3VAC5-60-90. Sunday deliveries by wholesalers prohibited; exceptions.

The Virginia Beer Wholesalers Association and its members strongly oppose the  proposed repeal of the prohibition on Sunday deliveries.  The prohibition on Sunday deliveries (with exceptions) has been in place for more than forty years, in response to which Virginia wholesalers have organized their business hours, staffing, and transportation needs.  The existing prohibition places no administrative burden on the Authority, but greatly impacts the independent businesses the Authority regulates.  Indeed, the Authority has provided no rationale at all for the elimination of the current restrictions on wholesaler Sunday deliveries. 

Virginia’s beer wholesalers are family-owned and operated businesses with strong ties to their communities, and VBWA members believe that their employees’ Sundays are meant to be spent with their families.  That ABC stores keep only abbreviated Sunday store hours indicates that the Authority at least acknowledges the same needs for its own employees. 

The entire burden of the proposed repeal of the ban on Sunday deliveries falls squarely on Virginia’s beer wholesalers.  As the Authority has failed to express any benefit to the consuming public or the Authority resulting from the proposed change in such a long-standing policy, VBWA and its members must strongly oppose the measure.

The Virginia Spirits Association (VSA) VSA and its members are proud of our long-standing partnership with the Commonwealth, and especially our partnership with Virginia ABC.  We appreciate the multi-year effort on the part of ABC’s staff to work to oversee the periodic regulatory review of Title 3 of the Virginia Administrative Code along with their engagement of industry stakeholders and look we forward to the finalization of these efforts in the upcoming months.  

The spirits and beverage industries are changing. This and other factors, such as a challenging economy for consumers, have created challenges nationally and in the Commonwealth for both our members and for the Virginia ABC.   VSA’s member companies currently represent approximately 97% of the distilled spirits sold in Virginia.  We thank the leadership at Virginia ABC for their willingness to collaborate and consider new ideas from industry this year that will increase revenue not only for industry but for the Commonwealth as well. 

Developing cooperative solutions to market challenges enables our member brands to consistently be major contributors to the General Fund through ABC disbursements and tax revenue. We also seek to promote efforts that will lower costs to the Commonwealth by streamlining processes, which support its commitment to continue to maximize revenues.

In this vein, VSA requests a change in the proposed text to 3-VAC-5-60-10, which regulates how spirits salespersons may obtain sample products for use in conducting a sample serving to a mixed beverage licensee.  At the present time, Chapter 60, Section 5-60-10, paragraph J.2 requires a mixed beverage solicitor salesperson to purchase any spirits product at an ABC government store and limits the purchase to a container of 375 milliliters.  This current regulatory burden means that:

• On-premises salespersons in the Virginia control-state environment are effectively salespersons for ABC.  Unlike beer and wine representatives who can pull samples from their own inventory remitting only taxes on the sample to the Commonwealth, spirits salespersons are required to purchase their product at full retail price at an ABC retail store plus associated taxes.
• VSA estimates that approximately $100,000 has been spent by industry representatives from ABC at retail cost to buy these samples in the last 12 months.
• The process of purchasing product at full retail price at an ABC store is not only inconsistent with the taxes only practice experienced by other beverage salespersons but is also not competitive with other states. 
• The process for obtaining spirits samples is also time consuming and product limiting. VSA members cannot currently obtain product samples from ABC’s warehouse and cannot obtain sample product that is not bottled in 375 milliliter containers.  This limits our members ability to expose licenses to premium brands.

VSA requests minor language changes that will not only reduce the regulatory and financial burden on VSA member company salespersons but will also create opportunities to increase revenue for the Authority thus the Commonwealth of Virginia.  These changes would:

• Provide opportunities for the Authority to sell more premium+ spirits with broader exposure to licensees of these products.  VSA estimates that at least 8-10 new placements could be made from sampling one - 750ml.
• Place Virginia in a competitive posture within among the 17 Control States and Northern Virginia’s neighboring Montgomery County, MD:
• 12 markets are permitted to pull samples from bailment or a warehouse at cost.
• Open states can pull samples from their distributors.

VSA requests that the proposed language to 50-60-10, be amended to permit:

• A requested sample brand not packaged in a 375-milliliter container to then be made accessible in next available size not to exceed 1 liter.  This modification will allow products that are not currently exposed to licensees through sample servings to have equal sampling benefits.
• The salesperson to request sample containers twice per month (or at a schedule set forth by ABC) from bailment inventory of a supplier housed at the Authority’s wholesale spirits provider’s warehouse or at a government store using a discount code equal to the cost of bailment inventory price.  

We will continue to work with the Authority and other industry stakeholders on regulatory reforms and policies that seek to modernize the industry and delivery of spirits from the Authority to consumers, increase revenue to the Commonwealth and encourage Virginians to drink responsibly.  

Please feel free to contact me at director@vsaspiritsassn.org to discuss this request in further detail.  We look forward to continuing to work with the Virginia Alcoholic Beverage Control Authority and to providing a consistent, steady revenue source to the Commonwealth.