Crown Imports, a fully owned subsidiary of Constellation Brands accepted in compromise a USD 420,000 fine imposed by the U.S. Tobacco Tax and Trade Bureau (TTB) for making illegal payments to retailers between January 1, 2016, and April 25, 2019. The TTB said the payments were meant to secure draft beer placements. “Specifically, TTB alleges that crown made the payments, in part, to secure tap handles and that this amounts to a slotting allowance,” the TTB said in a statement on May, 6.
Over the last year, the TTB intensified its investigations in the beer sector and imposed fines totalling nearly USD 6 million.
- In March last year, the TTB fined Brewers Distributing Company, a wholesaler in Peoria, Illinois, USD 350,000 for requiring retailers to purchase their products and for selling alcohol beverage products to retailers with the right of return, which is a practice prohibited under the provisions of the FAA Act.
- In May last year, Cincinnatti-based Warsteiner Importers Agency already paid a fine of USD 900,000 for allegedly being engaged “in illegal tied house, commercial bribery and exclusive outlet violations committed in order to compromise a retailer’s independence” between January 2015 and April 2018, according to the TTB. Warsteiner allegedly paid for equipment for dedicated tap lines in a so-called “pay-for-play” arrangement and for sponsored events in exchange for exclusivity for its products, trade practices which are legal and common in Warsteiner’s home country Germany.
- In December last year, Eagle Brands, a Miami-based distributor of Budweiser beer, has agreed to pay a USD 1.5 million settlement to the TTB for paying retailers to "carry and promote its products to the exclusion of competing products" between May 2015, and April 2018. The payments were disguised as banquet events, credit card payments for rebates, or consumer samplings, the TTB said. In addition, the TTB accused Eagle Brands to provide draft systems that were to be used only for their own products.
- Also in December 2018, the TTB negotiated a fine totaling a reported $325,000 with Elgin Beverage, a wholesaler of Corona, Old Style and Schlitz beer brands based in Elgin, about 40 miles west of Chicago/Illinois. The wholesaler allegedly made improper payments for preferred product placement at retail accounts, a form of “pay-to-play” scheme.
- Just last month, Heineken USA (HUSA) agreed to pay a USD 2.5 million record fine. The TTB alleged that Heineken provided some retailers with BrewLock draft systems at no charge and reimbursed other retailers for the cost of purchasing those systems. Reimbursements were disguised as unrelated credit card charges. (inside.beer, 9.4.2019)
Thomas Hogue, director of congressional and public affairs at the TTB, reported at the end of last year, that the bureau was investigating about 30 additional cases across several states.
Crown Imports, TTB’s last case of investigation is a company that imports and distributes brands like Corona and Modelo in the United States. It became part of Constellations Brands, when the company bought GrupoModelo's U.S. beer business from AB InBev in 2013 for approximately USD 4.75 billion.
