BY DEMETRIO ZEMA, FOUNDER & DIRECTOR
Top 5 Legal Tips for brewers and breweries
In the last few years we have seen a significant spike in boutique and micro breweries popping up. This is great for the local city social scene and also to see different beer varieties and experiments taking place with boutique breweries and beer taking prime position in some of the cities greatest bars and lounges.
Having worked with a number of breweries over the last couple of years, we have seen a few comment trends and mishaps, with brewers cutting corners on the legal and risk management side of their business, tending to focus on the product and its market fit.
The Law Squared team thought it would be beneficial to pen 5 tips for brewers and breweries to consider as part of their overall business and governance.
1. Business structure and reducing liability
Given the often extensive set up costs of a brewery, business is often conduct by two or more brewers working together. Whilst we always tend to focus on the exciting mechanics of starting a business, the finer detail is often left behind and the big questions are often not asked. We’ve all seen romantic beginnings end with rocky endings and therefore, ensuring the brewery business structure is set up right and set up so as to reduce personal risk and liability. Protecting personal assets and having clear governance amongst directors and shareholders (assuming the brewery is set up as a company) is critical.
From a tax, insurance, liability and risk management perspective, getting sound legal and accounting advice from the outset is critical.
2. Labelling Laws
Labelling is an essential part of a brands marketing strategy but it’s also how consumers draw information about the products quality, composition, origin and quantity.
The Australia New Zealand Food Standards Code sets out the responsibilities of the food producers around the label requirements for alcoholic beverages. The relevant requirements are in Parts 1.2 and 2.7 of the Code. Generally, an alcoholic beverage must include a statement of the number of standard drinks in the package, the ingredients, a date marking among other details. Brewers must show care in the way their product is marketed, so as to not attract unwanted attention from the ACCC. Marketing the uniqueness of your product is encouraged as long as the representation on the labelling is not misleading as happened to CUB in 2014.
We see clever and unique marketing every day and with social media being a prevalent marketing platform, regulators are more in tune with marketing tactics. Labelling is a critical part of the beer sale process and whilst the label needs to look “cool” for sale, it also needs to be compliant.
3. Trademark and intellectual property
Closing coming second in the race for importance and value (after your beer of course) is your brand. Your brand is the way you connect with your customers, sets you apart from the competition and shows the personality of your product. Protecting this name (and potentially design) both domestically and internationally allows you to enter new markets with the peace of mind that your brand is secured. If there’s already another brewery in the market with a similar or same name or a similar named beer, then you should obtain sound advice before committing to both design and marketing funds.
4. Non-disclosure and confidentiality
You've spent hours and hours perfecting your brew......you deserve better than losing countless hours to a copy-cat brewer. Brewing often involves the support of others. If you’re discussing your idea, recipe or secret ingredients with others, consider a confidentiality agreement to prevent those involved from sharing the details. If you choose to pursue protection via a patent or trademark, maintaining secrecy of your ’secret sauce’ can be done with the help of an IP Professional. Beer has been brewed for over 5000 years, so there are bound to be some variations on your recipe. Think about guarding the secrecy of at least one part of the process or ingredients list. Do your staff move from one brewery to another? Have you ever lost staff to the competition? Think about what they are leaving with.
5. Insurance for product liability
Ever since an elderly lady ended up with a dead snail in her ginger beer, there has been a strong focus on beverage distributers (and almost anyone that sells a product) to insure themselves for the potential damage their drink could cause (ask any law student the name of the ‘snail in the bottle’ case) Have you ever made a bad beer? Probably not, but you know it can happen. What happens if someone gets sick (we don’t mean the Sunday hangover) or there is a fault within the brew process which either causes harm or indeed the business has a substantial loss in product. Product Liability insurance will cover you and your business in the event of a mishap with your brew and a variety of other insurances will be sure your business (and your beer) is adequately protected.
At Law Squared, we don’t mind sharing a beer or two, but we do mind businesses not taking the governance and legal side of their business seriously. To find out more, contact one of our team members at Law Squared.
0417 679 007
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