Craft Beer Distribution Agreements

In California, the parties must be tailored to several important issues in the establishment of the agreement, such as the domain, duration, modification of property and broadcast rights, termination rights, terms of sale, commercially reasonable sales objectives, licensing rules and intellectual property advertising, dispute resolution and other rights and obligations of the parties. Such contractual terms are as important to a brewer as the search for a sales team that is the right fit for a growing brand. When creating new distribution spaces, you do your homework to find the best distributor. Talk to other craft breweries, chat with retail accounts (on and off premises) and of course, meet potential distributors. Do your research to find your best game. There is no point in knowing more about government contracts and laws when you get along with a small partner. Many larger craft breweries use consultants to conduct market research to open up a new field. Consultants talk to retailers, discover the nuances of the market and find out who the best distributor is. Then they gather information and reconnect with a recommendation to the brewery. Even if a small brewer is lucky enough to approach an independent distribution in a state with a small brewery exemption or a national brewery exemption, the fact remains that the trader starts with a much greater bargaining power. Yes, if your brand is the next hot thing in one market, you may be able to play one distributor against another, but that doesn`t happen very often. Instead, an emerging Craft Brauer has the chance to attract the attention and interest of one of the few traders on the market.

Thus, the brewer is almost always in a declining position in the negotiations. In any event, what this means for the negotiations is different. One of the country`s largest distributors offers craft brewers a surprisingly balanced distribution contract. But most distributors will probably start with a contract that will avoid promises of service and protect the distributor from termination for all but the most monstrous causes, while at the same time, the distributor can, for some reason or for some reason, terminate at any time. While this may limit AB InBev`s ability to persuade distributors to remove competitive craft beer brands, what other safeguards can a Craft-Brauer include for itself in a distribution agreement? Competition in the craft beer market is quite difficult without having to worry about financial incentives for traders to push other brands at the expense of yours. The inclusion of a termination provision, as described in this article, is certainly not a panacea, but at least gives Craft brewers some leverage in their dealings with distributors and provides some protection against anti-competitive macrobraux practices. As you may know, terminating a distributor can be difficult, costly and/or almost impossible. However, one possibility is for craft brewers to incorporate language into their distribution agreements, which is a major offence for a distributor to accept incentives from another producer that encourages the distributor to limit or reduce its efforts for the market and the sale of craft brewers` products or to otherwise reduce the obligations imposed on craft breweries. In today`s Internet age, with seemingly unlimited form contracts, removing a mouse click – there is no good reason to establish a distribution link without binding written agreement. The assertion that the distributor will invest time, money and other resources to develop a market for a brand should be reduced to writing.