Legislation Would Protect and Encourage Investments from Wholesalers in NJ
TRENTON – A bill sponsored by Senate Majority Leader Bernard F. Kenny, Jr., which would provide contract protections to beer and other malt alcoholic beverage wholesalers when dealing with brewers was approved by the Senate today by a vote of 36-1, receiving final legislative approval.
“Alcoholic beverage wholesalers spend staggering amounts of money in building a market for their products,” said Senator Kenny, D-Hudson. “A successful marketing campaign can have many different facets, from local pub relations, promotional costs, media buys and so much more. Unfortunately, as of right now, there are no guarantees that once the market is built and a brewer achieves success that they have to show any loyalty to the wholesaler who spent so much out of pocket to get their name out there, and in some instances, wholesalers have lost millions on a brewer that flew the coop once they became popular.”
The bill, S-2170, would establish permissible terms that may appear in contracts between brewers of malt alcoholic beverages and wholesalers. Known as the Malt Alcoholic Beverage Act, the bill would require contracts to meet certain reasonable standards, set forth in the bill and through case law, and would prohibit brewers from leaving a contract, unless it could be proven that the wholesaler had violated one of the reasonable standards set in the contract. The bill would also set up a regulatory structure for the wholesale distribution of malt alcoholic beverages in New Jersey, and it would apply to brewers around the world, so long as they contract with New Jersey wholesalers.
“A wholesaler-brewer relationship is a business model based entirely on trust, and really, not much more,” said Senator Kenny. “There is nothing to stop a brewer from turning on a longtime wholesaler, who has invested personal capital towards the success of their beverage, and going with a higher bidder. This bill, essentially, puts ethical business practices into law when it comes to the alcoholic beverage industry.”
The bill now heads to the Governor to be signed into law. It was approved by the Senate Law, Public Safety and Veterans’ Affairs Committee in September.