Can a local beer distributor sell a brand anywhere in Texas if it bought the beer from a general distributor instead of the maker?

Texas AG Opinion DM-0005: A Local Beer Distributor Is Confined to Its Manufacturer-Assigned Territory

Plain-English summary

Texas beer distribution runs through a tiered system: manufacturers assign sales territories to distributors, and distributors sell only within those territories. A state representative asked the Attorney General how that worked when a local distributor bought a brand of beer not directly from the manufacturer but from a general distributor. Could the local distributor then sell that beer in the general distributor's territory, or anywhere in the state the brand was sold? Some local distributors argued for one or the other reading.

The Attorney General concluded both arguments were wrong. A local distributor could sell a particular brand only in the territory the manufacturer of that brand had assigned to the local distributor in writing, no matter whether the beer came directly from the manufacturer or from another distributor. Section 102.51(b) of the Alcoholic Beverage Code said a distributor could not "make any sales of any brand of beer outside the sales territory specified in the written agreement," with nothing limiting that rule to beer bought directly from a manufacturer. Section 102.52(b) reinforced it: a distributor could not sell a brand outside its own county unless it held a written assigned territory from the manufacturer covering that brand. Together, those provisions blocked the idea that a local distributor could enlarge its territory just by buying from a general distributor.

The opinion acknowledged that one clause in section 102.52(a), read by itself, might support a distributor selling anywhere a brand was designated for sale. But that clause conflicted with the territorial limits in sections 102.51(b) and 102.52(b), and because those two subsections were enacted later, they prevailed under the rule that the later-enacted statute controls a conflict. So the bottom line was a single territory per brand, fixed by the manufacturer's written assignment.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The Alcoholic Beverage Code's beer-distribution provisions have been amended since 1991. Verify current law before relying on any specific rule mentioned here.

Common questions

Could a local distributor sell a brand statewide if it bought from a general distributor?
No. The opinion held the local distributor was limited to the territory the manufacturer assigned to it in writing, regardless of who it bought the beer from.

Could buying from a general distributor expand a local distributor's territory?
No. Sections 102.51(b) and 102.52(b) tied selling rights to the manufacturer's written territorial assignment, so buying through another distributor did not enlarge the territory.

What about the clause in section 102.52(a) that seemed to allow broader sales?
The opinion found that clause conflicted with the territorial limits in sections 102.51(b) and 102.52(b). Because those subsections were enacted later, they prevailed, citing the rule that the later-enacted statute controls.

Background and statutory framework

Section 102.51 of the Alcoholic Beverage Code required a manufacturer to designate territorial limits for each brand and required each distributor to enter a written agreement with each manufacturer setting the sales territory, providing that no distributor "shall make any sales of any brand of beer outside the sales territory specified in the written agreement" (section 102.51(b)). Section 102.52(a) preserved a distributor's right to sell beer to another distributor but limited a distributor who bought from another distributor to a territory the manufacturer had designated, and section 102.52(b) barred a distributor from selling a brand outside its own county absent a written assigned territory from the manufacturer covering that brand. The opinion read the territorial limits to govern and resolved the tension with the section 102.52(a) clause by applying the rule that the later-enacted provision prevails, citing Texas State Board of Pharmacy v. Kittman, 550 S.W.2d 104 (Tex. Civ. App.--Tyler 1977, no writ), and tracing the enactment dates (section 102.52(a) added in 1975, section 102.52(b) added in 1979, section 102.51(b) amended in 1983). It also referenced the general distributor-to-distributor sales authority in sections 64.01 and 66.01.

Citations

Statutory provisions:

• TEX. ALCO. BEV. CODE ANN. §§ 64.01, 66.01, 102.51, 102.52

Cases:

• Texas State Board of Pharmacy v. Kittman, 550 S.W.2d 104 (Tex. Civ. App.--Tyler 1977, no writ)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0005
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1991/dm0005.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
Attorney General

February 26, 1991

Honorable Erwin W. Barton
Chairman
Human Services Committee
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769-2910

Opinion No. DM-5

Re: Whether section 102.51 of the Alcoholic Beverage Code imposes a territorial limitation on the resale of beer by persons who purchase from general distributors (RQ-2151)

Dear Representative Barton:

You ask about the territory in which a local beer distributor may resell beer that the local distributor purchased from a general beer distributor. Your question requires an interpretation of both section 102.51 and section 102.52 of the Alcoholic Beverage Code. Section 102.51 provides in part:

(a) Each holder of a manufacturer's or nonresident manufacturer's license shall designate territorial limits in this state within which the brands of beer the licensee manufactures may be sold by general, local, or branch distributor's licensees.

(b) Each holder of a general, local, or branch distributor's license shall enter into a written agreement with each manufacturer from which the distributor purchases beer for distribution and sale in this state setting forth the sales territory within which each brand of beer purchased by that distributor may be distributed and sold. No holder of a general, local, or branch distributor's license shall make any sales of any brand of beer outside the sales territory specified in the written agreement.

Section 102.52 provides as follows:

(a) Nothing in Section 102.51 of this code limits or alters the right of a holder of a general, local, or branch distributor's license to sell beer to any other holder of a general, local, or branch distributor's license, except that a distributor who has purchased beer from another distributor may distribute and sell the beer only within a territory for which the manufacturer of the brand has designated that it may be sold by a distributor.

(b) A holder of a general, local, or branch distributor's license may not purchase, possess, transport, or sell any brand of beer outside of the county in which the distributor's licensed premises are located unless the distributor has a written assigned territory from the holder of a manufacturer's or nonresident manufacturer's license covering that brand of beer.

You interpret sections 102.51 and 102.52 to mean that local distributors are "required to limit beer distribution to the territories of the General Distributors from whom they purchase the beer." See generally Alco. Bev. Code §§ 64.01, 66.01 (holder of general distributor's license or branch distributor's license may sell beer to and receive beer from general, local, or branch distributors). You also inform us that some local distributors have taken the position that those provisions permit them to resell a particular brand in any part of the state in which the manufacturer permits the sale of that brand. We think that both of those interpretations are incorrect. The statutes make clear that a local distributor may distribute a particular brand of beer only in the territory assigned to the local distributor by the manufacturer, regardless of whether the local distributor purchased the beer directly from the manufacturer or from another distributor.

In response to your suggestion that a local distributor may resell a brand of beer purchased from a general distributor in the territory assigned to the general distributor, we note that subsection (b) of section 102.51 states that a holder of a local distributor's license may not "make any sales of any brand of beer outside the sales territory specified in the written agreement." Nothing in that language suggests that the territorial limitation applies only to beer a distributor purchases directly from a manufacturer. Further, subsection (b) of section 102.52 states that a holder of a local distributor's license may not sell any brand of beer outside the county of the distributor's licensed premises "unless the distributor has a written assigned territory from the holder of a manufacturer's or nonresident manufacturer's license covering that brand of beer." Those provisions clearly disallow the possibility that a local distributor can expand his assigned territory for a brand of beer by purchasing beer from a general distributor rather than a manufacturer.

Those provisions also negate the local distributors' suggestion that a local distributor who purchases a brand of beer from a general distributor, rather than a manufacturer, may sell that beer in any territory in which that brand may be sold by any distributor. Subsection (a) of section 102.52 does contain a clause stating that "a distributor who has purchased beer from another distributor may distribute and sell the beer only within a territory for which the manufacturer of the brand has designated that it may be sold by a distributor." Standing alone, that language might support the local distributors' suggestion. That interpretation is, however, in direct conflict with subsection (b) of section 102.51 and subsection (b) of section 102.52, both of which limit a local distributor's authority to sell beer to the territory assigned to the local distributor by the manufacturer. Since subsection (b) of section 102.51 and subsection (b) of section 102.52 were both enacted later than subsection (a) of section 102.52, those provisions prevail. Texas State Board of Pharmacy v. Kittman, 550 S.W.2d 104 (Tex. Civ. App.--Tyler 1977, no writ) (when statutes conflict, later-enacted prevails); see Acts 1983, 68th Leg., ch. 959, at 5229 (amending subsection (b) of section 102.51); Acts 1979, 66th Leg., ch. 33, at 55 (adding subsection (b) to section 102.52); Acts 1975, 64th Leg., ch. 20, § 1, at 41 (adding substance and basic language of section 102.52(a)). In conclusion, a local distributor may sell a brand of beer only in the territory assigned to him by the manufacturer of that brand, regardless of whether the local distributor purchased the beer from the manufacturer or from another distributor.

SUMMARY

A local beer distributor may resell a particular brand of beer that he purchases from a general distributor only in the territory in which the local distributor is authorized by the manufacturer to sell that brand.

Very truly yours,

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

SUSAN GARRISON
Acting Chairman, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General