Food and beverage establishments lost 5.5 million jobs in April alone, representing approximately 27 percent of total job losses that month, according to the Bureau of Labor Statistics (BLS). To those of us in the alcohol beverage industry, this is no surprise: The pandemic has massively impacted on-premise businesses, and has hit the hospitality sector particularly hard, resulting in massive furloughs for roles such as bartenders, cicerones, sommeliers, servers, and tasting room staffs, among others. Many brands are doing what they can to support both out-of-work and employed members of the trade. Yet, that doesn’t mean the federal and state rules should go out the window. Here, we discuss compliance considerations and examine brand campaigns designed to engage and support the trade during these unprecedented times.
As a brief background, it is unlawful for a brand to induce an on-premise or off-premise retailer to purchase its brand to the exclusion of another brand’s products. In particular, the federal and most state rules note that, subject to exceptions, “the act by an industry member of furnishing, giving, renting, lending, or selling any equipment, fixtures, signs, supplies, money, services, or other things of value to a retailer constitutes a means to induce.”
Federally, and in most states, it’s impermissible for a brand to give what is known as a “thing of value” that excludes a competitor’s brand or puts the retailer’s independence at risk. For convenience, just remember that unless there is an exception, giving any “thing of value” is impermissible. The exceptions are for things like point-of-sale materials, displays, and samples. These rules are why you avoid swiping your credit card, giving cash for menu placements, and giving away frozen drink machines. It is also why giving cash and free meals to working trade members is generally an impermissible “thing of value.”
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Helping Working Trade Members
The good news: There may be an exception in your state for providing free meals to working trade. In California, for instance, providing reasonable entertainment to discuss business, which may include food and drinks, is permissible as long as the brand’s representative is present. For instance, in May, San Diego-based Cutwater Spirits held a socially distanced meal pickup for the industry at its tasting room and kitchen. Cutwater representatives interacted with trade members as they came through the venue, allowing for an educational context as well as trade support.
For brands without a specific venue, and given the social distancing rules, it may be impractical and unsafe to get together physically. Instead of going to dinner and discussing business, it may be worth considering whether you feel comfortable sending drinks and a meal to a bartender or sommelier and scheduling a virtual dinner over FaceTime or Zoom. When the food and drinks arrive, the brand and the trade member chat together. The brand representative would be as present as one can reasonably be during this time.
Going beyond meals, things are a bit more complicated. It’s not permissible for a brand to just hand over cash to working trade members to help make ends meet. Some brands are turning to charitable donations and commercial co-ventures where the brand raises money for charities that provide funds to hospitality workers. For instance, Novo Fogo committed 100 percent of its April gross profits from its Sparkling Caipirinhas to the Restaurant Workers’ Community Foundation. Meanwhile, Chartreuse is donating $1 per bottle sold through July to the trade-focused non-profit Another Round, Another Rally.
The Michael Jordan-backed Cincoro Tequila launched a #toastyourteam hashtag where it donates $20 per video shared with the hashtag to the Bartender Emergency Assistance Program, part of the United States Bartenders Guild, with the goal of donating $100,000. Meanwhile, Other Half Brewing developed a worldwide initiative to raise funds to support those in need via #AllTogetherBeer. Any brewer can use the open-source recipe, artwork, and name. In exchange, a portion of the proceeds should be given by that brewery to support a hospitality industry cause. “Raising awareness about the devastating losses in the hospitality industry is the core vision of this project,” says Matt Monahan, co-founder of Other Half Brewing.
Supporting Out-of-Work Trade Members
If your goal is to support those who lost their jobs, from a compliance perspective things are more relaxed. A brand may now feel comfortable entering into a relationship directly with an out-of-work hospitality worker, such as a bartender, cicerone, or sommelier. As an example, perhaps a bartender can create a series of videos or host private tutorials or tastings? As a private commercial agreement, the brand can pay whatever the two agree is reasonable. As with nearly any agreement, the brand should consider including a compliance section. That means, at minimum, the bartender should represent that he or she does not have any direct, or indirect, interest in any retailer and the fee being paid is not conditioned on or being used to induce any retailer to purchase the brand’s products to the exclusion of any competitive products. The reason for that is to avoid the prohibitions referenced above. In addition to contractual basics, the brand may consider a section that discussed who owns any intellectual property created like recipes and videos.
DonQ Rum, for instance, just wrapped up its #DonQKeepingItTogether campaign. According to the rules, anyone working in the hospitality industry during the past six months was eligible to enter. Out-of-work bartenders and others made a DonQ Rum cocktail or shared their favorite memory at a bar and posted a 30-second video either on Facebook or Instagram. Then DonQ gave away various cash prizes up to $1,000 to the winners.
Meanwhile, Hendrick’s Gin has a “Tipple Effect” campaign where out-of-work bartenders are nominated by colleagues. The nominee then makes a cocktail and video for Hendrick’s Gin, gets paid $200, and nominates another out-of-work bartender. The cycle continues.
Brands will no doubt continue to find novel ways to support those in the trade who have been hit hardest by closures. We can only hope that, as states open, hospitality workers can safely get back to creating remarkable drinks and dreams for us enthusiasts.