Wine Law

WINE SALE 381 5. THE DISTRIBUTION CONTRACT For the sale of wine in foreign markets, it is often necessary or appropriate to contact importers/distributors. In many countries, from the Russian Federation to the United States of America, there are complex procedures for the import of such products, which almost oblige to delegate to a local entity. For instance, importing alcohol may be reserved for monopolies (Canada) or a few authorised local entities (Dubai), and import quotas may be imposed (Indonesia). An Italian exporter will frequently have only one customer in each foreign market, with all the advantages and disadvantages that this can imply. On the one hand, the exporter will avoid the fragmentation of credit and the multiplication of fulfilment (e.g. deliveries with related charges, costs and risks), on the other hand, he will be financially dependent on a single person and will not know the local market. Where possible, appropriate contractual precautions must be taken to optimise results and minimise risks. First of all, the distribution territory must be precisely defined, together with the possible exclusive nature of the relationship, in both senses; entrusting exclusivity to a distributor entails its size adequate to the size of the territory that must be ascertained. The contract may provide for promotional obligations, which may include advertising investments and participation in trade fairs, and the attainment of minimum turnover, but, it should be borne in mind, that in countries such as USA and Russia – where distribution is highly concentrated –, it is the importers who have a greater contractual force and dictate the conditions. Therefore, it is likely that the seller will support the promotion of his wine through the activity of agents, also to be contracted. The regulation of this contract in the European Union is found in Directive 86/653/EEC, transposed, in subsequent years, by the Member States, which now have national laws on the subject that, however, differ, at least in part, between them, both because of the alternatives allowed by the Directive and for the aspects not regulated by it. Also, outside the EU, various laws regulate the agency relationship. It is essential to introduce contractual clauses that provide for the importer/distributor’s commitment to take care of all the obligations provided for in his country for the importation of wine, bearing the related expenses, as well as his commitment to inform the producer on the local rules applicable to the products, as well as, in general, on the local market, including the activities of competitors and possible violations of the producer's brand. Generally, large importers have no objections in accepting these clauses, as the activities they provide for are part of their routine work.