Distribution of Wine in Romania

Romania holds one third of the total EU vineyards, but ranks only 6 as wine producer in the EU, and is exporting less than 5% from its local production.

Due to is good terroir, vast areas of underdeveloped vineyards and reasonable land prices, Roma-nia represents one of the most attractive EU countries for greenfield and brownfield investment in the wine and wine tourism industries and its wine has been defined by foreign investors as “hidden gem waiting to be discovered by many export markets”.

In terms of consumption, Romania’s wine imports have constantly been increasing but the focus is on lower quality, low price wines, and mostly white assortments. However, Millennials are more interested in premium wines and it is expected for this sector to grow in the upcoming peri-od.

The trademark right is acquired and protected by registering it to the State Office for Inventions and Trademarks according to the provisions of the Law no. 84/1998 regarding the registration of trademarks and geographical indications. The registration can be requested by submitting a re-quest that shall be published in an electronic register in maximum 7 days. For 2 months since the date it is published, third parties can submit oppositions or refusal observations.

It is to be noted that a trademark can incorporate a DOC or IG but only if the products for which the trademark is registered respects the specificity of the DOC/IG, otherwise, the registration shall be refused.

The trademarks are classified according to Nice Classification and the State Office for Inventions and Trademarks shall examine the request within 6 months from its registration. If admitted, the trademark will be published in the in the Official Gazette of Intellectual Property Rights and it will be registered in the Trademark Registry.

The trademark rights are valid for a period of 10 years starting from the day the request has been submitted and can renewed for as many ten years period as wanted. The trademarks registered at the State Office for Inventions and Trademarks are protected only on Romanian territory.

Considering that the national system is complementary to the European Union one, trademark protection should be ensured at European level too. Therefore, the trademark shall be registered to European Union Intellectual Property Office. When registered, the trademark will be protected in all the European Union States and it is valid for a period of 10 years, with possibility of renewal.

The labelling of wines sold on the Romanian market is governed by both European Law and the national legislation that sets additional requirements for the labels to the ones that can be found in Regulation (CE) NR. 491/2009, that have been presented in the European Section of this guide.

Additional compulsory label elements:

• nominal volume of the bottle/pack etc.;
• indications regarding the Lot number that would enable the identification of the bottling date;
• in the case of the aerated sparkling wines and of the aerated semi sparkling wines the in-dication of the production modality: obtained by adding carbon dioxide;
• information regarding the presence of: 'sulphites' or 'sulphur dioxide', 'eggs', 'egg pro-teins', 'egg products', 'egg lysozyme' or 'egg albumin', 'milk', 'milk products' milk "or" milk proteins "or corresponding pictograms, if the case;
• for the sparkling wines, aerated sparkling wines, and the favoured sparkling wines, the type of product, considering the sugar concentration. If according to the sugar content of the wine, the latter may fit into 2 categories, it shall be used one of them, by choice;
  
  

Please note that the sugar content cannot vary with more than 3gr/litre than the concentration indicated on the label.

In case of the wines bottled in Romania, the alcoholic strength shall be written on the label with font of minimum 5 mm in case the nominal volume is higher than 100 centiliters and of minimum 3 cm if the volume is lower or equal with 20 centiliters.

Additional optional label elements:

• in case of the harvest years – at least 85% of the grapes used in the production must have been harvested in that specific year
• the trade marks
• any prizes won by the wine in official competitions by that specific lots
• specific colour

Some of the elements are mandatorily and they must be grouped in the same visual field so that they are clearly distinguishable from other writings or drawings.

For the wine products produced in Romania, the label elements will be displayed in one or more of the official languages of the European Union. It is to be mentioned that one of them should mandatorily be the Romanian language.

Disrespecting the rules regarding the labelling of the wines may lead to their withdrawn from the market.

According to the legal provisions as foreseen by the Law of wine and vineyards, the Romanian wines should be bottled in any of the forms of packaging used on the international market for these types of products. So we have: bottled wine, wine sold bulk, or bag-in box wines.

The wines that are sold bulk or in bag-in-box type of package are subject to special rules regarding the selling and marketing. For example the wines sold bulk transported in recipients larger than 60 liters must be accompanied by the analysis bulletin released by the authorized laboratories.

The sparkling, aerated sparkling wines, aerated semi-sparkling wines, semi sparkling wines DOC, IG wines cannot be sold to consumers bulk but only bottled.

Also, the sale of bulk wines without GI or DOC or type indication can be done in spaces where no other bulk products are sold and only after obtaining a particular authorization in this sense.

Obtaining the DOP and IGP for the national wines will be done through a certificate issued yearly by the Wine and vineyard National Office.

Since April 1st 2019, the European Commission launched the electronic platform called eAmbrosia that is a database that contains the geographical indications of wines protected throughout the European Union and aims to ensure the easy identification of wines.

At the moment, Romania has more than 50 geographical indications in the Wine Register that are already protected and over 15 pending and 34 DOC that have been recognized.

In Romania, there are many law provisions that regulate alcohol advertising. So, through law no. 148/2000 regarding the advertising activity the explicit publicity of the wine products on the first or last page of written press or on the public transport tickets is prohibited. Also, it is prohibited to advertise wine products near school units or hospitals or in public locations intended for minors.

In addition, the National Audiovisual Council regulates that during 6 AM and 8PM the TV shows in which wine products are consumed are prohibited. Moreover, the TV shows dedicated to minors cannot be sponsored by individuals or companies whose main activity is related to manufacturing or marketing of the wine products.

Taxation

The sale of wine in Romania is not subject to excise duty, with one exemption namely sparkling wine for which an excise of approx. 10,28 EUR/ hl is due. The value of the excise is modified year-ly by the Ministry of finance.

The VAT applicable to wine, irrespective of category is 19%.

Licenses and authorizations

The sale of alcoholic beverages in Romania can be performed only by entities that obtain a license for engross or retail sale. The conditions for obtaining the license are:

• the existence of a warehouse where the goods are stored that has adequate conditions
• having means of verifying whether products are counterfeit
• having the NACE codes covering the sale of the alcoholic beverages
  
  

Regarding the duty suspension arrangements they are the same as presented in the EU section of this Guide, namely the wine cannot be transported in a suspensive regime unless the Romanian buyer has obtained one of the following authorizations:

• storage tax warehouse
• registered consignee
  

Obtaining either of the two authorizations above is highly regulated and subject to meeting cer-tain minimum social capital and volume of sales requirements. Since in practice the state authori-ties also have some requirements that are not foreseen in the fiscal code but just based on their practice, we highly recommend obtaining specialized legal assistance in such process. 

Distribution contracts are not expressly regulated by Romanian legislation, hence parties have a larger liberty to set the framework of their cooperation.

Nevertheless, foreign producers that want to access Romanian market through a distributor should pay attention to the following aspects that could represent serious risks on a long term:

• have a written contract

Although a gentleman’s agreement between the parties shall never be out of fashion, in case of a recurrent commercial relation a written contract is a must, and it should contain at least the clauses listed below.

• make sure that the distributor has the required authorizations and permits

In general, each party is liable for its taxes and excises related to the product sold, and the entity that sells wine in an excise suspensive regime in Romania may consider that its liability stops at the date the ownership rights over the product passes on to the distributor. However, according to the Romanian Fiscal code, in specific cases, all sellers and resellers of an excisable product are jointly liable for the payment of the excise.

So for example the authorized tax warehouse that sells sparkling wine in a suspensive regime, could be obliged to pay the excise should its client not comply with the tax provisions.

For this reason we recommend including an obligation for the distributor to provide to the Seller copies of its authorizations/permits and to inform the former immediately should they expire or be revoked.

• payment

The business model preferred by the sellers is the one in which the distributor pays the goods up-front and assumes ownership of them earliest on. However, in practice, the sellers provide the distributors with rather long payment terms which would mean that in order to reduce that de-fault risk the sellers must either work with credit risk insurers, either require from the distributor promissory notes or checks in blank as guarantee for the payment. Other options would be for the seller to withhold the ownership rights over the goods but transfer the risk to the distributor so that in case of default in payment the Seller may take back its products.

• sensitive clauses

The most sensitive clauses in distribution contract regard: exclusivity and price fixing that in some cases and depending on the business model could be prohibited by the Romanian competition laws. According to the Romanian competition council, the following provisions must be avoided:

• Provisions regulating the resale price/ the value of the discounts and generally interfer-ence of any sort into the price/discount policies of the distributor
• Provisions setting up a system monitoring the sale price of the distributor
• Provisions regulating the possibility of the seller to interfere with the buyer’s promotional and marketing campaigns etc.
  
  
• applicable law and jurisdiction

It is essential from our point of view for the distribution contract to contain express indications with respect to the applicable law not only to the competent courts or an arbitral clause

The reason for stipulating the applicable law is that these provisions shall be the one regulating: the interpretation of the contract, its formation and termination, the liability of the parties and such legal provisions shall intervene in any aspect that the parties have not regulated through the contract or even shall be applicable with priority to the contract should there be imperative legal provisions from which the parties cannot derogate from.

As an unwritten rule, the party bearing the highest risk of the contract should make sure that it is familiar with the applicable law and has easy access to the competent dispute resolution forum.

However bear in mind that in case of an international sale of goods, if both the country of resi-dence of the buyer and of the seller have ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG), the latter shall apply in the absence of an express deroga-tion of the parties in this sense. This mention is relevant because the CISG contains special provi-sions regarding (amongst other) the liability of the parties or the remedies that they have availa-ble that are different from the provisions of the Romanian civil code, and hence in case of conflict between the 2 the CISG shall prevail since it constitutes Lex specialis.

Unlike the distribution contracts, the agency ones are expressly regulated by the Romanian civil code namely article 2072- 2095.

In the case of the sale of wine, agency contracts are common only in the case of the Principals that have local presence and that can obtain the necessary authorizations for the sale and storage of wine and most important for entering the wine on the Romanian market in an excise suspen-sive regime because generally the agent does not have storage capacities nor does it obtain the authorization required by law for the sale because his acts just like an intermediary.

For the Principals that are not present in Romania, the agency contract is not a suitable option and they should explore concluding a distribution contract, hence placing most of the business risks and the obligations to obtain authorization of the Distributor.

The agency contract has a series of particularities, as follows:

1. the exclusivity clause
In both theory and practice the agency contract should contain a clause with respect to the exclu-sive (or non exclusive) character of the relation between the parties in that particular territory. In the absence of such a provision both the agent and the Principal are entitled to conclude similar contract for the same goods/services with third parties that shall activate on that territory.

The exclusivity may be unilateral, namely only for the Agent to be obliged not to act on behalf of other Principals on the same territory and for the same goods or products and, should this be the case, the clause must be worded in a manner that restricts the possibility of the Agent to provide competing services to other not only through an agency contract but also through a labor contract or an intermediary contract.

2. the non-compete clause
Is the one through which the principal restricts the possibility of the Agent to provide the same type of services after the termination of their contract.

According to the civil code the non–compete clause can regard only the territory included in the agency contract and only the goods and services that the agent was empowered to negotiate for and shall be valid for a maximum of 2 years after the end of the contract. If a longer period was foreseen then its effects shall be limited to 2 years and if the territory or the scope of the services affected by non compete have been enlarged then such provisions shall not produce effects.

The Principal cannot rely on the non-compete clause when the contract agency ceases in the fol-lowing situations: a) the Principal unilaterally denounces the agency contract with non-observance of the term of notice, legal or conventional; b) the agency contract is terminated as a result of the fault of the Principal.

3. the commission and its calculation
The agent receives for his services a commission and the parties may agree when is the latter due: In this respect the civil code sets forth 3 possibilities, but the parties have the liberty to dero-gate from the legal provisions: a) when the Principal observed its obligations towards third party; b) when the Principal should have fulfilled its obligation according to the contract executed with the third party; c) when the third party fulfilled its obligations (mainly the payment one) towards the Principal.

The Principal of course would be interested for the contract to stipulate that the Agent’s fee shall be due at the date the third party pays the price so that it does not have to advance such costs from its own pocket and also this would keep the Agent motivated to ensure the collection of the amounts (if he undertook this obligation under the contract).

The commission is due also for the contracts concluded through the efforts of the Agent, that have not been fully executed due to either of the parties, should the agent have fulfilled its obliga-tions.

With respect to the computation modality at the end of each quarter the Principal must send cop-ies of the invoices to the agent that were sent to third parties, as well as a description of the commission value calculation. At the request of the agent, the Principal shall immediately com-municate to him the information necessary to calculate the commission, including the relevant statements from its accounting records.

4. the duration and termination
Just like in the case of most type of contracts, the parties to an agency contract may stipulate its duration or just leave it for un undetermined period of time. It is to be noted though that in the case of the contract concluded for a determined period of time, if the parties continue to work on its basis after the expiry, then the contract shall be automatically prolonged for an undetermined period of time, which shall have an impact on the notice that either party must send for the antic-ipated unilateral termination of the contract, in the sense that the duration of the notice initially foreseen in the contract (if any) shall be prolonged as detailed below.

With respect to the notice period, in the first year of the contract, the notice period shall have a duration of at least one month. If the duration of the contract is longer than one year, the mini-mum notice period shall be increased by one month for each additional year started, without the notice period exceeding 6 months.

The parties may derogate from the provisions of the civil code and stipulate a longer notice period (than 6 months) but in such case it is mandatory for both parties to have the same obligation.