Archives for February 2012
To: Distilled Spirits Plants, Breweries, Wineries, Taxpaid Wine Bottling Houses, Wholesale Liquor Dealers, Importers, Retailers, and Others Concerned.
What is the purpose of this circular?
Our purpose in publishing this circular is to remind alcohol industry members and others that tie-in sales of alcohol beverage “products,” as defined in 27 CFR 6.11, and hereafter referred to as “products,” are prohibited inducements under the “Tied-House” provisions of the Federal Alcohol Administration Act (FAA Act).
This Industry Circular supersedes Industry Circular 2003–3.
What is a Tie-in Sale?
A tie-in sale occurs when an industry member requires a retailer to purchase a product that the retailer did not want to purchase, in order to obtain the product the retailer wants. Tie-in sales are a form of unlawful quota sales covered by the FAA Act in 27 U.S.C. 205(b)(7). Tie-in sales are also one of the unlawful means to induce covered under the “Tied-House” regulations promulgated under the FAA Act, which are contained in 27 CFR part 6, “Tied-House.” In particular, 27 CFR 6.72 defines a tie-in sale:
The act by an industry member of requiring that a retailer purchase one product (as defined in § 6.11) in order to obtain another constitutes a means to induce within the meaning of the Act. This includes the requirement to take a minimum quantity of a product in standard packaging in order to obtain the same product in some type of premium package, i.e., a distinctive decanter, or wooden or tin box. This also includes combination sales if one or more products may be purchased only in combination with other products and not individually. However, an industry member is not precluded from selling two or more kinds or brands of products to a retailer at a special combination price, provided the retailer has the option of purchasing either product at the usual price, and the retailer is not required to purchase any product it does not want. * * *
A tie-in sale results in a violation of the FAA Act “Tied-House” provisions (27 U.S.C. 205(b)(7)) and TTB’s part 6 regulations (27 CFR 6.21(g)) when the prerequisite elements of means to induce, exclusion, interstate or foreign commerce, and similar State law (in the case of malt beverages) are established.
TTB deems tie-in sales to be a serious unlawful trade practice that inherently puts retailer independence at risk in the context of exclusion. 27 CFR 6.152(d).
What are some examples of tie-in sales?
Tie-in sales occur when:
- A retailer must purchase a certain amount of regular distilled spirits, whether bottled or cased, in order to be allowed to purchase distilled spirits in a special holiday container or packaging.
- A retailer must purchase ten cases of Winery X’s Merlot from a wholesaler in order to purchase ten cases of Winery X’s Chardonnay.
- A retailer must purchase an industry member’s pre-mixed alcohol beverage specialty product (for example, strawberry daiquiri) in order to purchase a certain amount of their regular distilled spirits case goods. In other words, the regular distilled spirits products are not sold separately but only in combination with the specialty product. See § 6.93 of the TTB regulations (27 CFR 6.93) for rules concerning packaging of products with non-alcoholic items.
- A retailer is required to purchase a two-bottle package containing one each of a winery’s Merlot and Chardonnay in order to get the Merlot. The Merlot is not available for purchase separately.
- A retailer must purchase a slow moving wine in order to purchase a distilled spirit that is in heavy demand. The distilled spirit is not available for purchase separately.
The above examples are considered tie-in sales because the retailer is compelled or required to purchase one product in order to obtain the product the retailer wants. A tie-in sale occurs regardless of whether the two products are the same brand or different brands of products. A tie-in sale also occurs if another category of alcohol beverage is involved.
Whom may I contact concerning the information in this circular?
If you have any questions about tie-in sales, you may contact the Trade Investigations Division at:
Trade Investigations Division
Alcohol and Tobacco Tax and Trade Bureau
1310 G Street, NW. Box 12
Washington, DC 20005
February 10, 2012
Committee on Agriculture, Nutrition & Forestry Committee on Agriculture, Nutrition & Forestry
United States Senate
Washington, DC 20510
The Honorable Frank Lucas, Chairman
Committee on Agriculture Committee on Agriculture
United States House of Representatives
Washington, DC 20515
Dear Senators Stabenow and Roberts and Representatives Lucas and Peterson:
The 2012 farm bill is among the most important pieces of legislation the U.S. Congress will
consider this year. We the undersigned have heard calls for an extension of current law. We ask
you to reject these calls for delay and aggressively act to ensure that a new, comprehensive farm
bill is passed this year.
Farmers need a safety net that works more effectively, and they need access to tools that help
them be good stewards of our natural resources. The farm bill also provides essential resources
to prevent hunger, which is especially critical during these tough economic times. The bill also
addresses short and long-term job creation through streamlined and targeted rural economic
development policies and investments in agricultural research.
A temporary extension of current policy creates tremendous uncertainty while serving to further
none of these needs. We, therefore, stand ready to help you in an effort to pass a full,
comprehensive reauthorization of the farm bill this year, without needless delay or disruption.
American Farmland Trust
American Society of Agronomy
American Soybean Association
American Sugar Alliance
Aquatic Plant Management Society
Association of Farm Managers & Rural Appraisers
Association of Fish and Wildlife Agencies
Board on Agriculture Assembly of the Association of Public and Land-Grant Universities
Center for Rural Affairs
Community Food Security Coalition
Council for Agricultural Science & Technology (CAST)
Crop Life & Reinsurance Bureau
Crop Science Society of America
Environmental Defense Fund
Evangelical Lutheran Church in America
Experiment Station Committee on Organization and Policy
Fair Food Network
Green for All
Housing Assistance Council
Institute of Food Technologists
Izaak Walton League of America
Kentucky Waterways Alliance
Land Trust Alliance
League of Rural Voters
Midwest Dairy Coalition
Missouri Coalition for the Environment
National Agricultural Biotechnology Council (NABC)
National Association of Conservation Districts
National Association of Counties
National Association of Development Organizations
National Association of Resource Conservation & Development Councils
National Association of Towns and Townships
National Association of Wheat Growers
National Audubon Society
National Barley Growers Association
National Bobwhite Conservation Initiative (NCBI)
National Catholic Rural Life Conference
National Coalition for Food & Agricultural Research
National Corn Growers Association
National Farmers Union
National Milk Producers Federation
National Organic Coalition
National Rural Health Association
National Sorghum Producers
National Sunflower Association
National Sustainable Agriculture Coalition
National Telecommunications Cooperative Association
National Trust for Historic Preservation
National Wildlife Federation
North Central Weed Science Society
Organic Farming Research Foundation
Organic Trade Association
Partners for Rural America
Rain and Hail
Rural Community Assistance Corporation
Rural Community Assistance Partnership
Rural Community Insurance Services
Slow Food USA
Soil and Water Conservation Society
Soil Science Society of America
Southern Weed Science Society
Specialty Crop Farm Bill Alliance
The Nature Conservancy
The Wildlife Society
The Xerces Society for Invertebrate Conservation
Theodore Roosevelt Conservation Partnership
Union of Concerned Scientists
United States Conference of Catholic Bishops
USA Dry Bean & Lentil Council
US Canola Association
US Composting Council
US Rice Producers Association
Weed Science Society of America
Western Peanut Growers Association
Western Society of Weed Science
World Wildlife Fund
The Honorable Nancy Pelosi
The Honorable Harry Reid
The Honorable Mitch McConnell
Members of House and Senate Agriculture Committees
WineAmerica Executive Committee Meeting
Welcome WGA Registrants Hospitality Suite
8:30 AM – 11:30 AM
Concurrent WGA and WineAmerica Board Sessions
12:00 PM – 1:30 PM
Welcome Luncheon with Speaker
1:30 PM – 5:00 PM
WineAmerica SAC Meeting
1:45 PM- 5:00 PM
5:30 PM – 7:00 PM
Wine Reception at hotel
No Host Dinner
Luncheon and Hill Visit Preview
Taste the Wines of America Reception
Hill Visits cont.
Legislative Wrap-Up Session
One of the most important and essential functions of the WineAmerica staff is getting our message out to members and non-members across the country. Wineries and State Winery Associations need to know what we are doing to protect their interests in Washington, DC. To get our message out, the WineAmerica staff has been and will be traveling to various parts of the country to speak at various meetings and conferences as well as visiting our member wineries. Additionally, we are always looking to recruit new members. Here is a breakdown of our travel this winter and early spring:
Cary Greene spoke at the Oregon Wine Board meeting in Portland, Oregon.
Jennifer Montgomery was a featured speaker at VinCo 2012, the joint meeting of the Colorado Wine Industry Development Board and the Colorado Association of Viticulture and Enology held in Grand Junction, Colorado.
Michael Kaiser was at the 2012 Unified Wine and Grape Symposium in Sacramento, California representing WineAmerica.
Jennifer Montgomery will be a featured speaker at the 2012 Midwest Wine and Grape Conference held in St. Charles, Missouri.
Michael Kaiser will be attending the inaugural Eastern Winery Exposition in Lancaster, Pennsylvania.
Michael Kaiser and Jennifer Montgomery will be attending Wineries Unlimited 2012 in Richmond Virginia.
Michael Kaiser will be a featured speaker at License to Steal: The National Wine Marketing Conference held in Geneva-on-the-Lake, Ohio
Michael Kaiser will be attending the fourth annual DrinkLocalWine Conference in Denver, Colorado. The conference will be focused on Colorado wine this year.