State Distribution Laws

License Needed to Self-Distribute: Yes
Statute: N.J. Stat. § 33:1-10

New Jersey Statute

In New Jersey, brewers holding a plenary brewery license or limited brewery license are allowed to self-distribute to retailers. Restricted brewery licensees are not permitted to self-distribute.

Brewers who use wholesalers must enter into a written distribution agreement with them that provides them with an exclusive territory for the brands they are authorized to distribute. As part of their distribution agreement, brewers cannot:

• Set the resale price of their products
• Restrict a wholesaler’s ability to sell other products or brands
• Restrict the free association between wholesalers
• Unreasonably require or restrict a wholesaler’s change in management
• Unreasonably withhold their consent to a transfer of all or a portion of the wholesaler’s business

If a brewer has a distribution agreement with a wholesaler, the brewer cannot terminate or not renew a distribution agreement without good cause or without providing the wholesaler with proper notice. A brewer must send the wholesaler a notice of its intent to terminate or not renew the agreement and allow the wholesaler 120 days to correct the problem. Good cause is when a wholesaler fails to substantially comply with a reasonable provision of their agreement. Any brewer that terminates a distribution agreement without good cause or proper notice must pay the wholesaler for the reasonable damages it sustains to its business. Even if a brewer terminates with good cause, the brewer still owes the wholesaler reasonable compensation. However, a brewer does not need to follow the notice requirements or give the wholesaler an opportunity to cure the problem if:

• The wholesaler becomes insolvent or files for bankruptcy
• The wholesaler’s license is revoked or suspended for more than 31 days
• An owner is convicted of a felony or 3^rd degree crime or higher which negatively affects the goodwill of the wholesaler or the brewer, and the owner’s interest is not transferred within 120 days of such conviction
• The wholesaler intentionally sells outside of its territory
• The wholesaler attempts to transfer its interests without the brewer’s consent
• The wholesaler fails to pay the brewer for product
• The wholesaler engages in fraudulent conduct in its dealings with the brewer

Additionally, brewers that make up more than 20% of a wholesaler’s gross sales have rights to impose additional, reasonable requirements on the wholesaler. This may include additional rights to consent to the appointment or removal of managers, implementing additional terms governing quality, operational, marketing, and sales standards, maintaining certain inventory requirements, or requiring the wholesaler provide certain financial information.

Fun Fact: For a time during the late 19th century, Ballantine Brewing, founded in Newark in 1840, ranked as the sixth largest brewery in the US, nearly double the size of Anheuser-Busch.