This discussion summarizes the compliance issues and considerations related to sales and marketing for BC wineries. Significant topics covered include:
- Retail Sales - Permissible Locations, Processes and Fulfillment
- Wholesale Sales - Permissible Locations, Processes and Fulfillment
- Advertising - Marketing Rules for Alcoholic Beverages
- Web Sites
- Use of Social Media
Title: Sales & Marketing
Date: October 22, 2020
Author: Mark Hicken, BA JD
This document contains a general discussion of the issues noted which was prepared on the date noted above. It does not constitute legal advice and was not prepared for you specifically. If you or your business needs a legal opinion, you should contact a lawyer for individual and updated advice.
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The principal sources of guidance on the rules related to sales and marketing for BC wineries are:
- BC LCRB Terms and Conditions Guide for Manufacturers
- BC LDB Manufacturer Sales Agreement (for either Land-Based or Commercial Wineries depending upon the categorization of the winery by the LDB
- CRTC Advertising Code for Alcoholic Beverages
Retail Sales - Permissible Locations, Processes and Fulfillment
Retail sales are sales that are made direct to an end consumer. Retail sales can be made from your winery so long as you have an on-site store endorsement attached to your license. All retail sales must be made from the on-site store (i.e. from the area at your winery that is designated as the store). This applies in respect of either in-person sales to a customer or to sales made online or by telephone.
Inventory for your retail store sales should have been transferred to the store from the wholesale side of your winery as discussed below. The retail margin for retail sales is set by you and is not reportable to the LDB. You keep the entirety of the retail margin. You can discount and sell at any price you wish to retail customers so long as you comply with the LCRB's minimum pricing rules for the sale of wine.
Fulfillment (i.e. packaging and shipment) of all retail sales must be made from the on-site store (again, from the area at your winery that is designated as the store). You are not permitted to fulfill retail sales from secondary storage locations (this is permitted on a temporary Covid response basis until October 31, 2020).
Wholesale Sales - Permissible Locations, Processes and Fulfillment
Wholesale sales are sales that are made to licensee customers including retail stores (including your on-site retail store), restaurants, bars and hotels. The ability to make wholesale sales is governed by the LDB Manufacturer Agreement noted above. It is not dependent upon your on-site retail store. Indeed, as mentioned above, you should notionally sell inventory from the wholesale side of your winery to your on-site retail store in order to provide it with inventory. You must track and submit records of your wholesale sales to the LDB as required by your Manufacturer Agreement (usually referred to as "Doc 60" reporting).
As of July 20, 2020, all wholesale sales must be made at the wholesale price that you register with the LDB for each product. This includes all sales to private retailers, restaurants, bars and hotels (prior to July 20, 2020, a different pricing system applied for "hospitality" customers). Sales to BCLS stores (government stores) are handled somewhat differently (see Wholesale Pricing for BC Wineries article for more information). You are not permitted to make sales at other prices (i.e. you are not permitted to provide volume discounts or incentives).
Fulfillment (i.e. packaging and shipment) for wholesale sales can be made by and from your winery or from registered secondary storage locations.
Advertising - Marketing Rules for Alcoholic Beverages
You are permitted to advertise and market your wine within British Columbia. Note that the marketing of wine in other jurisdictions may be subject to restrictions or licensing requirements. The BC LCRB requires as part of the terms and conditions of your winery license that all marketing must comply with the rules and standards set out by the CRTC in its Code for Broadcast Advertising of Alcoholic Beverages which you should read. The Code is very restrictive and some aspects of it may seem illogical or even nonsensical. There are some rules in the Code which you may not expect. For example:
- You cannot obtain endorsements from anyone who might be viewed as a role model for minors.
- You cannot portray the consumption of alcohol as necessary for the enjoyment of life or as an escape from problems.
- You cannot depict anyone actually consuming alcohol or imply that it is being consumed or has been consumed (this seems to be a particularly restrictive and illogical rule since it seems to assume that consumers would not know what the purpose of wine is).
Web Sites
You can market and sell your wine through a web site that is controlled by you. You may also market through third party web sites subject to a number of rules and restrictions that are set out in another article: Third Party Marketing Rules & Considerations. Your web site is viewed as a form of advertising and marketing so it must comply with the Code described above (e.g. you cannot depict anyone on your web site actually drinking wine or imply that it will be or has been consumed).
Use of Social Media
You can market your wine through social media (e.g. Facebook pages or Instagram accounts). However, again the use of social media is viewed as a form of advertising and marketing so it must comply with the Code described above. Many wineries inadvertently violate the Code on social media by depicting wine tasting or consumption.