Beer Test Marketing Campaigns
The world of beer is a dynamic and ever-changing one. Breweries and beer importers are always looking for new ways to introduce their products to the Florida market. However, the beer industry has its challenges, especially when it comes to distribution. In this blog post, we’ll explore the Florida Beer Franchise Law, specifically focusing on the concept of test marketing and how it impacts the distribution of new beer brands.
The Challenge of Uncertainty
Introducing a new beer brand to the market is not a straightforward process. There are numerous uncertainties to consider. Will the brand perform better in kegs for restaurants or in cans for package stores? Where will it sell better, in South Florida or North Florida, on the East Coast or the West Coast? What are the best marketing techniques for promoting a new brand? These uncertainties can be at odds with a fundamental aspect of the beer industry: beer distributors usually gain an exclusive right to distribute a beer brand as soon as it is granted.
The Florida Beer Franchise Law
The Florida Beer Franchise Law, Florida Statutes Section 563.022, lays down strict rules governing the relationship between beer suppliers (manufacturers and importers) and Florida distributors. It typically grants a Florida distributor the exclusive right to distribute a beer brand within an exclusive territory, and this right cannot be unilaterally terminated by the supplier without penalties. See Termination of Florida Beer Distribution Agreements.
Exceptions to Exclusive Distribution Rights
Section 11 of the Florida Beer Franchise Law describes two ways by which a Florida distributor’s exclusive distribution rights may terminate early. First, if a manufacturer discontinues making the brand or the supplier stops selling the brand in the entire state of Florida, the distributor’s exclusive right can be terminated. Second, a distributor’s exclusive right can be terminated if the brand is part of a test marketing campaign.
Understanding Test Marketing
“Test marketing” refers to the sale of a new or previously unsold beer brand to Florida distributors. During a test marketing campaign in Florida, beer products must still be sold only to Florida distributors, with an exception for sales by a manufacturer in its own licensed taproom. Unlike other distribution rights, the distributor does not gain an indefinite right to distribute beer brands that are part of the test marketing campaign.
Notice to the Florida ABT
To conduct a test marketing campaign as described in Section 563.022(11), written notice must be sent to the Florida Division of Alcoholic Beverages and Tobacco (ABT). The notice should include details like the market area, the distributor’s name, the brand name, the testing period (which cannot exceed 18 months), and other relevant information.
The End of the Test Marketing Period
At the end of the testing period, the distributor’s exclusive right to distribute the beer brand should terminate, unless the supplier and distributor agree to extend it. If the extension is agreed upon, the distributor will have the continuing rights standard for existing brands, with limited termination rights for the supplier. If there’s no agreement, the supplier can select new distributors to distribute the beer, but it’s unlikely a new distributor can be engaged in a new market test period unless the first period was less than 18 months. The 18-month marketing test period applies to each brand, regardless of the distributors involved during that time.
The Florida Beer Franchise Law’s provision for test marketing offers a solution to the challenges associated with introducing new beer brands. It ensures that suppliers and distributors have the opportunity to test a brand’s potential without making long-term commitments. This law helps maintain a dynamic and competitive beer market in the state of Florida.
Do you have questions about test marketing campaigns? Contact us to schedule a consultation with a beverage attorney.
Because we’re attorneys: Disclaimer. Posted November 5, 2023.