Contracts to Purchase Alcoholic Beverages

Table of Contents

An industry member can enter into a supply contract for one year or less with a retailer where the industry member agrees to sell alcoholic beverages to the retailer on an “as needed” basis. The industry member cannot require the retailer to purchase any minimum quantity of alcoholic beverages as part of the contract.

All other contracts or agreements, written or unwritten, which require a retailer to purchase alcoholic beverages from an industry member beyond a single sales transaction are prohibited.

Examples of such contracts are:

  • An advertising contract between an industry member and a retailer with a requirement, expressed or implied, that the retailer purchase the advertiser’s products.
  • A sales contract awarded on a competitive bid basis which prohibits the retailer from purchasing from other industry members and requires the retailer to purchase a product or line of products, or a minimum quantity of products, from the industry member during the period of the agreement.

Industry members are also prohibited from using a third-party nonretailer, by agreement or otherwise, as a means of requiring a retailer to purchase the industry member’s product.

Example: A supplier enters into a contractual agreement or other arrangement with a third party. This agreement or arrangement contains an industry member requirement as described above. The third party—a ballclub or municipal or private corporation not acting as retailer—leases the concession rights and is able to control the purchasing decisions of the retailer. The third party, as a result of the requirement, by agreement or otherwise, with the industry member, requires the retailer to purchase the industry member’s products to the exclusion, in whole or in part, of products sold or offered for sale by other industry members.

Prohibited business arrangements between an industry member and a third party may also consist of such things as:

  • Sponsoring radio or television broadcasting
  • Paying for advertising
  • Providing other services or things of value

Iowa Administrative Code rule 701—1003.22