MONTGOMERY, Alabama — An ongoing effort to expand the availability of ready-to-drink blended spirits in Alabama continues to face obstacles due to industry disagreements over franchising laws, disputes that some say may be irreconcilable.
The first significant effort to expand the availability of RTD spirits came in 2023 in the form of Senate Bill 194, sponsored by Sen. Steve Livingston, R-Scottsboro. The bill would have allowed RTD spirits with an alcohol by volume content of up to 12.5% to be sold anywhere beer and wine are sold, such as in supermarkets and convenience stores.
While that effort ultimately failed, a similar bill was introduced in 2024, this time by Sen. Bobby Singleton, D-Greensboro, and with changes to address some previously expressed concerns about the bill, such as lowering the cap. ABV in RTD spirits of 12.5. % to 8%.
Even with the changes included, that version of the bill also failed, although this time, according to Livingston, it was primarily due to the franchise language included in the bill.
Both versions of the bill include language requiring RTD spirits manufacturers to designate geographic areas as “sales territories” and to enter into exclusive franchise agreements with a licensed wholesaler for each sales territory.
Beer distributors largely supported the franchising language; The Alabama Grocers Association, which supports the legislation, remains neutral on the franchise component. The Alabama Beverage Association, however, remains strongly opposed to that language and has instead advocated against the inclusion of any language that limits distributors by geographic locations.
Senator Steve Livingston.
“We have a very hard line between the alcohol distributors and the soft drink (distributors),” Livingston told the Alabama Daily News on Thursday.
“Buffalo Rock and Coca-Cola United both want to be in business, they want the business to be run through contracts, while the others want franchise agreements in place. Until that issue is resolved, I don’t really see it moving anywhere.”
Livingston said he still hoped the differences between the parties could be reconciled and that while he had no plans yet to reintroduce the bill, he still supported expanding the availability of RTD spirits.
“I think there is consumer demand that should be implemented,” he said. “I don’t know how it’s going to move until those two groups come together somehow and come to an agreement, because they’re both very powerful groups.”
Virginia Banister, executive director of the ABA, said her industry strongly supported expanding the availability of RTD spirits. However, any bill that includes franchise language has not yet been initiated.
“Our beverage industry – and that’s all the Coca-Cola and Pepsi bottlers in the state of Alabama – we support the sale of these mixed spirits in supermarkets, convenience stores; We have always done it, they are our customers,” Banister told KeynoteUSA on Thursday.
“We don’t want to change the franchise laws that apply to beer and wine, but they are not necessary for the sale of mixed spirits.”
Banister argued that franchise laws introduced unnecessary barriers and restrictions on distributors’ ability to compete “fairly in a free market” and that it was a “business principle” for his organization to oppose such restrictions.
“I understand that they fought very hard a long time ago to get these franchise laws passed, and they are protectionists; “I can understand why they would want franchise laws for everything,” Banister said.
“Franchise laws protect one interest, and only one interest; “If a bill didn’t include franchise laws, then it would benefit everyone.”
Donna Alexander, executive director of the Alabama Wholesale Beer Association, which represents beer distributors in the state, said the language of franchising remains important to beer and wine distributors because of the regulatory oversight they provide.
“(The importance of franchise language) has to do with the regulatory system that we’ve had for the last 50 years and continue to have, and it strikes a balance with temperance in the product,” Alexander told KeynoteUSA on Friday.
“It allows all the small players in the beer and wine market to get to market sensibly, and the soft drinks players just don’t have to do that, they own their products, so I understand why they’re not interested. “
Alexander said that although the latest version of the proposal to expand the availability of RTD spirits included franchising language, the AWBA still had several reservations, including the 8% ABV reduction, and therefore did not support the bill. directly.
Still, Alexander said it wasn’t impossible that beer distributors and the ABA could reach some sort of agreement or compromise when it came to including franchise language.
“The franchise is an important part, but I’m not going to say that they can’t come up with something to work with,” he said.
Other industry leaders with a vested interest in expanding the availability of RTD spirits expressed more optimism that a compromise could still be reached, including Bart Fletcher, president of the Alabama trade association Petroleum & Convenience Marketers.
“Our hope is that some type of RTD legislation will be introduced next year; we certainly still want to be able to sell those products to consumers through grocery stores and convenience stores,” Fletcher told KeynoteUSA on Thursday.
“I know that the biggest pushback came on the wholesale side of the issue, so we will be talking to our friends in the beverage industry over the course of the political offseason here to encourage them to try to find some kind of language that is acceptable to everyone in the wholesale trade class.”
Ellie Taylor, CEO and president of the Alabama Grocers Association, also expressed optimism that a compromise could be reached.
“We actually have members in our association on both sides of this issue, and we are very hopeful that these two sides can come together and find some kind of compromise,” Taylor told KeynoteUSA on Thursday.
“We have commitments from both sides to come to the table to reach an agreement, so we are hopeful that that can happen.”
The RTD spirits market is poised to reach a value of $21.1 billion in the United States by 2027, and is currently the fastest-growing adult beverage category in the country.
The latest proposal to expand the availability of RTD spirits in Alabama would have taxed them at a rate of $0.68 per 12 ounces, much higher than the $0.05 tax on beer. Given the potential new revenue stream, meeting consumer demand and pressure from retailers, lawmakers will likely find themselves in similar debates next year.
Whether lawmakers are willing to strip any such proposal of the franchise language remains to be seen, and at least for now, it remains uncertain.
Keynote USA
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