Obligations of beer wholesalers – What you should expect
The relationship between a brewer and wholesaler is a very complex and regulated one. State alcohol regulatory agencies mandate certain responsibilities of both the wholesaler and brewer such as payment terms, incentives, price posting, contracts, etc. Every state has a different set of regulations. It is extremely important that you familiarize yourself with the rules and regulations pertaining to the brewery and wholesaler relationship before doing business in that state. Many states also have franchise laws that define very specifically the parameters for terminating a wholesaler. Even in non-franchise states, a brewer can not terminate a wholesaler without cause unless they are willing to compensate the wholesaler for relinquishing the brand.
Generally, it is safe to consider your wholesaler as a warehousing and delivery service, with perhaps some brand maintenance (merchandising, retail rotation, POS) provided. But distributors are not sales mechanisms and are not responsible for the marketing of your products. These functions are incumbent on the brewer to provide.
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There are no strictly defined responsibilities of the beer wholesaler, but the following are considered standard obligations of both parties:
– Maintain proper storage environment as dictated in contract.
– Maintain adequate inventories.
– Proper stock rotation in warehouse and retail trade.
– Remove “out of date” product from retail trade.
– Maintain payment terms as dictated by state liquor law or as stated in contract.
– Service all accounts in assigned territory.
– “Proper” maintenance of draft products.
– “Reasonable” call-frequency to retail accounts.
– Provide “market intelligence” (buy and non-buy lists, monthly depletions, sales data) to supplier.
– Assist in agreed upon market promotions.
– Provide market support and assistance to wholesaler.
– Provide point-of-sale material.
– Provide consistent supply of product.
– Maintain consistent quality product.
– Notify wholesaler of changes in product, ownership of company, changes in marketing strategy and provide adequate lead time for introduction of new items or product design changes.
– Provide brand awareness or “pull.”
** It is highly advisable to consult with an attorney before signing a contract with a distributor and before terminating a distributor.**