Beneath the Surface: Three Areas New Brewers Need to Approach with CautionSep. 15, 2016
Erin Conway and Evan Sallee presented at the inaugural Midwest Craft Brewers Conference in 2015 on a few areas that are often overlooked: (1) trademark and brand protection; (2) distribution; and (3) less obvious regulations (e.g., label approvals, securities regulations, etc.)
With respect to trademarks, breweries are often surprised to find that not only do they have to worry about other beer trademarks, but also wine, spirits, bars, restaurants, coffee, etc. This does not mean that a trademark for a beer will always be refused if there is a coffee brand with a similar name, but it can happen.
Regarding distribution, most breweries are not aware of the significance of a distribution agreement. In Minnesota, for example, beer distributors are basically given a perpetual contract, regardless of any time limit you put on it – distributors may not be terminated or non-renewed, except in limited circumstances, and even then, the brewery must compensate the terminated distributor. Thus, ensuring you have as much protection as possible in the distribution agreement is imperative.
Labeling requirements are not necessarily complicated, but the label approval process can lead to some interesting examples, including a label rejected because it allegedly suggested that the beer included meat additives.
And securities regulations are frequently ignored, which can be a real problem for breweries. You cannot simply go out and ask people to invest – it requires a number of filings and disclosures. Moreover, you cannot solicit potential investors in a public fashion – you have to network.