Will federal reg relief on beer returns help retailers, bars, restaurants

With bars and restaurants across the country beginning to reopen from the pandemic shutdown, many are looking for ways to get rid of overstocked beer left over from the shutdown.

Brewers and wholesalers desiring to maintain good relations with bottle shops, bars and restaurants during this COVID-19 pandemic may want to accept returns of overstocked or slow-moving products, but they were not clear whether the practice was okay with federal alcohol sales rules. Under normal circumstances, the return or exchange of a product simply because it is overstocked or slow-moving is not permitted by the federal regulations.

To address this, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) recently issued an advisory and made it clear that it did not have a problem with this type transaction related to the pandemic. TTB also made it clear that wholesalers and brewers are are under no obligation to accept returns of overstocked or slow-moving alcohol beverage products.

Normally, a wholesaler or brewery may only accept returns of product for ordinary and usual commercial reasons, arising after the product has been sold. Ordinary and commercial reasons would cover such things as product with faulty or leaky packaging or labeling, product that is infected, or product withdrawn from the market for other reasons, etc. This TTB advisory changes that under limited, COVID-19 shutdown-related circumstances.

Accepting overstock returns could help retailers, many of whom have been completely shutdown and are sitting on a lot of aging beer, but it could put a financial strain on some wholesalers and brewers who have also struggled with decreased sales through the past couple of months.

The federal ruling applies specifically to retailers (bottle shops, bars, and restaurants) that have closed or substantially reduced operations due to COVID-19 shelter-in-place and stay-at home-recommendations. If their wholesaler or direct-selling brewery is willing to take it back, the feds would allow retailers to return alcohol beverage products for cash or credit. Wholesalers and brewers are under no obligation to accept returns of alcohol beverage products under the terms of this rule. Similarly, wholesalers who have closed or substantially reduced operations due to COVID-19 shelter-in-place and stay-at home-recommendations may return alcohol beverage products to breweries for cash or credit against outstanding indebtedness. Brewers, however, are are under no obligation to accept returns of alcohol beverage products from wholesalers.

Application in WV unsure

While the TTB’s position applies nationally, it does not supersede a state’s authority to regulate its intrastate alcohol sales transactions. The West Virginia Alcohol Beverage Control Administration often complies with the federal position in its rules on matters like this. but it does not have to. Just because a practice is okay with the feds, does not mean that a state’s alcohol beverage control agency would allow the practice. A request to the WVABCA about their position was not answered by post time. (This article will be updated if a WVABCA response is received.)

Brewers Assn offers advice on aging beer

The national Brewers Association offers a good set of advice on assessing aging beer. Check this link to see their resource.

TTB issued its advisory on May 8. (See TTB Industry Circular 2020-3 for the advisory. See 27 CFR 11.21 for the related section in the Code of Federal Regulations)