FAQ Searchable Database — Associated Beer Distributors of Illinois

Marisa Iglesias

My competitors’ supplier has an advertisement in the local newspaper which offers instant savings if the consumer buys 3 twelve packs of the brewer’s beer. Is this legal?

Yes. The Commission's current policy on coupons is as follows:

1)    Mail-in coupons or mail-in rebates are permitted.

2)    Offering Instant Rebate Coupons (IRCs) at the licensed premises is prohibited. Distributors and suppliers are permitted to offer IRCs in newspapers, magazines, on the Internet, etc.; however, at no time may an instant rebate coupon be offered on an alcoholic beverage package or within the licensed premises. In the example given in the distributor’s question, the consumer must clip the coupon and physically bring the coupon into the store for the discount. The coupon does not state that the consumer will receive “free” or “complimentary” beer but rather provides the consumer with a quantity discount.

3)    Cross-promotional coupons are coupons which discount a non-alcoholic product in conjunction with the purchase of an alcoholic beverage product (For example, “Purchase a 24-pack of Brand X – Get a free bag of charcoal"). Cross-promotional coupons are permitted provided that the non-alcoholic item discounted is not a retailer specific brand. Unlike Instant Rebate Coupons, cross-promotional coupons may be offered on and off the retailer’s premises.

Can a Distributor Offer Free Labor to Install Glycol Draught Systems? Doesn’t the Rules Allowed Us to Provide Free Labor on the Original Installation if the Retailer Pays for the Equipment?

No. 100.210 states: “Distributor servicing, balancing, or inspecting draft beer or wine systems at regular intervals, and providing labor to replace or install rods, taps faucets, fittings and lines in draft beer or wine dispensing equipment, shall not be considered a subsidy. However, free cleaning of coils by a distributor by a company whose services are paid for by a distributor shall be considered a subsidy or something of value…” If free cleaning can’t be provided by a distributor then anything related to coil cleaning like installation of a Glycol system has to be paid for by the retailer.  The rule allowing for free labor is specific to the mechanics of the maintenance and repair of a tap system - not the regular cleaning and not original installation. 

The Commission has earlier stated that if a distributor is found guilty of giving a retailer a draught system or providing free labor to install a brand new system, the distributor may be fined up to $20,000 and have their license suspended for no less than 7 days. ABDI advises any distributor engaging in this activity to cease immediately.

What is the difference between a brewer, Class 1 & Class 2 Brewer and a Brew Pub?

BREWER (IN-STATE) NON-RESIDENT DEALER (OUT-OF-STATE BREWER)

·         Permitted to manufacture an unlimited amount

·         Must sell to importing distributors (Non-Resident Dealers) or Distributors (Brewers)

·         May not self-distribute

·         Brewers are permitted to sell beer manufactured by the brewer on the premises (tap rooms).    They may not sell wine, spirits or beer not manufactured by the brewer.

Class 1 Brewers

·         May only manufacture 30,000 barrels (930,000 gallons or 413,333 cases) of beer per year and may self-distribute up to 7,500 barrels (232,500 gallons or 103,333 cases) of beer per year in Illinois 

·         May not own a brew pub

·         May sell their beer at the production facility (tap room).  The above guidelines apply.

Class 2 Brewers

·         May manufacturer up to 120,000 barrels (3,720,000 gallons or 1,653,333 cases) of beer per year. 

·         May not self-distribute.

·         A Class 2 Brewer, or Non-Resident Dealer, who brews fewer than 120,000 barrels of beer per year across all commonly owned locations inside and outside of Illinois may sell at retail from no more than 3 locations in Illinois. These may include 3 brew pub locations, 3 tap room locations, 2 tap rooms and a brew pub, or 1 tap room and 2 brew pub locations. All amounts are accumulative, and they may not be a part as a member of or affiliated with, directly or indirectly, a manufacturer that produces more than 120,000 barrels of beer per year or any other alcoholic liquor.

BREW PUBS

·         May manufacture up to 5,000 barrels of beer per year per location.

·         May not self-distribute

·         May sell beer for off premises consumption purposes to consumers (known as non-licensees) and to distributors and importing distributors.

·         Are regarded as a specialty retailer; therefore, they may operate an unlimited number locations provided that each location is licensed separately and that they are not affiliated with a Class 1 or Class 2 Brewer.  If they are affiliated with a Class 2 Brewer the limits apply.

·         May sell other beer, wine and spirits at retail provided it purchases said products from a licensed distributor.

·         May simultaneously hold a Class 2 Brewer’s license provided that the location is separate from the Brew Pub location

As a distributor am I permitted to give glassware to a retailer if my supplier gives me the glassware free of charge?

No. According to Section 6-6 of the Liquor Control Act, no manufacturer or distributor may “directly or indirectly, sell, supply, furnish, give or pay for, or loan or lease, any furnishing, fixture or equipment on the premises of a place of business of another licensee authorized under this Act to sell alcoholic liquor at retail….”  

Section 6-6 (iv) also states: “…however, such items, for example, as coasters, trays, napkins, glassware and cups shall not be deemed to be inside signs or advertising materials and may only be sold to retailers.”

Can Manufacturer or Distributor Offer a Discount that Offers Beer at 1₵?

If a consumer buys 3 cases of brand X beer, for example, the consumer receives the fourth case at 1₵. The Commission interprets this type of discount to be in violation of Rule 100.280 Giving Away of Alcoholic Liquors.  

 The Rule states: “a) No licensee, individual, partnership or corporation shall give away any alcoholic liquor for commercial purposes or in connection with the sale of non-alcoholic products or to promote the sale of non-alcoholic products….”

 Depending on the licensee which is advertising such a promotion, manufacturer or distributor, such licensee may be cited and receive disciplinary action by the Commission. In addition, any retailer that advertises this type of promotion is also subject to the same disciplinary action.

What constitutes a permanent sign versus a temporary sign?

There are four sign categories outdoor permanent, outdoor temporary, indoor permanent and indoor temporary signs.

Outdoor permanent signs are made of any permanent material such as glass, wood, wrapping material (such as on ice machines and fuel pumps) and metal. If you display an outdoor permanent sign you may only have one sign per brand. Outdoor signs do not include signs that are painted or placed on windows inside the establishment or in areas referred to as beer gardens.  In these examples they would be considered inside signs. At no time may these signs be retailer-specific which includes the retailer name, logo, or trademark. Permanent outdoor signs may not exceed $2,369 per manufacturer (2016). The cost limitation is exclusive of erection installation, repair, maintenance and permit fees. Additionally, permanent signs include painted signs on exterior walls, windows, etc.

Outdoor temporary signs are made of any temporary material such as paper, cardboard, and vinyl. These include banners, posters, pole signs, flags and pennants. Again, you may only display one outdoor sign per brand. However, two signs displayed back to back that are attached to a pole or fence is considered one sign provided that the signs after being attached are in some way touching. At no time may these signs be retailer-specific, which includes the retailer name, logo, or trademark.

Indoor permanent signs are generally neons, mirrors, lighting fixtures, etc. These signs also include decals which are placed on mirrors, doors, and windows. Regardless of the ease of removing the decal from the mirror, door, and window (scraping or peeling the item off the door on signs made of cling plastic) the Commission considers these signs to be permanent in nature. At no time may these signs be retailer-specific which includes the retailer name, logo, or trademark. Permanent Indoor Signs may not exceed $5,308 per manufacturer (2016).

Indoor temporary signs, like the outdoor temporary signs, are made of paper, cardboard and vinyl. These include banners, posters, table tents, streamers but also include lighted chalk boards (due to the changing of daily messages), acrylic table tent beverage or appetizer list holders, bowling sheets (if they still make those), sports schedules, etc. These are the only signs that may be retailer-specific. This is due to the fact that the Commission recognizes that there is no value added since the patron is already in the establishment. Temporary Indoor Signs may not exceed $867 per manufacturer (2016).

Signs do not include: coasters, trays, napkins, cups and glassware. These items may only be sold to a retailer. Should the retailer purchase any of these items, it is highly recommended that the retailer secure the receipt for these items for inspection purposes. All signs except temporary indoor signs require the manufacture’s identity either by name, brand, logo, etc. In addition, units of government are excluded from certain of value limitations.

I realize that we are limited to a certain dollar limit for signs to be displayed at a retailer’s premises. What are the dollar limits again?

Each year a “cost adjustment factor” is used to update the signage dollar limits prescribed in Section 6-6 of the Liquor Control Act. The “cost adjustment factor” means a percentage equal to the change in the Bureau of Labor Statistics Consumer Price index or 5%, whichever is greater. Since 1997 the dollar limits have been significantly increased.

Dollar limits for signage (2016):

  • Permanent Outside Signs = $2,369.27 per brand (1997 amount $893)
  • Permanent Inside Signs = $5,308.19 per manufacturer (1997 amount $2,000)
  • Temporary Inside Signs = $867.21 per manufacturer (1997 amount $325)
  • Temporary Outside Signs = No dollar limit as you may only display one sign per brand

The General Assembly broke signage into 4 categories the mid-90’s (permanent outdoor, temporary outdoor, permanent inside, and temporary inside signs).

 OUTDOOR PERMANENT SIGN:

·         1 per brand

·         Shall only bear manufacturer’s name, logo, brand, symbol, etc.

·         Can include: cold beer, on tap, packaged liquor, etc.

·         Made of permanent materials (wood, glass, metal, mirrors, neon, or other materials reasonably considered to be of a substantially permanent nature).

·         Also includes signs painted on outside walls.

·         Signs attached to the outside of a window are considered outside signs.

·         Signs attached to the inside of a window are considered inside signs.

·         Brands that appear on an outdoor permanent sign may only have 1 temporary sign. In the example above, only 1 Old Style banner may be displayed.

·         MAY NOT BE RETAIL SPECIFIC

·         Must not exceed $2,369 per brand

OUTDOOR TEMPORARY SIGN:

·         1 per brand

·         Includes banners, flags, pennants, streamers and other items of a temporary and non-permanent nature.

·         Must include the manufacturer’s name, brand, trade name, slogan, markings, trademark, or other symbol commonly associated with identifying the product.

·         Signs MAY include the product, price, packaging, date or dates of a promotion and an announcement of a retail licensee’s event if the sign is intended to advertise the product and the event and promotion are simultaneous. STATE LAW DOES NOT REQUIRE OUTDOOR TEMPORARY SIGNS INCLUDE A PRICE!

·         May include, community goodwill expressions, regional sporting event announcements, or seasonal messages. All examples above would be acceptable.

·         There is no limit on the number of times a logo may appear on 1 sign.

·         If two brands are represented on 1 temporary outdoor sign – both brands are not eligible for another temporary outdoor sign.

·         A two-sided banner, flag, pennant, poster, or streamer displaying the brand name on both sides is considered 1 outdoor temporary sign.

·         A multiple sided or wrap around sign or signs affixed to a pole, fence, or other stationary object displaying the same brand on both sides is considered 1 sign.

·         MAY NOT BE RETAIL SPECIFIC

PERMANENT INSIDE SIGN:

·         Unlimited (must not exceed the dollar limit)

·         Made of permanent materials (wood, glass, metal, mirrors, neon, or other materials reasonably considered to be of a substantially permanent nature)

·         Includes neons, lamps, clocks, lamps, mirrors, tap handles, decals, etc.

·         Must include the manufacturer’s name, brand, trade name, slogan, etc.

·         Permanent signs in a beer garden are inside signs

·         MAY NOT BE RETAIL SPECIFIC

·         Must not exceed $5,308 per manufacturer

·         Menus and alcohol lists are permanent inside signs – these MAY be retailer specific

TEMPORARY INSIDE SIGN:

·         Unlimited (must not exceed the dollar limit)

·         Includes lighted chalk boards, acrylic table tent beverage or hors d’oeuvres list holders, banners, banners, flags, pennants, streamers, posters, placards, bowling sheets, table tents, inserts for acrylic table tent holders, sport schedules, etc.

·         DOES NOT INCLUDE: coasters, trays, napkins, glassware and cups. These items MAY ONLY BE SOLD to a retailer.

·         Must include the manufacturer’s name, brand, trade name, slogan, markings, trademark, or other symbol commonly associated with identifying the product.

·         Temporary Inside Signs MAY be retail specific

Must not exceed $867 per manufacturer

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