Alcohol Beverage Trade Practice Law Overview

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Payments from a supplier or wholesaler to a retailer for the rental or purchase of shelf, display, back bar, drink well, storage or warehouse space is a per se (i.e., in and of itself, without the need for authorities to demonstrate any anti-competitive consequence) violation of federal law and the laws of most states. The TTB has a broad interpretation of slotting allowances.

Federal law and state laws prohibit a supplier or wholesaler from giving money, goods, tickets, trips/travel, etc. to a retailer or its em­ployees, regardless if such items are given in connection with meeting performance objectives, connected to bartender/server contests, or to participate in or sponsor a retailer’s conference/sales meeting.

A supplier, wholesaler, or retailer cannot control the purchasing or pricing decisions of other licensees; all pricing decisions are the sole discretion of the actual selling party. Other prohibited practices include consignment sales and a supplier or wholesaler issuing any pricing credits to retailers.

Typically, a supplier or wholesaler may provide a retailer with reasonable business entertainment, however, paying for airfare and lodging expenses is strictly prohibited in all instances.  Also, many states specifically outline the types and costs of permissible entertainment.

Items that have value to a retailer only as advertising are generally permissible, subject to per item and/or aggregate cost limitations in some states. Items that have any utilitarian value to a retailer, including glassware and equipment, must be sold to a retailer for no less than their initial purchase price.

A supplier or wholesaler may provide retailers with product displays that are conspicuously branded and designed to hold alcohol products. Federal laws restrict such items to no more than $300 per brand, but state regulations often vary on this amount.

Instant redeemable coupons and/or mail-in refund offers on alcohol beverage products and on non-alcoholic, cross-promotional items are permitted in a number of states. However, laws require that all retailers are treated equally so that a particular coupon offer or its equivalent must be available to all in-state retailers.

Generally, furnishing free alcohol to retailers is prohibited. However, states may have exceptions allowing for limited quantities of samples to retailers who have not previously purchased the item.

A supplier or wholesaler may pay the reasonable costs of printing the pro-rated portion of a retailer’s drink menu, which cannot include food items or menu jackets.  All payments require a detailed invoice and must go directly to a bona fide printing company that is independent of the retailer.

Federal and state laws may not be circumvented by requesting or re­quiring a wholesaler, agency, printing company, radio station, or other third party to do anything that a supplier, wholesaler, or their respective employees may not do directly.

It is critical that industry members maintain complete, truthful, and accurate records of product samples, display activities, and promotional programs. State and federal regulators are able to request copies of such records without prior notice.