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Alcoholic Beverages - Serbian Legal Framework

Alcoholic Beverages - Serbian Legal Framework

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Our current publication is in detail Serbian Legal Framework for alcoholic beverages. It thoroughly analyses governmental approvals required to market alcoholic beverages, advertising restrictions, licensing and distribution requirements and restrictions, permissible product ingredients, and practical compliance issues.

This legal overview covers the following key topics:

1. Specialized Regulations for Beer, Wine and Strong Alcoholic Drinks;
2. General regulations: Law on Excise Duties, Law on Advertising & Law on Protection of Competition

1. Specialized Regulations

The regulatory framework of Serbia in the field of alcoholic beverages consists of several narrowly specialized laws and sub-regulations that govern the production and marketing of alcoholic beverages. Serbian legislation regulates beer, wine, and strong alcoholic drinks individually, and separate law applies to ethanol (ethyl alcohol). In the listings below, key issues addressed by the laws on alcoholic beverages will be pointed out.

a) Beer

✓ The Law on Beer deals with the issues of beer production, service beer bottling, beer quality and raw materials quality control, packaging and labeling, and beer market placement.

✓ Only legal entities registered in the Register of Beer Producers may engage in beer production.

✓ The beer producer should meet the prescribed conditions for facilities, premises, equipment, devices, and professional staff.

✓ A beer producer registered in the Register of Beer Bottling Service Providers can also engage in the beer bottling service.

✓ If imported in bulk, the beer producer and service beer bottler can bottle the beer in original packaging.

✓ Raw materials for beer production are subject to mandatory quality testing in terms of physical, chemical, and microbiological properties and the presence of residues of plant protection agents and other pollutants. The responsibility for the quality of raw materials rests with the beer producer or the importer of raw materials. Bylaws under the jurisdiction of the Ministry of Agriculture define the requirements regarding the quality of hop, barley malt, unmalted raw materials, and water.

✓ In addition to raw materials, beer is also subject to mandatory quality control, including sensory evaluation.

✓ Beer producers or importers are responsible for the packaging and labeling of beer. The label in the Serbian language should be prominent and readable and should not mislead the consumer.

b) Wine

✓ The Law on Wine deals with, among others, wine production and trade.

✓ The wine should possess the prescribed quality in terms of physical, chemical, microbiological, and sensory properties. Wine is subject to mandatory quality testing and sensory evaluation before bottling, labeling, and market placement, by an authorized laboratory.

✓ The wine is packaged and labeled by the producer. Like with beer, the label should be easy to see, clear and legible, with information in the Serbian language.

✓ Wine intended for the final consumer is marketed only in its original packaging.2. General Regulations

✓ Imported wine should meet the conditions regarding quality and labeling that apply to domestic wines. In this sense, imported wine is subject to sampling for quality testing and sensory evaluation.

c) Strong alcoholic drinks

✓ The Law on Strong Alcoholic Drinks deals with the production, quality, labeling, and sale of strong alcoholic drinks, as well as other issues of importance.

✓ Strong alcoholic drinks have specific sensory properties and a minimum alcohol strength of 15% vol. This category of alcoholic beverages also includes egg liqueur with a minimum alcohol strength of 14% vol.

✓ Only a legal entity registered in the Register of Producers of Strong Alcoholic Drinks can produce strong alcoholic drinks.

✓ Strong alcoholic drinks should meet quality and safety conditions, which is the manufacturer's, i.e., the importer's responsibility. Authorized laboratories perform safety and quality testing and sensory evaluation of strong alcoholic drinks. Strong alcoholic drinks should be kept and packaged in containers whose lids or foil do not contain lead to preserve their quality.

✓ The producer or importer is responsible for labeling strong alcoholic drinks, and the label should be easily visible, clear, and legible. The data on the label should be in the Serbian language so that the consumer can easily understand every piece of information. Multilingual label corresponding to data written in Serbian is allowed.

✓ Category names Whiskey or Whisky, Brandy or Weinbrand, Raisin brandy, Heferbrand, bierbrand or eau de vie de biere, Topinambur, Geist, Gin, London gin, Aquavit or aquavit, Pastis, Pastis de Marseille, Anis, Bitter, Creme de cassis, Guignolet, Punch au rhum, Sloe gin, Sambuca, Maraschino, Marrasquino or Maraskino, Nocino, Advocaat or avocat or lawyer, Mistra, Väkevä glögi or Spritglögg Berenburg or Beerenburg should not be translated on the label, nor in the description and presentation of strong alcohol drinks.

✓ Strong alcoholic drinks in their original packaging that meet safety and quality requirements can be placed on the market for immediate human consumption.

✓ If imported to Serbia for further production or sale, strong alcoholic drinks should meet domestic safety, quality, and labeling requirements and be accompanied by an appropriate quality document from the exporting country.

2. General Regulations

In addition to the previous laws, companies whose business is in the alcoholic beverage industry also interact with other laws such as, among others, the Law on Excise Duties, the Law on Advertising, and the Law on Protection of Competition.

The list of relevant regulations is not exhaustive, but we will pithily refer here to the most noteworthy aspects of these laws affecting the operations of such companies.

a) Law on Excise Duties

Alcoholic beverages are subject to excise duty. Hence, they classify as excise goods.

For excise taxation purpose, alcoholic beverages are beverages that are, depending on the raw materials from which they are produced and the ethanol content, marketed as such beverages. Alcoholic beverages classifying as excise goods are:

1. strong alcoholic drinks;

2. low-alcohol drinks containing more than 1.2% vol. alcohol but no more than 15% vol. alcohol, produced from fruit juices or refreshing non-alcoholic drinks; and

3. beer (except non-alcoholic beer that contains up to 0.5% alcohol).

The highest excise tax applies to strong alcoholic drinks.

b) Law on Advertising

The advertising of alcoholic beverages is subject to special rules concerning children and minors.

During and at least ten minutes before or after the broadcast of a children's show, i.e., a show intended for minors, it is forbidden to broadcast advertising messages and TV sales messages recommending alcoholic beverages.

Additional prohibitions and restrictions apply to strong alcoholic drinks. Their advertising is prohibited, including any display of a trademark or other mark used to identify the strong alcoholic drink, unless in printed media, provided that they are not intended for or thematically oriented toward children or minors, and in electronic media from 11 pm until 6 am.

Exceptionally, it is possible to advertise an alcoholic beverage, trademark or another mark of an alcoholic beverage or to publish information about the quality and other properties of the alcoholic beverage at the point of sale, fair stand, in professional books, magazines, and other professional publications intended for producers or sellers of those products, or on means of business communication and business representation of alcoholic beverage producers.

The rules for advertising alcoholic beverages with an alcohol content of less than 20% are more lenient.

It is allowed, for example, to advertise such alcoholic beverages on transport vehicles (except public transport vehicles), in connection with sports events, or via internet advertising. It is expressly forbidden to show the use or imitation of the use of alcoholic beverages in advertising.

An advertising message advertising an alcoholic beverage should contain a warning message referring to the prohibition of the sale and serving of alcoholic beverages to children or minors, as well as a warning on the responsible use of alcoholic beverages.

An advertiser of alcoholic beverages may not sponsor:

1. media, athletes, sports clubs, sports competitions; nor

2. children and minors, their activities, and persons or activities whose audience is predominantly children or minors.

This restriction does not apply to an advertiser of alcoholic beverages with an alcohol content of less than 20%.

c) Law on Protection of Competition

Compliance with competition protection rules is crucial for all market participants, especially regarding exclusive or non-exclusive distribution agreements.

A business model of a market participant that has or can have the goal/consequence of significantly restricting, distorting, or preventing competition violates the competition.

Distribution agreements may have features of a restrictive agreement if they are aimed at or lead to a significant limitation, disruption, or prevention of competition in the territory of Serbia.

Under the Law on Protection of Competition, restrictive agreements shall include contracts, contract provisions, express or tacit agreements, concerted practices, and decisions of market participants’ associations, which determine purchase or sale prices or other terms of trade, or limit and control production, market, technical development, or investments, apply unequal business conditions, or share markets or sources of supply.

It is possible to exempt a restrictive agreement from the prohibition if they contribute to the production and trade or incite technical or economic progress and do not exclude competition in the market.

At the request of the participants in the restrictive agreement, the Commission for the Protection of Competition of Serbia may exempt a particular restrictive agreement from the prohibition. In addition, under the regulations of the Government of Serbia, specific categories of agreements on the sale, purchase, or distribution of goods between market participants operating at different levels of production or distribution (vertical agreements) are exempt from the prohibition.

Therefore, when concluding a distribution/licensing agreement, one should pay attention to the provisions that could act as a restrictive agreement and test the planned business model against the regulation on the exemption of vertical agreements from the prohibition.

By Milan Samardzic, Partner and Tijana Kovacevic, Senior Associate, SOG Law Firm