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Alabama mixed spirits expansion faces continued hurdles amid industry disagreements

MONTGOMERY, Ala. — An ongoing effort to expand the availability of ready-to-drink mixed spirits in Alabama continues to face obstacles over industry disagreements on franchise laws, disputes that some say may be irreconcilable.

The first significant effort to expand the availability of RTD spirits came in 2023 in the form of Senate Bill 194, sponsored by Sen. Steve Livingston, R-Scottsboro. The bill would have permitted RTD spirits with an alcohol by volume of up to 12.5% to be sold anywhere that beer and wine are sold, such as at grocery and convenience stores.

While that effort ultimately failed, a similar bill was filed in 2024, this time by Sen. Bobby Singleton, D-Greensboro, and with changes to address some concerns previously expressed about the bill, such as reducing the ABV cap on RTD spirits from 12.5% to 8%.

Even with the included changes, that version of the bill failed too, though this time, according to Livingston, due mostly to franchise language included in the bill.

In both versions of the bill, language is included that mandates manufacturers of RTD spirits designate geographic areas as “sales territories,” and that they must enter into exclusive franchise agreements with a licensed wholesaler for each sales territory.

Beer distributors largely supported the franchise language; the Alabama Grocers Association, which supports the legislation, remains neutral on the franchise component. The Alabama Beverage Association, however, remains strongly opposed to such language, and instead has advocated against the inclusion of any language that would limit distributors by geographical locations.

Sen. Steve Livingston.

“We have a very hard line that’s drawn between the alcohol distributors and the soft drink (distributors),” Livingston told Alabama Daily News Thursday. 

“Buffalo Rock and Coca-Cola United, both (of which) want to be in the business, they want the business to be handled via contracts, whereas the other folks want franchise agreements in place. Until that issue is solved, I really don’t see it moving anywhere.”

Livingston said that he still hoped the differences between the parties could be reconciled, and that while he did not yet have any plans to reintroduce the bill, he was still in support of expanding the availability of RTD spirits.

“I believe there is consumer demand, that it ought to be in place,” he said. “I don’t know how it moves until those two groups come together in some capacity and make an agreement, because they are both very powerful groups.”

Virginia Banister, executive director of the ABA, said that her industry was strongly in support of expanding the availability of RTD spirits. Any such bill that includes franchise language, however, was still a non-starter.

“Our beverage industry – and that’s all of the Coke and Pepsi bottlers in the state of Alabama – we support the sale of these mixed-spirit beverages in grocery stores, convenience stores; we always have, they’re our customers,” Banister told ADN Thursday.

“We don’t wish to change the franchise laws that apply to beer and wine, but they are not necessary for the sale of mixed-spirit beverages.”

Banister argued that franchise laws introduced unnecessary barriers and restrictions on the ability of distributors to compete “fairly in a free market place,” and that it was a “business principle” for her organization to oppose such restrictions.

“I understand that they fought very hard a long time ago to get these franchise laws passed, and they’re protectionists; I can understand why they’d want franchise laws on everything,” Banister said.

“Franchise laws protect one interest, and one interest alone; if a bill were not to have franchise laws in it, then it would benefit everyone.”

Donna Alexander, executive director of the Alabama Wholesale Beer Association, which represents beer distributors in the state, said that franchise language remained important to beer and wine distributors due to the regulatory oversight they provide.

“(The importance of franchise language) has to do with the regulatory system that we’ve had for the last 50 years and continue to have, and it strikes a balance with temperance on the product,” Alexander told ADN Friday.

“It allows all the small market players of beer and wine to get to market in a sensible way, and the soft drink players just don’t have to do that, they own their products, so I get why they’re not interested.”

Alexander said that even though the latest iteration of the proposal to expand the availability of RTD spirits included franchise language, the AWBA still held several reservations, including the reduced ABV of 8%, and therefore did not endorse the bill outright.

Still, Alexander said it was not impossible that beer distributors and the ABA could reach some sort of agreement or compromise when it came to the inclusion of franchise language.

“Franchise is a major part, but I’m not going to say that they might not come up with something that could be worked with,” she said.

Other leaders in industries with a vested interest in expanding the availability of RTD spirits expressed more optimism that a compromise could still be reached, including Bart Fletcher, president of the trade association Petroleum & Convenience Marketers of Alabama.

“Our hope is that some sort of RTD legislation will be introduced next year, we certainly continue to have a desire to be able to sell those products to consumers through grocery and convenience stores,” Fletcher told ADN Thursday.

“I know that the major push back came on the wholesaler side of the issue, so we will be speaking with our friends in the beverage industry over the course of the political off season here to encourage them to try to find some sort of language that’s acceptable to everyone in the wholesale class of trade.”

Ellie Taylor, CEO and president of the Alabama Grocers Association, also remained optimistic that a compromise could be reached.

“We actually have members in our association on both sides of this issue, and we’re very hopeful that these two sides can get together and figure out some type of compromise,” Taylor told ADN Thursday. 

“We have commitments from both sides to come to the table to compromise, and so we’re hopeful that that can happen.”

The RTD spirit market is poised to reach $21.1 billion in value in the United States by 2027, and is currently the fastest-growing category of adult beverages in the country. 

The latest proposal to expand RTD spirit availability in Alabama would have taxed them at a rate of $.68 per 12 ounces, much higher than the $.05 tax on beer. Given the potential new revenue source, meeting consumer demand and pressure from retailers, lawmakers are likely to find themselves in similar debates next year.

Whether lawmakers are willing to strip any such proposal of franchise language remains to be seen, and at least for now, remains uncertain.

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