Posted on | April 5, 2013
Written by | Keven Danow and Arielle Albert
And SLA Cracks Down on Availing & Cooperative Buying
On February 27th, 2013, the full board approved a new combination package advisory which allows distributors to make combination packages from their own inventory.
Under Section 101-b of the New York State Alcoholic Beverage Control Law, which provides for the posting of prices by the supplier to the wholesaler, and by the wholesaler to the retailer, the price posted must “be individual for each item and not in ‘combination’ with any other item.” The Authority interprets an “item” to be a bottle or case of a particular liquor or wine.
The statute provides for two exceptions, one of which can also be a bottle of liquor or wine combined with certain non-alcoholic products in a pre-wrapped package. This type of package is usually called a “Value Added Pack” or “VAP.” In addition, the Statute authorizes the SLA to make exceptions for good cause shown, not inconsistent with the intent of the statute. With this new advisory, the SLA has approved the following types of combination packages:
In each case, the package must be a sealed pre-wrapped package which is price posted on both the Wholesale Price Schedule and the Retail Price Schedule. Value Added Packages must be preapproved by the Liquor Authority and may only contain one bottle of wine or spirits Combination packages may only be made from brands owned by a single brand owner. Combination packages made by the distributor from its own inventory must be identified on both schedules with symbols that the SLA will create and there must be a note on the Wholesale Price Schedule to indicate that these packages will not sold to the distributor as a complete package.
VAPs and Packages made by the supplier and intended to be sold through to the consumer may but need not be sold by the distributor as a limited availability item. If it is limited in availability, it must be reported to the Authority in the same manner as other limited availability items, by email to the Wholesale Bureau (email@example.com), setting forth the method of allocation.
Combination packages which are intended to be broken down by the retail licensee and sold to consumers as individual bottles may only be sold as limited availability items. The Distributor has discretion to determine a reasonable method of allocation of combination packages made by the supplier. However, at least one such package must be sold to any retail licensee that meets the allocation criteria.
Once title to the inventory used to make the package has passed to the distributor, any package made from that inventory will be a distributor made pack. The distributor has no choice as to the allocation method to be used to sell a distributor made combination package. The distributor may only sell one of each such package to any retail licensee in any month and may not refuse to sell one such package to any licensee that wishes to purchase it.
Availing Does Not Pay
On March 12th, 2013, the New York State Liquor Authority accepted conditional no contest pleas offered by four package stores charged with availing and cooperative purchasing. Availing is the term for allowing someone who is not listed on the license to profit from the sale of beverage alcohol. It is based upon the concept that the licensee has made its license available to a third party. Cooperative buying is charged when two or more retail licensees join together to purchase goods, taking advantage of quantity discounts.
One of the four stores had its license revoked and its $1,000 bond cancelled. This means the owners of the store lost their license and are not permitted to apply for another for a period of two years. A second store had its license cancelled. It, too, is out of business; however, the owners may apply for a new license without waiting for two years. The other two stores received heavy fines, $75,000 and $20,000 respectively.