Trade Practice Pitfalls
Both federal and state laws and regulations severely restrict a manufacturer’s or wholesaler’s activities in connection with retail licensees, both on and off premise. The general rule is that no manufacturer (i.e. brewer) or wholesaler may provide any retail licensee, directly or indirectly, any item of value or any service unless specifically and explicitly permitted by the laws and regulations. It would take far more than the space available here to list all the examples of things that are prohibited and the details regarding the exceptions. However, I will mention three types of practices that would be considered egregious violations by both TTB and the State Liquor Authority.
1. Slotting Allowances – Purchasing, renting or paying any type of fee for display, shelf, storage or warehouse space is strictly prohibited. Since beer is distributed via grocery stores where this is common practice, it is very important that brewers and beer wholesalers be very clear about this being a strictly prohibited practice with respect to alcoholic beverages.
2. Stocker Services – Stocking, replenishing, rotating, displaying and price marking of beer on shelves, in coolers or in displays at retail premises is permitted, but ONLY by manufacturers or wholesalers who sell those brands to the retailer. A brewer or wholesaler may not even touch any products other than those it sells. The rearranging or resetting of all or part of a retailer’s stock or shelves is prohibited.
a. Cooperative Advertising – A brewer or wholesaler may not participate with a retailer in paying for an advertisement.
b. Advertising in Retailer Publication – A brewer or wholesaler may not purchase advertising space in a retailer publication for distribution to consumers or the general public, such as catalogues or flyers.
c. Advertising in Ballparks, Racetracks and Stadiums – A Brewer or wholesaler may not purchase advertising on signs, scoreboards, programs, scorecards and the like from a licensed concessionaire.
d. A brewer or wholesaler may list the names and addresses of two or more unaffiliated retailers selling its products in its ads, provided that the ad does not also contain the retail price of the product and the listing is the only reference to the retailers in the ad and is relatively inconspicuous in relation to the advertisement as a whole.
Note that the advertising rules apply to social media and websites as well as traditional print, radio and TV advertising.