KNOW
THE
LAW
78
BEVERAGE MEDIA
April 2013
O
n February 27
th
, 2013, the full
board approved a new combina-
tion package advisory which al-
lows distributors to make combi-
nation 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 excep-
tions, 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 com-
bination packages:
Value Added Packages (VAPs) made
by the Supplier and intended to be sold
through to the consumer as a whole.
Packages made by suppliers intended
to be sold through the consumer as a
whole.
Packages made by the supplier
intended to be dissembled by the
retail licensee and sold through to
consumers one bottle at a time.
Combination Packages made by the
distributor from its own inventory.
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 preap-
proved 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 own-
er. Combination packages made by the
distributor from its own inventory must
be identified on both schedules with sym-
bols 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 com-
plete package.
VAPs and Packages made by the sup-
plier and intended to be sold through to
the consumer may but need not be sold
by the distributor as a limited availabil-
ity 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
, setting
forth the method of allocation.
Combination packages which are in-
tended to be broken down by the retail
licensee and sold to consumers as indi-
vidual bottles may only be sold as lim-
ited 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 alloca-
tion criteria.
Once title to the inventory used to
make the package has passed to the dis-
tributor, any package made from that in-
ventory 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 12
th
, 2013, the New York State
Liquor Authority accepted conditional
no contest pleas offered by four package
stores charged with availing and coopera-
tive 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 ap-
ply 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 with-
out waiting for two years. The other two
stores received heavy fines, $75,000 and
$20,000 respectively.
Commissioner Greene originally re-
fused the conditional no contest pleas.
She only agreed to it after the licensees
that remained open agreed to a larger fine
and to terminate the management re-
sponsibilities of anyone who participated
in the cooperative buying scheme.
Keven Danow is an attorney representing members
of all three tiers of the beverage alcohol industry and
member of the firm of Danow, McMullan & Panoff, P.C.
275 Madison Ave, NY, NY 10022. t/ 212-370-3744, e/
Advisory Specifies New Combo
Pack Opportunities
And SLA Cracks Down on Availing & Cooperative Buying
BY KEVEN DANOW
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