liquor Licenses and Control (“DLLC”) issued three Industry Advisories in the last month addressing wholesaler industry practices. The advisories come in the wake of a September 19, 2012wholesaler licensee meeting, which “was held so that laws, rules and industry practices would be reviewed to ensure an open and competitive market in Arizona where no advantage is given to one liquor-licensed business over another.” On November 6, 2012, the DLLC issued the first advisory, Wholesale Licensee Industry Practices, which provides clarification on numerous trade practices. The advisory is quite detailed, but key points include: - Channel pricing can be for on-premise or off-premise, but no sub-categories of liquor pricing are permissible. - Cumulative quantity discounts are prohibited. - Promotional item limit is $500 per wholesaler per retailer, not per brand or per producer represented by a wholesaler. - Items useful to the retailer in the conduct of business cannot be provided to retailers under the $500 allowance, even if rendered unusable (e.g. patio umbrellas). - Third party promotional companies can’t be used to provide items to retailers that the licensee cannot provide directly. - The advisory also addresses shelf space, product displays, buy backs, signage, and equipment. The DLLC’s November 30, 2012 advisory, Removal of Unauthorized Signs, sets a deadline of February 1, 2013 for wholesalers to remove unauthorized signs from retail premises. The advisory provides that an authorized sign is one that: - The wholesale licensee LENDS to the retailer, - Has a value that does not exceed $400, - Has no utilitarian value; and, - Doesn’t mention a particular retailer (e.g. Joe’s Bar) or directional information (e.g. Enter Here). The DLLC’s most recent advisory, the December 4th Wholesale Licensee Industry Practices #2, addresses three wholesaler practices not covered in the earlier advisories. Specifically, - Glassware: may be provided to on-sale retailers as part of $500 promotional item allowance and must be supplier-branded. - Energy drinks may only be sold to retailers at or above the wholesaler’s cost, and may not be given to retailers. - Inventory for sampling events must be supplied by an off-sale retail licensee for a sampling conducted by that retail licensee, and must be provided by a wholesaler or producer for a sampling conducted by a producer or wholesaler at an off-sale retailer. Given the breadth of the guidance contained in the advisories, the DLLC will likely be on the lookout for compliance in the coming months.
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