In Florida, it’s common for beer suppliers and distributors alike to speak in terms of the appointment of a supplier’s exclusive distributor. This is not technically accurate in the context of the Florida Beverage Laws. A beer supplier is not required to appoint an exclusive distributor for itself in Florida. Rather, a supplier is required by Florida law to appoint exclusive distributors for each beer brand it chooses to distribute in Florida. The focus (and the franchise) is on the brands, not the brewery.
With that brands-focus in mind, here are 3 tips for beer suppliers’ to better manage their appointment of exclusive distributors for beer brands.
Tip #1: Avoid “All Brands and Extensions” Distribution Agreements
It is common in Florida for beer distribution agreements to apply to “all brands and extensions” of the supplier. So common, in fact, the a large Florida distributor recently made the following statements in a federal court pleading:
“Beer distribution agreements in Florida are not amended for every new brand because they are covered by Florida Beer Franchise Law, which makes it so that once a case of a brand is sold the distributor has the distribution rights for all brands.”
This statement, and the practice of distribution agreements covering “all brands and extensions”, is not consistent with the Florida Beverage Laws concerning brand distribution. Florida Statutes Section 563.021(1) provides: “Where a manufacturer or importer sells several brands, the agreement may apply to all brands sold by the manufacturer or importer or may apply to one brand or several brands so long as each brand is covered by an exclusive territorial agreement.” (emphasis added)
Beer suppliers should exercise extreme caution before agreeing to distribution agreements that cover “all brands and extensions” of the supplier. Making this agreement robs the supplier’s future self of the freedom to make strategic decisions about the distribution of its future brands and brand extensions.
Tip #2: Select the Right Distributors in the Right Territories for the Right Brands
Provided that all brands distributed in the State of Florida are covered by an exclusive territorial agreement, beer suppliers can pick the right distributors for the right brands. Suppliers can have two or more distributors within the same distribution territory, as long as each of those distributors has the franchise to distributor different brands. Likewise, suppliers can appoint different distributors to distribution the same brands in different territories.
Granting the right to exclusively distribute all beer brands to one distributor in a territory is probably the right decision in many cases (particularly considering economies of scale), but it is not a requirement of the Florida Beverage Laws. Beer suppliers have greater flexibility in deciding the right distributor to distribute each of its brands.
Tip #3: Craft Distribution Goals and Terms that Fit the Brand
Even for territories in which a beer supplier has designated one exclusive distributor for all of its brands, different terms, requirements, expectations and goals might apply to some of those brands. For instance, consider a brewery’s flagship brands versus its seasonal brands. It is not inconsistent with the Florida Beverage Laws that a beer supplier and distributor agree on terms that recognize that not all brands–even from the same supplier–should be treated the same.
The one exception comes to the terms that apply to specific beer brands concerns pricing. The Florida Beverage Laws prohibits the distribution agreement from setting the distributor’s prices for sales to retailers. See Fla. Stat. s. 563.021(3). This includes not only explicitly set prices but also formulas, markup factors, or other methods of fixing prices. Distributors are guarantee the right to determine their own prices to retailers.
Do you have questions about crafting the perfect Florida distribution agreements for your beer brands? We’d love to discuss it with you. Contact us at email@example.com to schedule a consultation.
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