TTB Issues a Not-So-Subtle Reminder on Tie-in Sales

Much like the tax code, almost as instantaneously as the government codifies an alcohol regulation, people start to look for ways around those regs.  And when you offer examples of your rules in practice, every so often you’re going to have to update the circulars to keep up with changing industry practices.  That’s what just happened with TTB Circular 2012-2.  An update to 2003-3, it looks like a few reminders and some new information seemed necessary to ensure both the letter and spirit of the law were being enforced.

The circular offers some interesting examples, as did 2003-3.  Restated from the previous circular, an important point concerns certain holiday mixes or brews that will be of interest to anyone offering holiday or seasonal products.  Offering them to retailers, tied to your regular product is expressly in violation of the definition for “tie-ins” under 27 CFR § 6.72:

A retailer must purchase a certain amount of regular distilled spirits, whether bottled or cased, in order to be allowed to purchase distilled spirits in a special holiday container or packaging.

A new example not found in 2003-3, is aimed at anyone looking to move a slow-selling product.  Getting rid of inventory by forcing purchase of the slow-moving product in order to get the hot-ticket alcoholic beverage is a practice that’s now off limits – the example:

A retailer must purchase a slow moving wine in order to purchase a distilled spirit that is in heavy demand.  The distilled spirit is not available for purchase separately. 

The bottom line is still the same, you can’t force a retailer to purchase a product it doesn’t want just to get the product it does want.  The new example may be a subtle reminder to some industry members that the law goes beyond the listed examples.