Molson Coors Will Eat Half the Cost for Untapped Kegs

Dear Client:

We’ve been covering the pressing issue of who will, could and should bear the brunt of keg returns and out of code beer, as the TTB has allowed returns (usually related to load-in for now-cancelled events) in the wake of COVID 19’s disastrous effects on the on premise, which has basically been shuttered.

Most brewers have been silent on policies related to returns. But today, Molson Coors made a bold move, telling its distributor network that it would basically eat half the cost of its untapped kegs.

“…We plan to implement a 50/50 split with distributors for the cost of untapped Molson Coors and craft partner kegs – whether they’re in your distributor warehouse or at retail,” Kevin Doyle wrote to distributor partners. 

That goes for all Molson Coors products, including those of craft partners (but naturally excludes anything from Pabst). It does not apply to package product, only kegs. 

To be clear, the company spelled out exactly what the 50/50 split includes: “Molson Coors will reimburse distributors 50% of their fully-loaded FOB [freight on board] for all eligible keg product that goes through the program requirements,” it said.

HOW DOES ONE PARTICIPATE? Clearly there are still details to work through in this program, and Molson Coors admitted as much. But they tried to be as specific as possible at this point about what distributors must do to secure reimbursement for eligible kegs:

“Distributors will need to either decant eligible keg product themselves or coordinate with Molson Coors to have a third party decant eligible keg product before return. Kegs must return empty to Molson Coors to qualify for this program. Distributors will submit a signed certification to Molson Coors stating that all submitted empty keg product was eligible for the program. We expect to share this form with you soon. Upon receipt of returned empty keg product, Molson Coors will process the reimbursement, net of adjustments.”

ALSO OFFERING CREDITS FOR DECANTING TO SAVE FREIGHT $$ ON KEG RETURNS.”We will also split 50/50 with distributors any tax reimbursements, deductions or credits from eligible returned kegs and provide a per-keg credit to distributors for decanting eligible kegs on or near their premises, or cover offsite third-party decanting costs, thereby saving freight costs on keg returns to breweries. In addition to assisting on-premise retailers during this extraordinary time in our industry, this step will help ensure the quality of our beer in market,” it said. More details on this forthcoming. 

BUT DO KEEP THOSE KEGS FULL, AT FIRST, TO CLAIM CREDIT. For those who are interested in the program and do have eligible kegs, Molson Coors “strongly advises distributors to keep eligible untapped kegs full and at their warehouses until they go out of code,” as “a federal business income tax credit might require that the party claiming the credit be in possession of the product when it expires.”

FAQS. Sound a bit confusing? Kevin acknowledged the many questions partners will likely have, from how this works under varying state laws, to “the mechanics of any business income tax credit that Congress might pass” and more. So, as a start, they offered some pre-emptive FAQs, like:

When does this program start and end? Distributors start participating today, March 26. “Distributors must file claims that are signed and certified by a senior distributor officer no later than June 30. We will provide this form and additional detail on claims submission in the coming days,” company said.

But participation in the program is not mandatory. “This limited-time program is completely voluntary and distributors must make their own decisions after considering state and local law, as well as employee safety,” Kevin wrote. Moreover, “if you believe that you have a reasonably good chance of selling fresh keg product through at retail, you may decline to participate in the program.” The company added that “distributors can choose to submit some or all eligible keg product for the program.”

But what should distributors do with existing empty kegs and existing partial kegs? “Distributors should return existing empty kegs and existing partial kegs that become empty to Molson Coors through the customary empty keg return process,” but they are not eligible for this program. 

Stay tuned. 

Until tomorrow,

Harry, Jenn and Jordan

“The world breaks everyone and afterwards many are strong at the broken places.” – Ernest Hemingway

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