Practical Guide for the International Distribution of Wine
1. Spain: a strong wine producer which is opening up for import
Spain is a consolidated wine producer, with many different regions producing a broad variety of wine types, but the market is big and leaves room also for imported wines. For a number of years now, the market trend is towards the consumption of better-quality wines, therefore – even if the amount of wine consumed per capita is the same of 10 years ago (notwithstanding some ups and downs due to the financial crisis) – the quality wines are increasing their sales.
The importation of wine in Spain is subject to EU regulations, so, once the products are within the EU borders, the difficulties for wine importers are more related to find the right distributor and reach the consumers than to legal issues.
2. Protect your assets
Counterfeit is not usual in food products in Spain; however it may happen to find that a certain trademark has already been registered as a Spanish trade mark.
As seen in the EU section of this guide, indeed, it is possible to apply for the registration of a national trademark, valid only in Spain, though nowadays it is more usual to apply for a European trademark, which provides protection in all European Union countries.
Our advice is to make sure that the producer has the correspondent EU or Spanish trademark registration, and the correspondent internet domains, before starting the commercialization of the products in Spain, or even the negotiations for the distribution.
3. Get your label right
The importation of wine in Spain is subject to EU regulations, governing also the labelling, among other issues. All legislation, therefore, is of EU origin and is contained in Royal Decree 1363/2011, which implements the provisions of Regulations 607/2009 and 479/2008, and was amended by Royal Decree 8/2015.
4. Sale channels
Wine is sold in Spain at supermarkets, specialized shops, small food stores, and through internet. The only limit for selling wine is the prohibition to sell it to people under the age of 18. Apart from the state-level laws, which mostly implement EU directives and regulations, in Spain there are many regional laws regarding, for example, retail trade.
For imported wines, the hospitality sector (hotels, restaurants, bars, catering services) plays an important role. In general, the commercialization of wine is developed in a mature and complex market from the business point of view, where the importer should look for the suitable party to make its products reach the customers.
Tax legislation is rather complex, but, in a nutshell, is divided into the following items:
Custom Duty Tariff: Spain is part of the European Union Customs Union, therefore please refer to the EU section of this Guide.
Value Added Tax (VAT) (21%): Ordinary rate applies to wine purchase, except if it is consumed at a bar or restaurant, where the tax rate would be 10% (the same than the food consumed at the restaurant).
Excise tax on alcohol: There is no excise tax for wine, unlike other drinks, such as beers, having an excise tax depending on the percentage of alcohol contained.
6. Distribution and agency agreements in Spain
The most typical commercialization agreements in Spain are the agency agreement and the distribution agreement. In the case of wine or food products, due to the complexity of the market and the logistics, it is usual to allow sub-distributors and sub agents, or agents who appoint local distributors. Nowadays, in both types of agreements it is quite usual to define precisely the business sector before which the agent or the distributor should act: big hypermarkets chains, supermarkets, specialized shops, the hospitality sector, which could be divided in several sub-sectors (hotels, restaurants, bars, catering), etc.
Some agreements include the possibility of depositing the goods at the distributor's warehouse, and the goods are paid (purchased) once they are sold to other sub-distributors, retailers, hotels or restaurants.
As regards territorial exclusivity, it is usual to divide the Spanish territory between several distributors or agents. This is because the characteristics of the market could vary a lot depending of each Spanish region: for example, in the Balearic and the Canary Islands, the hospitality sector plays a relevant role, and the preferences of Spanish consumers could also vary from each region.
When drafting the legal agreements, it is necessary to include the relevant clauses regarding payment terms, exclusivity, causes to terminate the agreement, compensation at the end of the legal relationship and non-competition. Regarding the exclusivity clauses and considering that probably the best sales agents or distributors are those specialized in this business sector, which means that they are already commercializing other wines or alcoholic beverages, it is necessary to draft them very carefully in order to distinguish what other types of wine are competitive: for example, the exclusivity clause could be referred to wines from the same country of the principal.
Regarding compensation at the end of the commercial relationship, it should be taken into account that, according to Directive 86/653/CEE, implemented in Spain through Law 12/1992, it is mandatory to pay such compensation to sales agents, provided certain circumstances are met: mostly, if the agent has increased the principal’s turnover and if the principal could continue taking advantage of such goodwill at the end of the agency agreement, provided of course that the agreement has not been terminated due to a breach by the agent.
As regards compensation to be paid to distributors, there has been a legal dispute with a lot of court cases during many years. According to the most recent case law, distribution agreements could exclude the right to such compensation (but should be properly drafted, not as a general waiver to the distributor’s rights). In case the distribution agreement does not include such waiver, the rules on the agency agreement would be applicable, and the compensation would be calculated on the distributor’s net margin.
Concerning applicable law and jurisdiction, if the principal is an extra-EU company, we suggest to opt for Spanish laws and courts. If the principal is an EU company, we suggest to opt either for the Spanish courts or the Courts corresponding to the principal’s place of business, as EU Regulation 1215/2015 made enforcement of EU-judgement very fast and easy. In case the judgement is issued by a court in a country outside the EU, Spanish Law 29/2015 regarding international legal cooperation in civil matters shall apply. Arbitration is a good alternative, especially if there are many documents in a language which is not Spanish, as it could avoid the translation of such documents. Spain, indeed, is a member of the 1958 New York Convention, hence foreign arbitral awards are normally enforced without legal hurdles or unnecessary delay.