Legislation Would Protect and Encourage Investments from Wholesalers in
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 unanimously approved by the Senate Law, Public Safety and Veterans’ Affairs Committee today.
“This bill is about fairness, ensuring that brewers can’t reap the benefits from a wholesalers’ hard work in marketing their product, and then turn around and stick it to the wholesaler when the demand is high,” said Senator Kenny, D-Hudson. “The marketing and distributing of alcohol is big business in New Jersey, and wholesalers can spend millions carving a niche in the market for a specialty beer. We want to make sure that the contracts between brewers and wholesalers provide ample protection to allow wholesalers to be fairly compensated for their investments.”
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.
“This bill codifies good business practices and customer loyalty, and provides protections for wholesalers from a brewer who would take the money and run,” said Senator Kenny. “So often, the demand for a product is dictated by the successful marketing of the product, and wholesalers contribute millions to build market interest for their brewers. That they would be able to benefit from the hard work of one wholesaler and then split for a better deal is hardly fair business practice.”
The bill now heads to the full Senate for consideration. Identical legislation, A-3619, was approved by the Assembly in June by a vote of 77-1, with one abstention.