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RTDs Under Beer Distributor Relationship?


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A little background: I'm asking this as the distillery side to this relationship, and I have not seen the related distribution contract.

In Ohio, we have separate distillery and ready-to-drink canner licenses. A local brewery has the license to can RTDs, and obviously has the equipment to do it with their own operations. Due to the nature of breweries in Ohio, they also handle quite a bit of self distribution. They also have a distribution contract which definitely covers their beer and may or may not cover RTDs. Their lawyer is unsure of whether the distributor would have a right to claim that the RTDs are covered by the beer contract or not since it's the same LLC, even though it's a different type of product and different license.

This brewery has approached us about doing canned RTDs with our name on it. They would buy our spirits, manufacture the RTDs including packaging, and would like to self-distribute. In theory we could get the same RTD license, but we don't have canning equipment nor the capital or space to get it. We also don't have a team the size that could handle self-distribution and don't have an interest in signing with a true distributor (we're in a control state). The brewery has all of those things, but has the distribution issues.

In short, has anyone dealt with the distribution side of this before? Are there court cases or similar that would give precedence to whether or not a vauge beer distribution contract covers RTDs?

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I can't speak specifically towards Ohio beer laws, but in the states that we have dealt with beer distributors for our spirit based RTDs the contracts are tied to particular label or brand at a particular facility. Franchise laws are dirty and out dated and breaking up with a distributor in a franchise state generally leads to not being able to get any other distributor in said state to pick you up. I have never heard of franchise laws applying to self distribution though, so as long as you had a signed agreement that they could not sign a distribution contract with a wholesaler for that brand you should be able to break away easily if it doesn't work out. Talk with your own Alcoholic Beverage Attorney though, preferably one that is sure on the laws as you shouldn't pay $400 an hour for "maybe", and have them draw up a contract that's fair to both parties but favorable towards you.

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