AZ Liquor Wholesalers and Retailers Under Investigation by State Liquor Department

Categories: Buchanan, News

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Lee Hill, Communications Director for Arizona's Department of Liquor Licenses and Control, has confirmed a rumor that's been flying around the restaurant industry for weeks:

The department is conducting a statewide investigation of the relationships between licensed wholesalers (liquor distributors and wineries, for example) and licensed retailers (restaurants, hotels, resorts, nightclubs, wine bars and liquor stores, including big boxes).

See also:
-- Roosevelt Row's Tediberto's Has a Liquor License Problem

Here's what they're investigating and what it might mean for the rest of us.

Because the investigation is open and ongoing, the department refused to share any details, including which businesses are in the spotlight. However, Hill directed me to two liquor industry advisories on the department's website that outline laws -- and therefore possible violations.

The liquor department could be looking at wholesalers who have bribed retailers with money, services, fixtures, signs, supplies or other things of value (including free trips) or who have offered bonuses or compensation to retailers for buying the wholesaler's products.

Other violations might involve wholesalers who have offered samples too generously, leaving retailers with whole bottles to sample at their leisure instead of requiring the retailer to take samples at a designated time with the wholesaler in attendance in amounts outlined by law: 12 ounces of beer, six ounces of wine and two ounces of spirits per person per brand.

It's likely that wholesalers' and retailers' books are being audited.

Wholesalers and retailers found guilty could be heavily fined or forced to close their businesses for a set number of days or weeks.

An unnamed wine expert who declines to go on the record for fear of job loss or blacklisting in the industry says he's well aware of the investigation, and that it's uncovering practices that have gone on for many years. He theorizes that in recent memory, Arizona's liquor department has placed its emphasis on under-age drinking -- leaving wholesalers and retailers to conduct business on the honor system.

The wine expert maintains that these practices are nationwide and hardly exclusive to Arizona and that rumors that the FBI is involved in the investigation are probably founded, given the limited resources the state of Arizona would have for such a wide-scale investigation.

A wine rep who also spoke anonymously says the investigation has made it impossible for wholesalers to operate in the way they have for years, which, apparently, involved leaving wine or liquor bottles (for practicality's sake as much as anything else), giving out logo'd umbrellas and other freebies and donating liquor for charity events.

"There used to be gray areas, but there's no gray anymore," she laments. "The department is strict with everything now."

Chow Bella will keep you posted regarding further developments as we report them.



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11 comments
sooner_rick
sooner_rick

So when Sierra Nevada paid for people from Casey Moore's and Whole Foods to go to Chico it was illegal?

champagne24
champagne24

So my Gm and sommelier telling the staff that Southern Wines can suck it because we are only buying wines from Youngs and then taking a week long trip to Napa and staying at the Inglenook winery is illegal?go figure!Not to mention the free golf and sick bottles of juice they get hooked up with?inconceivable!

sarahsmile
sarahsmile

Check out the folks in the firepalce pix on Isabella's Parlor facebook page. Hmmmm Young's Market employees.

 

Dwayne
Dwayne

Rumor on the street is that the big fines (about $500,000) and suspension of license are going to be levied on Youngs Market distributor for over 400 violations and a major Scottsdale based chain of restaurants/bars for accepting items such as free liquor and other items like their draft systems from the distributor. I think the liquor board is doing it right not only going after those that gave the bribes to carry their product but for going after those who received them as well.

Kimberlynn Hall Tovrea
Kimberlynn Hall Tovrea

Uh oh isn't exactly what came outta my mouth when I read the paragraph that referenced charity events.....

AZnikkib
AZnikkib

 @Dwayne I agree with you. And what about the suppliers who put the pressure on the wholesalers and furnish them with the gifts to bribe the retailers?

Dwayne
Dwayne

 @AZnikkib Unless the supplier told the wholesaler to violate the law they are probably in the clear.  Under current law a supplier can give up to $500 worth of merchandising to a retailer per year, what Youngs Market was doing and giving away went far beyond that though.

James
James

 @AZnikkib  @Dwayne

 The $500 limit is not per supplier, but per wholesaler per account.  It only applies to certain items like glassware, etc.  At no point would it be legal to purchase things such as trips, draft systems, free liquor etc.  The practice has been rampant amongst certain wholesalers and cracking down on it is the best thing the liquor board could ever do.

AZnikkib
AZnikkib

 @Dwayne Yep, that's what I heard too. But honestly, I think other people may also have given well beyond the $500 limit per year. Well beyond.

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