Thursday, 26 May 2016 06:55

Online wine sales and promotions – seller beware!

Written by  Marija Batisich, senior associate, and Sarah Anderson, solicitor, both of Bell Gully.
Marija Batisich. Marija Batisich.

The online sale of wine is now commonplace and an increasing number of both local and international retailers are using this forum for promoting and selling wine.

Those who are marketing alcohol online need to be aware that the restrictions which apply to physical stores under the Sale and Supply of Alcohol Act 2012 (the Act) often also apply to online retailers.

The first key matter to be aware of is that s 40 of the Act makes it clear that off-licences are required for remote sellers of alcohol. This means that those selling alcohol exclusively in an online forum still need to obtain a liquor licence. Although endorsement as a remote seller can remove some of the obligations around the display of signs which apply to physical premises, the Sale of Alcohol Regulations 2013 still require the name of the person who holds the licence, the licence number and the date on which the licence expires to be displayed in a prominent place on the internet site. Every receipt issued must also include this information and a legible image of the licence (or a clearly identified link to an image of the licence) must be included on the website.

A further requirement for remote sellers of wine is that reasonable steps must be taken to ensure that the purchaser is not under the purchase age. This should include asking the prospective buyer to declare by ticking a box on-screen that he/she is over 18 years of age both when the buyer first enters the site and again immediately before the sale of alcohol is completed.

The key difference for online retailers compared to physical stores is that remote sellers are not required to comply with the usual trading hour restrictions so sales can be made at any time on any day. However, delivery must still comply with the Act so that the goods are not delivered after 11pm at night or before 6am (or on specified public holidays).

The second key matter for online sellers to be aware of is that s 237 of the Act applies to all those promoting alcohol "in the course of carrying on a business".

The restrictions in relation to promotion and advertising included within that section therefore apply equally to online sales. One of the key restrictions, which in our experience is often overlooked by online retailers, is that it is illegal to promote or advertise discounts of 25% or more below the price at which alcohol is ordinarily sold (unless this is in a catalogue or similar price list of a holder endorsed as a remote seller). The advertising of alcohol which is free of charge (for example, buy 2 and get the 3rd free) is also prohibited by the Act and loyalty programmes should be carefully scrutinised to ensure that the rewards and discounts provided do not apply only or primarily to alcohol.

In addition to these advertising restrictions, it is also an offence to do anything that is likely to encourage people to consume alcohol to an excessive extent or to promote alcohol in a manner that is likely to have special appeal to those under 18 years of age. The wording, layout and style of advertisements should therefore be carefully considered to ensure that there is no breach of this requirement.

For overseas based online retailers, whether all or some of the above requirements apply will depend on the jurisdiction in which the sale is taking place.

A number of factors including tax obligations and bank account structures may be relevant to this determination. Any retailers considering opening New Zealand websites should therefore seek legal advice to be clear on their specific obligations.

In summary, those selling wine online should be familiar with the requirements of the Act and ensure that all necessary licences are in place.

Promotion and advertising of wine should also be undertaken in a responsible manner in accordance with the vendor's obligations under the Act.

The potential fines under the Act are high, so if in doubt – just ask! Both writers frequently advise on these issues.

 

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