Alcohol Brands Leverage Retailers to Place Products ‘Near Children’s Toys and Juice Drinks’ in Stores, Wholesalers Say

An image attached to the letter submitted to the TTB demonstrating the inappropriate placement of Hard Mountain Dew (Photo: 22 Independent Alcohol Wholesalers/Maletis Beverage)

A group of independent wholesaler businesses submitted a letter on Dec 15. in response to the Alcohol and Tobacco Tax and Trade Bureau’s (TTB’s) recent notice of proposed rulemaking.  The wholesaler businesses brought forward concerns that new entrants into the alcohol beverage market, namely brands associated with soda or soft drinks like Hard Mountain Dew, are not following the “same well-estabished regulations” as more traditional alcohol brands. 

The TTB opened up a call for comments in relation to Docket No. TTB-2022-0011, an Advance Notice of Proposed Rulemaking (NPRM) titled “Consideration of Updates to Trade Practice Regulation.” President Biden’s Execute Order 14036, “Promoting Competition in the American Economy” prompted the TTB to seek public comment on current regulations. 

The letter represented 22 independent wholesaler businesses from 17 states. The wholesalers’ main concern was an NPRM section stating: 

“The TTB regulations provide that paying or crediting a retailer for any advertising, display, or distribution service is an inducement.”

Current regulations prohibit alcohol manufacturers from engaging in a number, of what is referred to as, “trade practices.” However, soft drink producers are allowed to provide inducements to retailers. An inducement is similar to an incentive, where companies pay retailers to gain preferential shelf space or other advantages. 

There are a growing number of soft drink brands creating alcoholic versions of their products, such as Hard Mountain Dew. The group of wholesalers has noticed that the large soft drink manufacturers’ alcoholic and non-alcoholic versions are sometimes displayed together in stores and are often outside the “traditional” alcohol aisles. 

“It is unrealistic to think that soft drink manufacturers are not leveraging slotting fees for their non-alcohol brands to ensure preferential shelf space for the alcohol counterparts,” stated the letter. “TTB rules prohibit slotting fees for alcohol beverages, and from our perspective, working in these markets on a daily basis, these rules are being ignored with respect to the new large soft drink companies who have entered the alcohol space.”

An aspect of this that will likely cause great concern to consumers is inappropriate advertising to underage individuals.

The letter continues, “we have seen first-hand the inappropriate placement of some of these new alcohol products. Whether near children’s toys and juice drinks or next to the non-alcohol versions of their brands, these products are being sold in places in which they do not belong.”

According to the letter, it appears further regulation is not necessary. However, these large soft drink companies are possibly taking advantage of the confusion of their previous association with non-alcoholic products. In addition, it is conceivable that retailers are taking the inducements while they are able to. Alternatively, there may be confusion across the board on where these products should be placed.

If the practices highlighted by the letter are investigated, it could mean retaliation from the TTB. Furthermore, these major brands may be setting themselves up for trouble because consumers could argue they are advertising to minors and angry parents can be dangerous adversaries.

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