Slotting Allowances and the Retail Sale of Alcohol Beverages

Abstract

Considerable controversy and debate surrounds the practice of slotting allowances, or fees, paid by manufacturers for obtaining the patronage of retailers. To date, regulators have yet to agree on public policy toward these practices; at least one federal antitrust agency suggests that slotting fees may be competitive, another has conducted investigations into these practices, and still another suggests banning them altogether. In this article, the authors examine the recent decision by the Bureau of Alcohol, Tobacco, and Firearms (BATF) to prohibit slotting allowances in the retail sale of alcohol beverages. Focusing on the regulatory environment, industry structure, marketing practices, and consumer consumption behavior in the alcohol beverage industry, the authors analyze the BATF's decision and attempt to reconcile disparate public policy treatment of these practices. Implications for understanding slotting allowances and recommendations for further public policy development and research then are explored.

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