The Don’ts and Do’s of Supplier Merchandising Alcohol Beverages
January 10, 2005
Michael Brill Newman - San Francisco
As is well known to the industry in California and other states, suppliers of
alcohol beverages (i.e., manufacturers or wholesalers) are generally
restricted by “tied-house” laws from providing things of value and services to
retailers. Most states, by statute or regulation, or sometimes by policy
interpretation, provide for exceptions for certain advertising items or
merchandising or shelf management activities.
California prohibits a supplier from furnishing a service to a retailer
unless there is an express exception provided by the legislature in the ABC Act.
In other words, unless a statute, in this case §25503.2 of the Act, allows for a
particular merchandising service, it is illegal.
What services may or may not suppliers provide in California to retail
stores? Suppliers may rotate or move their own products from one shelf to
another shelf. Suppliers may dust or clean their products on the shelves but may
not clean the shelves themselves. Suppliers may take inventory of their own
products. Generally, unless its beer, suppliers may not stock shelves or
“cold boxes.” However, suppliers may stock floor displays of their own products.
Wine and spirits suppliers may, under legislation enacted in 1999 in response to
one ABC crackdown on illegal supplier activity, stock or restock shelves for the
introduction of new products, a store “reset” of existing products, or the
setting or arranging of a new store.
Wine and spirits suppliers may not price-mark their own or other
products placed on shelves but may price-mark bottles on floor displays. A
supplier may stock, stack, or arrange its products in a retailer’s storeroom
provided the products of other suppliers are not disturbed. Suppliers may
furnish schematics or “plan-o-grams” but only for the type of alcohol beverage
products they supply (i.e., beer, wine and/or distilled spirits).
Violations of the ABC Act by suppliers providing illegal services and
retailers inducing or accepting such services can result in license suspensions
or significant fines. The California ABC continues to be proactive in
investigating and disciplining licensees not complying with these restrictions.
It is advisable that both suppliers and retailers make a concerted effort to
understand the laws regarding merchandising.