88
BEVERAGE MEDIA
September 2013
KNOW
THE
LAW
1) Past sales history (within preceding 12
months) with 10% holdback allowance
(i.e., set aside and held in inventory) for
prospective new business;
2) Lists of retailers published by respected third
party sources such as: a listing as best wine
list in Wine Spectator Magazine; a listing
in Zagat’s as best restaurants; a listing in
Michelin Guide or the like;
3) Unsold accounts (retailers that have not
purchased the item within the past year);
4) First come first served with a maximum
per account;
5) Advance interest, provided all accounts
are given reasonable notice and the op-
portunity to express their interest but no
pre-ordering is allowed.
Channel Marketing
There are twomarketing channels: on-prem-
ise and off-premise. Although both on- and
off-premise licensees must be offered the
goods at the same price, a different method
of allocation may be used for each channel,
but all qualified accounts within the channel
must be given an equal opportunity to obtain
the limited availability items.
Adjusting Allocations Over a
Period of Time
Suppliers, importers and wholesaler are
permitted to create an allocation meth-
od which will extend over a reasonable
commercial period of not more than 12
months. However, at least 30% of the
available goods must be offered to each
channel for each price point offered dur-
ing each time period.
Clarifying Close-Outs
Close-outs are special form of Limited
Availability Items. “Closeout sales” occur
when the supplier, importer or wholesaler
intends to sell its entire remaining inven-
tory. In order to qualify as a close-out,
there must be a price reduction of at least
10% from the previous month. Except in
the case of seasonal items, a close out is
not permitted unless the item has been
offered for at least six months. Orders for
close-out goods may not be accepted until
9:00 am on the first day of each month for
which the price posting is in effect. Close-
outs may be offered as follows:
The first month of a close out filing
the item must be offered with a maximum
number of cases per retailer which does
not exceed 10% of the available inven-
tory and must include with its price post-
ing a notice that in the next month and
thereafter the item will be marked “first
come first served—no maximum.”
The second and subsequent months,
the goods may offered on a first come first
served basis with no limit.
If the price is reduced in the second or
any subsequent month, the process must
be repeated from the beginning.
Legislative Update
Sections 109 and 110 of the ABC Law
require all applications (original and re-
newals) to include “a statement setting
forth the type of establishment to be op-
erated at the premises. The statement
must indicate if there will be topless en-
tertainment and/or exotic dancing at the
establishment.
The provisions related to the sale of
adulterated beverages has been amended
to require that the adulteration be “inten-
tional.” This amendment will make it dif-
ficult for the Liquor Authority to charge a
retail on-premise licensee with sale of the
adulterated beverages because of the pres-
ence of fruit flies and other insects.
And a Word to the Wise
Section 110-b of the Alcoholic Bev-
erage Control Law requires notice
to the Community Board before the
Liquor Authority considers a sub-
stantial corporate change, which is
defined as:
(a) for a corporation, a change of 80%
or more of the officers and/or directors, or
a transfer of 80% or more of stock of such
corporation, or an existing stockholder
obtaining 80% or more of the stock of
such corporation; and
(b) for a limited liability company, a
change of eighty percent or more of the
managing members of the company, or a
transfer of eighty percent or more of own-
ership interest in said company, or an ex-
isting member obtaining a cumulative of
eighty percent or more of the ownership
interest in said company.
At the July 31
st
board meeting,
Chairman Dennis Rosen noted that
the Authority has been receiving ap-
plications for corporate changes which
attempt to circumvent the statute, by
limiting the change to 79% or slightly
less. Chairman Rosen expressed the
Authority’s displeasure with attempts
to thwart the intent of the law. He
made it clear that any such attempt
will place the application for a corpo-
rate change under increased scrutiny.
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. (212-370-3744).
Website: dmppc.com; email:
.
This article is not intended to give specific legal
advice. Before taking any action, the reader should
consult with an attorney familiar with the relevant facts
and circumstances.
IN ORDER TO QUALIFY AS A CLOSE-OUT, THERE
MUST BE A PRICE REDUCTION OF AT LEAST 10%
FROM THE PREVIOUS MONTH
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