Supplier Payments to Retail Licensees
response to recent industry inquiries, the Department is issuing this advisory
to remind manufacturers, importers and wholesalers of alcoholic beverages that
paying money, directly or indirectly, to retail licensees for stocking and
displaying alcoholic beverages, or for other support services, is a violation
of the Alcoholic Beverage Control Act. The inquiries submitted to the
Department concern payments often referred to as "slotting fees" or
"slotting allowances." Retailers who solicit or accept such payments
are also in violation of state law and will be subject to the same sanctions as
money or giving free goods or other things of value to retailers for favorable
product placement on store shelves or in retailer advertising circulars or
coupon books, not only constitute violations of state law, but are considered
unfair trade practices which create and foster anti-competitiveness and
disorderly markets. Such practices also violate the Federal Alcohol
Administration Act, which is administered by the Bureau of Alcohol, Tobacco and
Firearms, and could subject violators to Federal sanctions.
the past several years, the Department has conducted a number of investigations
into illegal payment schemes and has taken formal disciplinary action against
both suppliers and retailers. In some instances, the parties have agreed to
settle their disciplinary matters by paying substantial fines.
and retailers alike should be aware that tied-house statutes limit financial
relationships between them. In addition to the overall prohibition against the
payment or acceptance of slotting fees, payments for other purposes such as the
placement of brand advertising and for sponsoring retailer-inspired contests or
promotions could also violate the Alcoholic Beverage Control Act.
& Professions Code Sections 25500, 25502 & 25503
Questions concerning this advisory can be directed to the
Department's Business Practices Unit at (916) 263-6900.