Press Release from the Georgia Craft Brewers Guild:
For Immediate Release, January 26, 2017
Atlanta, Georgia – The 2017 General Assembly of Georgia will consider legislation to allow consumers to purchase beer directly at the brewery that makes it.
Senator Rick Jeffares (R – McDonough), chairman of the Senate Regulated Industries and Utilities Committee, introduced Senate Bill 85, which will allow breweries to sell up to 3,000 barrels of the beer they manufacture to consumers visiting the brewery. If passed, consumers will be able to enjoy fresh beer by the glass, take up to one case to go, and purchase food without the tour package that is currently required. Furthermore, the bill slightly modifies the brewpub license to reinforce local control on issues of to-go sales from brewpubs.
Throughout the summer and fall of 2016 business leaders from craft breweries and their wholesale partners met to discuss common sense updates to benefit the beer industry in Georgia. “With suggestions championed by both brewers and wholesalers, Lt. Governor Casey Cagle, Speaker of the House David Ralston (R-Blue Ridge), House Regulated Industries Committee Chairman Howard Maxwell (R- Dallas), and Senator Jeffares have provided guidance to create this legislation. Their commitment to supporting the small businesses of Georgia shines through in SB 85,” said Nancy Palmer, Executive Director of the Georgia Craft Brewers Guild. According to Palmer the Georgia Beer Wholesalers Association is also due credit, “The business leaders of the GBWA have been crucial in this process.”
“I applaud the industries for coming together and agreeing to an innovative solution,” commented Lt. Governor Cagle. “The shared interest of supporting our emerging small business and creating more opportunities for Georgians is clearly reflected in this legislation.”
According to the most recent data from the Brewers Association, Georgia ranks 48th in breweries per capita, 41st in economic impact per capita, and 17th in overall craft beer production. In 2016 Georgia added 11 new breweries and brewpubs continuing a consistent trend of growth.
Here’s a great piece by the insightful Pam Erickson on exclusive arrangements in the beverage-alcohol industry:
We ban these arrangements because of our experience before Prohibition. Those agreements and other business practices led to aggressive sales that increased consumption and social problems. For potentially dangerous products, special regulations are intended to prevent sales to vulnerable populations such as youth or heavy drinkers. We also want to curtail inducements that promote high volume consumption. Such regulations are not considered necessary for other commodities which are not subject to abuse.
To help understand the problem, let’s see how an exclusive agreement works: In exchange for exclusivity, a retailer will get special prices or other benefits (cash payments, free equipment or labor, etc.) But the expectation is that the retailer will increase sales and profits for the wholesaler/manufacturer. And, of course with a reduced price, the retailer will need increased volume sales to make the same or greater profits. If these practices become widespread, you may see price wars and extreme competition that juice up sales. These are the kinds of things that led to huge social problems before Prohibition.
The ban on exclusive arrangements is designed to foster local alcohol markets that have a fair and even playing field. Without this ban, it is most unlikely that the craft beer business would have even started. In Europe and other developed countries, you find very little variety because of exclusive agreements. If exclusive agreements were to become widespread here, the diversity of products we have today from over 4,000 breweries could become a mirage. We could have a scenario where diverse products would only be available at the small brewpubs, but not at most of the thousands of bars, restaurants, taverns and stores.
A review of the beer market in Mexico illustrates this issue. Until recently, almost all retailers had an exclusive agreement with one of the two large beer companies: FEMSA (owned by Heineken) and Grupo Modelo (owned by Anhueser-Busch).
The TTB amended its regulations to change tax return due dates and remove bond requirements for certain eligible tax payers (T.D. TTB–146). The amendment authorizes a new annual return period for taxpayers (distilled spirits, wine, and beer) who reasonably expect to be liable for not more than $1,000 in such taxes imposed for the calendar year and who were liable for not more than $1,000 in such taxes in the preceding calendar year. The amendment also removes the bond requirements for taxpayers who do not reasonably expect to be liable for more than $50,000 in alcohol excise taxes for the calendar year and were liable for not more than $50,000 in such taxes in the preceding calendar year. An existing permittee can take advantage of the bond removal amendment by amending its federal permit/registration.
The amendments are effective January 4, 2017.
From the TTB:
ELIMINATION OF BOND REQUIREMENT FOR SMALL BREWERIES/BREWPUBS, DISTILLED SPIRIT PLANTS, AND WINERIES
Starting January 1, 2017, if you are a TTB-permitted entity owing less than $50,000 in excise taxes in the previous year and expect to owe less than $50,000 in the current year on beer, distilled spirits, or wine, you will no longer be required to hold a bond.
Because the bond exemption does not go into effect until January 1, 2017, if you submit applications to operate breweries/brewpubs, distilled spirits plants, or wineries before that date, you must submit a bond with the application even if you expect to be eligible for the bond exemption when it goes into effect in 2017. Based on current processing times, we do not expect any application received before January 1, 2017, to be processed before that date.
To streamline the application process, we added a new data field in Permits Online allowing you to indicate that you expect to owe less than $50,000 in excise taxes in 2017, and thus will be exempt from bond requirements. If you are confirmed to be eligible for the bond exemption, we will process your application so that you can operate without a bond upon approval, and we will return any bond-related materials to you when we take final action on the application.
If you applied to operate a brewery/brewpub, distilled spirits plant, or winery before the new field was added to Permits Online, but your application is not processed before January 1, 2017, we will work with you to determine if a bond will be required, and if not, we will return all bond-related materials to you.
To learn more about the elimination of bonds for small taxpayers, as well as how we will handle existing TTB-permitted entities affected by the bond elimination, read TTB Guidance 2016-4.
Marketing and advertising are key components of any successful business. Henry Ford said, “A man who stops advertising to save money is like a man who stops a clock to save time.” Like Henry Ford back in the 1940s, today’s craft brewers are diligently finding ways to build their brands, to get the word out, to broaden their exposure to consumers. One way the craft beer industry is doing so is through mobile apps (think Untapped, Pint Pass, Brewery Passport, TapHunter). Mobile apps involve a host of legal issues of which the developer needs to be aware. But when a mobile app intersects with the craft beer industry, there is a complex web of laws governing advertising in the beverage-alcohol industry, and it’s important for the app developer to be aware of these regulations too.
Developing a mobile app raises several legal and regulatory concerns, including those relating to:
- Intellectual property (IP) rights
- Rights of publicity
- End-user privacy
- Advertising
- Industry and self-regulatory guidelines
For instance, maintaining the privacy rights of consumers is of utmost importance when developing an app. Part of the consideration in maintaining the privacy rights of consumers requires that you provide certain notices and disclosures to the end-user. The three most important things to tell the end-user are: (1) what data you collect, (2) how you use it, and (3) with whom you share it. Typically, this information is provided in a privacy policy, which should contain a comprehensive overview of your data collection and use practices.
Not surprisingly, the FTC recommends that app developers have a privacy policy that is easily accessible through the app store, and provide just-in-time disclosures and obtain affirmative express consent before collecting and sharing sensitive information
The complexity and breadth of laws and regulations is even greater when a brewery itself wants to develop and distribute an app. Under the Federal Alcohol Administration Act (“FAA Act”), a brewery is considered an “industry member” and, as such, is subject to a host of advertising laws and regulations, among others. A brewery wishing to develop a mobile app needs to be keenly aware of such laws and regulations to ensure compliance with same. For instance, does a brewery’s mobile app need to comply with mandatory statements under 27 C.F.R. 7.52? If yes, how does it do so?
This 2013 TTB Circular on the use of social media in advertising alcoholic beverages provides some helpful insight into complying with the FAA Act: https://www.ttb.gov/industry_circulars/archives/2013/13-01.html.
Additionally, many mobile apps offer coupons or rebates. Companies operating in the beverage-alcohol industry that want to develop a mobile app that offers coupons and/or rebates should consider at least two other sets of laws and regulations: (1) those pertaining to a manufacturer providing a retailer with a “thing-of-value;” and (2) those governing “consumer specialty advertising” or “consumer specialty items.”
If you have questions regarding advertising in the beverage-alcohol industry, I am happy to help answer them.
“In 2012, the Atlanta brewer notified AlaBev (then called Birmingham Beverage Company) of its intent to switch to Supreme Beverage. AlaBev sued Sweetwater for breach of contract and alleged that the brewer did not follow the process laid out in Alabama law to switch distributors.
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Under Alabama law, a beer producer can only have one wholesaler for a given territory, usually counties. The law requires a producer and a wholesaler have a territorial agreement in writing and on file with the state Alcohol Beverage Control Board.
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[The lower court judge] cited in his 2015 ruling that there’s no evidence that a written territorial agreement between SweetWater and AlaBev ever existed or was on file with the ABC Board in his ruling for SweetWater.
The Alabama Supreme Court affirmed [the lower court judge’s] decision Friday. The court did not issue a written opinion with the decision.” — Kelly Poe, AL.com
Press Release from Georgia Craft Brewers Guild:
Atlanta, Ga, September 21, 2016 – Today the Mississippi Brewers Guild announced a deal reached with the Mississippi Beer Distributors Association that will, upon passage of legislation, allow craft breweries in Mississippi to sell beer direct to the public among other concessions. Both the brewers and the wholesalers of Mississippi have shown tremendous leadership and partnership in the advancement of an industry that was in desperate need of attention.
Upon passage of this proposed legislation in Mississippi, Georgia will remain the sole state in the country where a brewery may not sell beer to the general public. As has been for decades now, the craft brewers of Georgia have one customer – their wholesaler. While consumers, economic developers, entrepreneurs, and state legislators have called for the ability to buy beer at a brewery, that privilege is reserved for the 13 businesses that wholesale Georgia craft beer.
The Georgia Craft Brewers Guild strongly supports legislation to allow Georgia’s breweries to sell beer in tasting rooms among other much needed modernizations to Georgia’s brewery laws. As always, and in the spirit of cooperation, we hope the Georgia Beer Wholesalers Association will have a change of heart and choose to support our legislative efforts this January.
Link to Jackson Free Press:
For additional comment contact Nancy Palmer.
“The U.S. Department of Justice has officially closed its investigation into Anheuser-Busch InBev’s acquisition of Devils Backbone Brewing Company, according to a statement issued today by Deputy Assistant Attorney General Juan Arteaga.
Citing conditions in a previously agreed upon settlement between A-B InBev and the DOJ — one that permits the world’s largest beer company to proceed with its acquisition of SABMiller — Arteaga said the ‘competitive implications of ABI’s acquisition of Devils Backbone are too uncertain at this time to warrant further investigation.’” — Chris Furnari, Brewbound
“Declaring it unconstitutional, a Texas state judge struck down the law that prohibited brewers from receiving monetary compensation from distributors for their distribution rights. The rule was part of the bundle of 2013 legislation that was otherwise a boon to Texas breweries.
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Brewers and their fans are rejoicing this victory right now, but they’re still holding their breaths over two other beer-related cases in Texas courts. Soon, these should also have outcomes.
One involves an issue that brewers pushed for in the 2013 legislative session, to no avail. As a result, Dallas’Deep Ellum Brewing sued the Texas Alcoholic Beverage Commission last year to try and get breweries the ability to sell beer to-go from their facilities — something that wineries and distilleries in Texas are both able to do. (Brewpubs, which sell food in addition to beer, can as well.)
And before that lawsuit, Cuvee Coffee decided to go to battle with the TABC over the issue of whether retailers can sell crowlers, which the TABC argues are one-use cans, rather than aluminum growlers, that only manufacturers of beer can sell.” – Arianna Auber, Austin 360.
It was very exciting to be involved with the first growler sale by a brewpub in the City of Atlanta! What’s even cooler? I got to take home a growler of “Taylor Harper Oatmeal Porter.” I’ve won cases…won motions…won appeals…but taking home a beer named after you most certainly is at the top of the list! Thanks to all who were involved in making this happen!
From left to right: Crawford Moran (5 Seasons owner), Kwanza Hall (City of Atlanta Councilmember), me, David Larkworthy (5 Seasons owner), Dan Plevak (attorney with my firm), and Hunter Hill (State Senator).
Georgia Craft Beer Lawyer 