Distribution of Wine in the Die Niederlande

The Netherlands has a very mature alcohol and beverages market. As in many more mature markets there is a slight tendency for a lower – relatively speaking – wine consumption. The popularity of wine seems to be increasing in the Netherlands, also because climate change has made it possible for local producers to grow certain wine varietals like Auxerrois, albeit still on a very small scale. There is a trend towards more low alcohol wines and 30% of the respondents in an alcohol and beverages industry interview indicate an explicit preference for lower alcohol wines. Also the sale of non-alcoholic wines is on the rise, with an increasing variety of types.

The average consumer (albeit the older age cohort) has a significant awareness in respect of wine and is willing to experiment. There is also an increase in wines that are marketed more as brands rather than as the – more traditional – focus on region and house of production. Given the mature market and excellent language skills and traditional focus on trade, it will be easy to find business partners. The market as such is interesting because it has predictive value for uptake in other (Northern) European markets.

Owners of intellectual properties in the Netherlands (including, brands, designs, trademarks and trade names, denomination of origin, website domains etc.) enjoy a very strong protection, not just based on the EU legislation, but also on the basis of the Dutch IP laws and, in particular, a very fast and dependent protection by the courts, which includes also full litigation cost (not always possible in other jurisdictions). Furthermore, the law provides for expedited procedures to get court orders and injunctions and seize products that infringe on intellectual properties. In the Netherlands the Benelux Treaty for Intellectual Property (Benelux Verdrag voor de Intellectuele Eigendom) applies, which provides national level IP protection in the Netherlands, Belgium and Luxembourg. The procedure for registering a brand, trademark or model typically takes about three months. The costs are starting from EUR 244 ex VAT and vary upon number of classes for which protection is sought.

As of 1 March 2019 there are also two distinctions of marks: collective or certificate marks. The former are the traditional marks and the latter are marks that may be used to signify that the product or service fulfils certain criteria.

In addition to European labelling requirements, Dutch requirements for bottle sizes and labelling re sulphites may apply. See https://www.rvo.nl/sites/default/files/2019/05/Overzicht-regels-wijnetiket.pdf for more details (for now Dutch only).

The obligation to include the so called pregnancy pictogram on the labels of alcoholic beverages has already been discussed several times in the House of Representatives, but is not yet compulsory by law. Despite this, exporters are advised to start already entering the pregnancy pictogram because it will probably become mandatory.

In the Netherlands there is an Advertising Code for Alcoholic Beverages (Reclame Code voor Alchoholhoudende Dranken), which is the most important regulation in the Netherlands on alcohol marketing and advertising. The Code has existed for more than 30 years and is regularly updated to reflect changes in how alcohol consumption is seen in society and reflects amendments of legislation such as relative recent increase from 16 to 18 years for legal consumption.

Liquor and Catering Act (Drank en Horecawet)

The Liquor and Catering Act establishes that, for selling alcoholic beverages (i.e. more than 0.5% alcohol), a liquor and catering license or a liquor license is mandatory. Furthermore, advertising campaigns should be compliant with the advertising code, which, although not a proper law, is the de-facto standard and may also be the basis of legal actions of competitors or consumer organisations to seek court injunctions against advertising or communication infringing on the code.

Import duties and sales tax

Import duties are due for wine from a country outside the EU and paid on the customs value, i.e. the purchase price of the wine plus transport and insurance costs up to the EU border or port of entry. Less import duties may be due for wine from a country with which the EU has a trade agreement. You pay sales tax on the customs value and import duties (21% VAT on import into the Netherlands).

When paying sales tax, the law distinguishes between purchases within and outside the EU. In both cases, you have to pay the Dutch sales tax on import in the Netherlands, but there is a difference in the administrative settlement with the tax authorities. A purchase from a supplier from another Member State is called an intra-Community acquisition. One may apply for a reverse charge arrangement to prevent pre-financing the VAT and transfer it to your administration.

Excise

Excise duty is a national tax on alcoholic beverages, mineral oils and tobacco products. Import your excise goods from another EU country, then you have two options:

• excise goods received under suspension of excise duty

You regularly expect excise goods from another EU country and the excise duty is not yet paid in the other EU country. Before you receive the shipment you must have a 'Registered consignee's permit'. You expect occasional excise goods from another EU country and the excise tax has not yet been paid in the other EU country. Before you receive the shipment you must have a 'Registered consignee (temporary)' license.

You receive the excise goods from a tax warehouse or from a registered consignor in another Member State. An electronic administrative document (e-AD) is required for the transport of excise goods. Did you receive the goods? Then you have to pay Dutch excise duty via an electronic weekly declaration.

If you receive excise goods from another EU country and is the excise tax already paid in that other EU country? Then you do not need a permit. However, you must inform Customs beforehand and provide security for the excise duty. A simplified administrative accompanying document is required for transport. Did you receive the goods? In that case, you must pay Dutch excise duty via an electronic declaration, no later than 1 working day after receipt.

Do you import alcoholic beer or wine from countries outside the EU? Even then you pay excise duty. If you have a registered consignor license, you do not pay excise duty in certain cases. For imports of wine from countries outside the EU you need a VI-1 document. The EU has designated bodies that may issue these documents. Do you import non-alcoholic beer from an EU or non-EU country? Then you pay consumption tax instead of excise tax.

• storage of excise goods

Do you want to store goods under suspension of excise? Then you need a 'Permit storage in an excise goods warehouse (AGP)'. There is a minimum quantity of 40,000 liters of beer or 10,000 liters of wine to qualify for this permit. Exception: In an excise goods warehouse, the quantities may be lower if you transfer excise goods to other Member States to a significant extent.

An overview (EU wide) can be found here.

The Dutch market, like others, moves towards the digital world and the wine sector reflects this tendency in particular in relation to communication, promotion and sale of products, although brick-and-mortar store still remains a fundamental element in the distribution chain.

Given the maturity of the market and the strong position of large players, it is important to secure trading partners in the Netherlands when accessing the markets. In particular the brewery companies have a very strong hold on the alcohol and beverages markets, although there are several strong parties independent of these companies as well. The choice for a partner will therefore be highly dependent on the market segment to which the product is targeted.

Several importer and traders organisation indicate increasing difficulty of traditional channels to keep up with the data collection capabilities and algorithms of distribution channels with a more digital focus. In the Netherlands, online sales account for an estimated 5% of the wine market (2015), but this channel is estimated to have grown significantly in the meantime. The leading online wine retailer in the Netherlands is Wijnvoordeel.nl, operating only online. Premium wines also sell online as consumers are willing to pay more for a more exclusive wine which they cannot buy in the supermarket. In general, online sales development is interesting for new market entrants from developing countries, as they can use the online space to provide more information on their products.

Below our main tips for negotiating a distribution contract:

Who is your distributor? It is easy to seek out information via official channels to establish the validity of your trading partner. The Dutch embassies and larger consulates will be able to point exporters to the right channels to find a partner or industry representation.

Draw up the contract in English. A contract only in English is perfectly valid, a bilingual agreement neither necessary nor advisable. Stamp duties or the like do not apply for a valid agreement. A written agreement executed by authorized representatives suffices.

The best way to proceed is to indicate what your business model is and what your specific goals are for the Dutch market and have local Dutch counsel tailor the agreement to your needs. As a distribution agreement is a very common agreement in most cases it can be based on a template and cost will be predictable. If an agreement has already been prepared by capable counsel in other EU jurisdictions, in many cases a sanity check and slight amendments will be all that is needed.

As in all EU jurisdictions, the wine exporter must clearly distinguish between dealing with an importer or commercial agent. The latter is the beneficiary of protective provisions which may include a compensation upon termination. In the Netherlands exporters have to also consider that a long-term commercial relationship with a highly dependent partner in the Netherlands, may be deemed a long term agreement even if no written understanding exists. Termination of such relationship therefore require assessment by local counsel to avoid litigation.

Of course, EU law applies in respect or competition and Dutch law largely reflects the same. In recent years private competitors have increasingly sought court action on infringements. Limitations e.g. as to online sales are only possible up to an extent and may be related to quality requirements. Expert advice is required to avoid infringement on laws which may affect enforceability of agreements and incur the risk of governmental or private legal action.

The Netherlands have a relatively quick and cost-effective legal system that allows for equal protection under the law. Foreign parties do not have to fear favouritism of Dutch defendants. In most instances courts will allow documentary evidence in court in foreign languages even without translation in summary proceedings if the documentation is in English, German or French.

Like in many other European countries, the Netherlands now has a dedicated commercial court that allows for court proceedings in English for cases with an international angle. The court has a dedicated panel of judges chosen for their experience in commercial cases and language skills. The Netherlands are a member of the New York Convention of 1958 and enforcement of an arbitral award is easy as is the recognition of foreign court decision.