The Virginia Spirits Association (VSA) commends the Virginia Alcoholic Beverage Control Authority’s staff for their diligence in conducting the 2022 regulatory reform effort of Title 3 of the Virginia Administrative Code.  This effort required the participation of both internal Authority staff along with industry stakeholders over several months.  VSA recognizes that it is no easy task to bring such a diverse stakeholder group to the table with the goal of removing outdated language from the regulations along with making regulatory modifications needed to ensure administrative code clarity, and modernization, as well as eliminating any conflicts within the Administrative Code and the Code of Virginia.

VSA and its broker, importer and distiller member companies are proud of our long-standing partnership with the Commonwealth. Our member companies currently represent approximately 96% of the distilled spirits sold in Virginia. This enables our member brands to consistently be major contributors to the General Fund through ABC disbursements and tax revenue. In 2022, that was $538 million.  We will continue to work with the Authority and other industry stakeholders on regulatory reforms and policies that seek to modernize the industry and delivery of spirits from the Authority to consumers.

VSA seeks to promote efforts to eliminate the regulatory burdens on the spirits industry by streamlining processes, which support its commitment to continue to maximize revenues to the Commonwealth. In this vein, VSA requests a change in the proposed text to 3-VAC-5-60-10, which regulates how spirits sales representatives may obtain sample product to introduce to a mixed beverage licensee by conducting a sample serving.  At the present time, Chapter 60, Section 5-60-10, paragraph J.2 requires a mixed beverage solicitor salesman to purchase any spirits product at an ABC government store and limits the purchase to a container of 375 milliliters.  This current regulatory burden means that:

• On-premises sales reps in the Virginia control-state environment are effectively sales reps for ABC.  Unlike beer and wine representatives who can pull samples from their own inventory remitting only taxes on the sample to the Commonwealth, spirits sales representatives are required to purchase their product at full retail price plus associated taxes.
• VSA estimates that approximately $100,000 has been spent by industry representatives from ABC at retail cost to buy these samples in the last 12 months.
• The process of purchasing product at an ABC store is not only very expensive but is also time consuming and product limiting. VSA members cannot currently obtain product samples from ABC’s warehouse and cannot obtain sample product that is not bottled in 375 milliliter containers.  

VSA requests minor language changes that will not only reduce the regulatory and financial burden on VSA member companies but will also create opportunities to increase revenue for the Authority thus the Commonwealth of Virginia.  These changes would:

• Provide opportunities for the Authority to sell more premium+ spirits with broader exposure to licensees of these products.  VSA estimates that at least 8-10 new placements could be made from sampling one - 750ml.
• Place Virginia in a competitive posture within among the 17 Control States and Northern Virginia’s neighboring Montgomery County, MD:
• 12 markets are permitted to pull samples from bailment or a warehouse at cost.
• Open states can pull samples from their distributors.

VSA requests that the proposed language to 50-60-10, be amended to permit:

• A requested sample brand not packaged in a 375-milliliter container to then be made accessible in next available size not to exceed 1 liter.  This modification will allow products that are not currently exposed to licensees through sample servings to have equal sampling benefits.
• The salesperson to request sample containers twice per month from bailment inventory of a supplier housed at the Authority’s wholesale liquor provider’s warehouse or at a government store using a discount code equal to the cost of bailment inventory price.  
• VSA recommends a code modernization changing “salesman” to “salesperson”.
  

Please feel free to contact our Executive Director, Don Tierney at director@vaspiritsassn.org to discuss this request in further detail.  We look forward to continuing to work with the Virginia Alcoholic Beverage Control Authority and to providing a consistent, steady revenue source to the Commonwealth.