State of Colorado. Department of Revenue. Liquor Enforcement Division. Colorado Trade Practices Guideline November 1, 2002

Transcription

1 State of Colorado Department of Revenue Liquor Enforcement Division Colorado Trade Practices Guideline November 1, 2002 Prepared by: Laura Harris Liquor Enforcement Division 1881 Pierce Street, Room 108A Lakewood, Colorado Phone Website on Liquor Enforcement Information Updated: May

2 2

3 Pursuant to Section (1)(a), (3)(a), and (7), C.R.S. it is unlawful for a supplier to provide, and a retailer to receive, any financial assistance, directly or indirectly. The purpose of this section is to prevent the control of outlets for the sale of alcohol beverages by any person or parties other than the persons licensed. Note: Non-profit arts organizations that hold an Arts class of retail license pursuant to Section , C.R.S., may receive financial or in-kind assistance from a licensed supplier. All other classes of permanent retail licensees (not Special Events Permitees) are subject to the rules described herein. I. ADVERTISING A) Advertising Materials {Regulation (A), (B), (C)} 1) Advertising materials that a licensed manufacturer, brewpub, importer, or wholesaler (hereinafter Supplier ) may give to a licensed retailer free of charge: * Napkins, and paper napkin rings * Coasters * Menu sheets, Menu covers * Placemats * Calendars * Trays (serving, ash, change, utility) * License holders * Lamps * Mirrors * Clocks * Foam scrapers * Bottle and Can Openers Note: To be provided free of charge, these items must primarily advertise the supplier. Primarily means that more than 50% of the print and logo material must be for the supplier or his products. Division position: A supplier must charge a retailer the entire cost of a clock or mirror that bears the retailer s name or the name of the retail establishment. 2) Advertising materials of a similar nature, that are of negligible value and carry sufficient print and/or logo material to show to show that they are intended to primarily advertise the supplier or his products, may be given to a retailer upon approval of the state licensing authority. 3) Advertising materials that may not be given to a retailer but must be sold at a minimum of the supplier s cost: * Glasses, mugs, paper cups * Book matches 3

4 * Picnic coolers * Similar items that are of more than negligible value: e.g.: clothing and electronic devices Division Position: A supplier may never pay for the cost of printing its product name or logo on any of these items. B) Media Advertising {Regulation (D)} 1) A supplier shall not directly or indirectly furnish or pay for any advertising for, or with respect to any one or more retail licensees by means of radio, television, magazines, newspapers, pamphlets, or similar media. Division Position: A supplier s joint payment ( tag-on ) with a retailer for the cost of an advertisement that mentions the name of the retailer or his location is prohibited. The value of the entire ad would accrue to the retailer, who only paid for a portion of the ad. Division Position: A supplier s payment to a third party, such as radio station or ad agency, for the cost of an advertisement that mentions the name of the retailer or his location is prohibited. The value of the ad accrues to the retailer. Division Position: Added Value belonging to a supplier, such as additional radio spots, may not be transferred by a radio station to a retailer s ad schedule. The added value accrues to the retailer by giving him free air time. 2) A retailer, at their sole expense, may advertise a supplier or its products. 3) A supplier may not advertise a retailer by means of any sign not located on or in the licensed premises of that retailer. (See Exterior Signs and Interior Displays for rules related to advertising on the retail licensed premises.) 4) A supplier may not pay to advertise a tasting at a particular retail establishment through media described above. 5) Internet websites, including related s and direct mail, are not considered similar media described above, and restrictions related to such media do not apply. C) Point-of-Sale Advertising: advertising within the licensed premises. 1) A supplier may advertise alcohol beverage products, consumer giveaways, and contests via POS advertisements. 2) Consumer Coupons redeemed in retail liquor stores (a) A supplier may make coupons available to consumers via POS tear-off pads, package inserts, or printed media. 4

5 (b) Licensed retailers must seek cash reimbursement from a third-party clearing house, not from wholesaler or manufacturer. Division Position: A wholesaler may not provide a credit to a retailer s account for coupon redemption. 3) Consumer Coupons redeemed directly from the supplier (a) Suppliers may provide cash redemption to consumer through the mail. (b) Suppliers may provide non-cash redemption, such as novelty items, as long as the retailer is not involved in the redemption process. 4) Consumer Coupons redeemed by on-premises retailer (cash equivalent coupons) (a) Usually related to on-site product sales promotion (b) Supplier Reps must provide these coupons directly to the consumer for redemption by retailer for an alcohol beverage product. (c) On-premises retailers must seek cash reimbursement from a third-party clearing house, not from a wholesaler, manufacturer, or supplier rep. Division Position: A financial institution, such as the retailer s bank, is not an authorized third party. Therefore, the retailer cannot deposit the coupon like cash. II. EXTERIOR SIGNS AND INTERIOR DISPLAYS {Regulation } A) Exterior Signs means all signs of every kind located any place outside of the licensed premises; or in, on, or adjacent to any window or door of the retail premises. Such signs are designed and intended to be seen from the exterior of the premises. 1) A retailer can pay for and erect any sign of any kind on his licensed premises (subject to local ordinance and Conduct of Establishment regulation). 2) A supplier may provide exterior signs free of charge when such signs are the supplier s neon or plastic signs, AND when they contain only the ad copy allowed in Regulation (C), which is: (a) Manufacturer s name (b) Brand name (c) On Tap, On Draft, In Bottles/Cans (d) Any statement indicating the price of alcohol beverages 3) These signs may not be attached to, connected with, operated jointly with, or combined in any manner with a sign advertising the retailer or the name of the establishment. 5

6 4) EXCEPTION: As of July 1, 2001, none of the restrictions described above are applicable to paper or vinyl bulletins, or posters or banners, that are not intended or designed to primarily advertise the retailer. They must feature the supplier and retailer equally, or primarily advertise the supplier or his products. (a) In order for a supplier to provide this type of signage free of charge, the sign can never primarily advertise the retailer. Primarily is anything in excess of 50%. Division Position: Any copy related to the retailer s name, location, or general operation, is copy attributable to the retailer. (b) There is no 15-day allowance as of July 1, ) A suppler must charge a retailer the minimum of his cost for any painted or constructed sign (e.g. murals). 6) A supplier may never, directly or indirectly, pay any retailer any value or consideration for the privilege of installing or maintaining an exterior sign. Division Position: A supplier may not pay a fee to an independent advertising agency for the privilege of advertising the supplier s product on retail-licensed premises, when the retailer receives any fees or consideration, such as rental income, from the independent agency. Division Position: A supplier cannot require exclusive signage on the retail licensed premises, unless there is an authorized sponsorship agreement for a bona fide Sponsored Event. B) Interior Displays : means all signs and displays maintained in the interior of a retail-licensed premises such as non-refrigerated racks, bins, barrels, casks, shelving and the like from which alcohol beverages are actually sold. 1) A supplier can provide to a retailer, free of charge, any of the display items described above as long as they contain only the ad copy allowed in Regulation (C), which is: (a) Manufacturer s name (b) Brand name (c) On Tap, On Draft, In Bottles/Cans (d) Any statement indicating the price of alcohol beverages 2) These displays may not be attached to, connected with, operated jointly with, or combined in any manner with a sign or display advertising the retailer or the name of the establishment. Division Position: Interior displays given to a retailer may not have a utility value other than for display purposes. A supplier may place consumer novelty items within a retail display for promotional purposes, but only for the period of a particular promotion or consumer giveaway. The supplier may never give the novelty items to the retailer free of charge. 6

7 Division Position: Any bin that that can be sealed and used primarily as a cooler, may not be provided to a retailer free of charge. 3) As of July 1, 2001, none of the restrictions described above are applicable to paper or vinyl bulletins, or posters or banners, that are not intended or designed to primarily advertise the retailer. They must feature the supplier and retailer equally, or primarily advertise the supplier or his products. (a) In order for a supplier to provide this type of display free of charge, the sign can never primarily advertise the retailer. Primarily is anything in excess of 50%. Division Position: Any copy related to the retailer s name, location, or general operation, is copy attributable to the retailer. 4) A supplier may never, directly or indirectly, pay any retailer any value or consideration for the privilege of installing or maintaining an interior display. III. PRODUCT DISCOUNTS {Regulation (A)} A) Volume discounts and rebate programs are permissible, with only the following restrictions. 1) A wholesaler may not sell vinous and spirituous liquors below its laid-in cost of such vinous and spirituous liquors. 2) A wholesaler may not sell malt liquor and 3.2% beer below its laid-in cost of such malt liquor and 3.2% beer. Division Position: The purpose of separating wine and spirits from beer products within the regulation is to prohibit the mixing of the two classes of alcohol for incentive buying, thereby providing an equal playing field for all wholesalers regardless of their product mix. Division Position: There are no time limits on a discount buying programs. However, the wholesaler must keep a sufficient audit trail to verify that the average per-case price charged to a particular retailer throughout a particular buying program did not fall below the wholesaler s per-case cost. Division Position: If a volume buying program involves a rebate back to the retailer, the wholesaler may only provide a credit to the retailer s account. There can be no cash rebate from wholesaler to retailer. 3) Laid-in cost is defined as the actual proportionate invoice price, plus freight charges and state and federal taxes to a wholesaler. 4) Laid-in cost per case will be determined by using the most recent per-case price charged by the manufacturer (last in/first out method), unless the wholesaler can show that the actual cost was less than the most recent shipment received by the wholesaler. 7

8 Division Position: Wholesaler s often receive supplier rebates for large purchases. The actual proportionate invoice price (using last in/first out method) will be reduced by the proportionate rebate in determining laid-in cost. 5) Exceptions to below cost rule: (a) A manufacturer will discontinue the availability of a product for at least one year. (b) Products will be used but not resold by the drink by a non-profit, charitable, or similar organization on a retailer s permanently licensed premises, with the retailer s permission. Wholesalers must use the following procedure: (i) The wholesaler must invoice the retailer for the product, showing no charge. (ii) The invoice must list the specific products provided and name the group for whose benefit they are provided. (iii) At the conclusion of the event, any unused product must be returned to the supplier or be re-invoiced to the retailer. 6) Offering different discounts to different retailers is not a violation of statute or regulation. IV. ON-SITE PRODUCT SALES PROMOTIONS {Regulation (B)} A) Product Sales Promotion is defined in Regulation (D) as a sales promotion featuring a particular brand of alcohol beverage that is conducted on a retailer s premises by an alcohol beverage supplier. B) Product sales promotions may, and often do, include drink specials, product samplings, and consumer giveaways. C) When suppliers conduct product sales promotions on retail premises, the following guidelines apply: 1) Suppliers may not directly or indirectly pay for any media announcement of a product sales promotion that mentions the retailer or his location. Regulation (D) and related positions apply (paragraph I above.) Division Position: A supplier may not pay for any fees related to the appearance of radio personalities for an on-site product sales promotion. 2) Internet websites, including related s and direct mail, are not considered media in this regulation and Regulation (D), and restrictions related to such media do not apply. 3) A retailer may advertise a supplier s product, at its own cost, in relation to a 8

9 product sales promotion. 4) Suppliers may provide exterior signs and interior displays, subject to the guidelines discusses in paragraph II above. 5) Consumer novelty items may be given to the public, but must remain in the possession of, and distributed by, a supplier representative. 6) Consumer novelty items may never be given to a retailer prior to a promotion. 7) Consumer novelty items may also be provided to a retailer s employees, as long as the cost of each piece does not exceed $ ) A competitor s product may not be excluded during a promotion, nor may a supplier require that the retailer change its product selection or tap placement as a condition of conducting the promotion. Division Position: A supplier may pay for the cost of a consumer sampling during an on-site product sales promotion. The wholesaler must invoice the on-premises retailer for the alcohol beverage brought onto the retail premises for the sampling. The wholesaler may then issue a credit for the product used. The retailer must return any unused product or pay the normal cost. Division Position: Supplier-sponsored celebrities, such as race car drivers, may appear at retail licensed accounts during an on-site product sales promotion as long as the retailer does not charge a separate fee for admittance. V. SPONSORED EVENTS {Regulation (C)} A) A Sponsored Event is defined in Regulation (E) as an event conducted at a licensed, on-premises retail establishment, were a licensed supplier provides a sponsorship fee directly to a retailer or third party in order to conduct the event. Division Position: The purpose of Sponsored Events is for the financial benefit of non-profit, charitable, or similar organizations, rather than licensed retailers. The Division reviews sponsorship agreements on a case-by case basis to ensure that the event is not a subterfuge for financial assistance to a licensed retailer. B) A bona fide sponsored event may not be conducted for, or in conjunction with, any product sales promotion. Division Position: Any activities associated with the promotion of an alcohol beverage product (as described in paragraph IV above) will disqualify the event as a Sponsored Event, and no sponsorship fee may be paid. C) A supplier may pay for any advertisements for a bona fide sponsored event, utilizing the name of the retailer for location purposes only. D) The retailer s product selection or tap placement may not change as a 9

10 condition of the event sponsorship, nor may a competitor s product be excluded during the event. VI. RETAILER ENTERTAINMENT/FREE GOODS {Regulation (D), (H)} A) Retailer Entertainment 1) A supplier may give a retailer or its employees tickets to events, plus the cost of meals related to the event and nominal in-state ground transportation (limousine, promotional train, or bus). Division Position: Events as described in this section refer to pre-scheduled sporting contests, concerts, or celebrity appearances. Ski lift tickets do not qualify. Division Position: Tickets to qualifying events may be provided to a retailer s employees as an incentive for increased sale of the supplier s product. A supplier may not provide a retailer or its employees with any other goods as incentives, through contests, or other sales programs. B) Free Goods: Suppliers may not provide a retailer with any free goods, other than those specifically allowed in statute or regulation. Division Position: A wholesaler may not provide free goods to a retailer that are related to non-alcohol beverage products or promotions if the wholesaler and retailer otherwise deal in alcohol beverage products. VII. RESETS WITHIN RETAIL PREMISES A) A competitor s products may not be disturbed during a reset, unless that competitor has been given 72 hours written notice and is not present at the time designated for the reset activity. Division Position: A retailer may move or display its alcohol beverage stock in any manner it chooses. However, a supplier cannot direct a retailer to disturb or move a competitor s products during a reset, in order to escape notification requirements under this regulation. Division Position: The straightening of shelves, which includes the replacement or realigning of products pursuant to an existing shelf schematic, is permissible without notification. Division Position: Wholesalers are required to keep evidence of written notifications for a minimum of thirty days. Any complaints regarding reset activity must therefore be made with the Division within this thirty-day period. VIII. SERVICES AND EQUIPMENT {Section (3), C.R.S.; Regulation (E), (G), (I)} A) Equipment provided to a retailer, must be sold at a minimum of the supplier s 10

11 cost, or rented at fair market value. B) Services provided to a retailer 1) Installation of equipment (a) Retailers must pay for any labor related to installation of equipment. At minimum, the supplier must charge the normal hourly wage of any and all wholesale employees participating. Division Position: The charges related to labor must be separately stated from equipment charges on the supplier s invoice. Division Position: Granting a retailer a limited time reduced price on products to cover the cost of installation will be considered a violation of this regulation. 2) A supplier may clean and inspect dispensing equipment free of charge. A supplier must charge the retailer for repairs in a manner similar to installation. 3) Stocking and other services (a) Suppliers may provide labor free of charge only as it relates to delivery, price stamping, rotation, and stocking. (b) For any other services performed by the supplier s employees (e,g, helping a retailer move product or shelves during a move or remodel; cleaning), the retailer must pay that employee s hourly wage. Division Position: If a supplier s employee performs labor that may be provided free of charge in addition to labor that may not, the supplier must charge the retailer the employee s hourly wage for the entire time spent working in the retail establishment. 4) Warehousing alcohol beverage stock for retailer (a) A wholesaler or manufacturer may not provide a retailer free warehousing space at the wholesale-licensed premises for products previously purchased or ordered by a retailer. (b) The wholesaler or manufacturer must deliver all orders within the next scheduled delivery cycle. (c) Back orders will not constitute violation of this regulation. IX. CONSIGNMENT SALES {Regulation (C)} A) Wholesalers and manufacturers are generally prohibited from making sales of alcohol beverages on consignment. Division Position: A violation of this regulation occurs if a wholesaler, finding 11

12 itself short of particular brand, returns to a retail account to whom the brand has previously been sold, and re-purchases the brand (through credit to account) for sale to another retail account. B) Alcohol beverage stock may be returned by a retailer if that retailer surrenders its liquor license to the proper licensing authorities, or for the following commercial reasons: 1) Defective or dated product including damaged labels, mutilated tamperresistant closures, or leaking containers. Division Position: This does not include beer products that have exceeded the manufacturer s freshness date. Division Position: Retailer Damage Credits: A licensed wholesaler may provide a credit to a retailer s account for product damaged by the wholesale rep during delivery or stocking, as long as the credit does not exceed the original per-case sales price. Generally, a credit allowance may not be applied to products damaged by a retailer or its employees. However the Division will allow credits of a diminutive nature. The Division considers a credit of no more than $50.00 per quarter, per retailer, reasonable. 2) Error in delivery 3) Discontinued product Division Position: This does not include products that are discontinued by the wholesaler or the retailer, but products discontinued by the manufacturer for not less than six months (e.g. holiday products). 4) Seasonal operations of the retailer Division Position: A retailer is deemed seasonal when it is closed for any consecutive period no less than three consecutive months in length. 5) Retailer in violation of Uniform Commercial Code Division Position: There must be an order from a court allowing a wholesaler to reclaim inventory for non-payment. 6) Surrender or expiration of liquor license 7) Special Event Permittee C) Trade-outs made pursuant to manufacturer s freshness requirements, are not considered consignment sales. Division Position: A wholesaler may trade out old product with fresh product that is of IDENTICAL brand name, and IDENTICAL package type. (e.g. XYZ Light 12 oz. 6-pack bottles for XYZ Light 12oz. 6-pack bottles). X. SPECIAL EVENT PERMIT HOLDERS {Regulation } 12

13 A) Suppliers may provide financial support and/or services to organizations that secure a special events permit for the sale or service of alcohol beverages, including: 1) Media Advertising 2) Signs and Promotional Material 3) Cooler Trucks (non-dispensing) 4) Clothing 5) Prizes for consumers 6) Cash sponsorship fees or cash donations B) Support to a Special Event Permittee may not be conditioned, directly or indirectly, upon the present or future purchase of a supplier s alcohol beverage products or the exclusive sale of a supplier s products. C) Suppliers may not provide the following free of charge to Special Event Permitees: 1) Cups or glassware 2) Alcohol beverages to be resold to the public 3) Dispensing Equipment (troughs, tapping equipment, cold boxes, cooler trucks with built-in dispenser) D) Non-profit or charitable organizations may receive donations of alcohol beverages if they are for hospitality purposes only, or for fund-raisers held in permanently licensed retail accounts. (In either case, the non-profit is not reselling the alcohol by the drink, as if he would be if he held a Special Events Permit). E) Invoicing and Warehousing for Special Event Permittees 1) The wholesaler must invoice the non-profit organization named in the permit and no other entity for the alcohol beverages sold or served pursuant to the Special Events Permit. 2) Due to the short-term nature of events, a permittee may return any unused alcohol beverages to a wholesaler. 3) Permit holders may only purchase or receive their alcohol beverage stock from licensed wholesalers or retail liquor stores. 4) Upon approval of local and state liquor licensing authorities, a special event permittee may designate an off-site storage facility for storage of their alcohol prior to the date of the event. Wholesalers should verify the approval of an offsite location before delivery. 5) One or more wholesalers may allow the permit holder to store its alcohol beverage products, for which the permit holder has been invoiced, at designated wholesale licensed premises until the date of the event. Permitees and 13

14 wholesalers must adhere to the following guidelines: (a) The warehousing wholesaler and permittee must enter into a written agreement, stating therein that a portion of the wholesaler s licensed premises will be specifically designated for the temporary storage of the permittee s alcohol beverage stock. (b) The agreement may cover only one event. (c) The wholesaler must allow the permittee access to the product during the period of storage. (d) A wholesaler may deliver the products on the date of the event. (e) The aforementioned written agreement should be submitted to the Liquor Enforcement Division for approval. Such agreements will be maintained in the permit holder s license file. 14