The dream of owning your own hospitalty business - a vibrant café, a stylish brasserie or a cozy restaurant - is alive and well for many entrepreneurs. The Belgian hospitality industry is therefore a sector that breathes tradition, craftsmanship and passion , a unique culture that was even recognized as a Unesco World Heritage Site in 2016.
But behind this dream lies a harsh reality. The industry faces stiff challenges: rising costs, changing regulations and cutthroat competition. For a start-up operator, or an established one looking to renovate, finding start-up capital and a suitable location are often the highest thresholds.
At that crucial moment, breweries and beverage retailers often present themselves as the ideal partner. They offer what appears to be a golden ticket: substantial financing, premises in a prime location, or complete furnishings. The quid pro quo? Signing a brewery contract.
A brewery contract, also known as a beverage purchase contract, is an agreement whereby a hospitality operator (the ‘operator’ or ‘buyer’) undertakes to purchase beverages (exclusively or for a minimum quantity) from a specific brewery or beverage dealer for a specified period of time. In return, the operator receives these substantial economic benefits.
While these contracts can be an indispensable springboard, they also place a heavy and long-term burden on your business. They are legally complex documents that in Belgium combine rules from various areas of law, from contract law and commercial lease law to the strict competition law. A thoughtless signature can ‘stifle’ your commercial freedom and profitability for years.
The anatomy of a brewery contract: a ‘mixed’ agreement
Unlike a simple sale or lease, the brewery contract is not a one-size-fits-all agreement named in law. It is what legal experts call a ‘mixed agreement’ or a ‘framework agreement. It acts as an umbrella above which several separate, but interrelated, contracts are hidden.
The typical building blocks of a brewery contract are:
- The beverage purchase agreement: This is the core. It contains the agreements on which drinks (exclusivity) and how many drinks (minimum purchase) you must purchase.
- A financing agreement: This can be a money loan , a ‘fonds perdu’ (a non-refundable payment), or a security depost where the brewery guarantees your loan with the bank.
- A provision agreement:
- Commercial lease: Very often the brewery owns or is the main tenant of the property and (sub)leases it to you through a commercial lease.
- Loan (‘commodity’): The brewery supplies and installs equipment such as the tap system, refrigerators, umbrellas, glasses and façade advertising, which you may use ‘free of charge’ as long as the contract runs.
This interconnectedness is exactly where the legal complexity begins. The rules of the mandatory Commercial Lease Act , the rules on loans, and the rules of competition law are all at the same time applicable.
The dual purpose: a balancing act between ambition and outlet
To correctly evaluate a brewery contract, you must understand the goals of both parties. In theory, it is a partnership that strives for a win-win situation.
The brewery's perspective: guaranteed sales and market share
For the brewery or beverage retailer, the goal is to primarily commercial and strategic:
- Guaranteed sales: The contract assures the brewery of stable sales of its products over a long period of time.
- Market penetration: It allows them to have a presence in strategic locations and increase their market share.
- Brand visibility: The chospitality business will become a showcase for the brewery's brands.
- Exclusion from competition: An exclusivity clause literally excludes competition from that specific point of sale.
The perspective of the hospitality operator: the necessary springboard
For the (start-up) hospitality operator, the benefit is of the contract almost always financial. It provides access to resources that are difficult or more expensive to obtain through traditional channels (such as banks):
- Access to capital: A ‘fonds perdu’ or a loan enables the purchase of the commercial business, the execution of renovation works or the purchase of stock.
- Access to a prime location: Breweries often own or lease the best located properties. Without them, an operator would never have access to that particular location.
- Reduction of investment costs: The loan of expensive equipment (tap installations, cold rooms) significantly lowers the initial investment cost.
The other side of the coin: criticism and legal pitfalls
These benefits come at a high price. Criticism of brewery contracts has been around for decades and is at the heart of most legal disputes. The fundamental problem is the economic dependence that is created.
The main disadvantages and risks for the hospitality operator are:
- Loss of commercial freedom: You are tied to the brewery's assortment. Responding to new trends (e.g., specific craft beers, popular soft drinks) becomes impossible if your contract partner does not supply them.
- Higher purchase prices: This is the most common complaint. Because you have nowhere else to go, the brewery is in a monopoly position. You cannot negotiate or take advantage of competitor promotions. The brewery can set prices unilaterally, which puts direct pressure on your profit margin.
- Stifling minimum purchase requirements: Many contracts impose a minimum purchase volume (in hectoliters) per year. Failure to meet this quota, for example due to road works, an economic crisis (such as COVID-19 ) or simply a disappointing season, is considered a breach of contract that can lead to heavy penalties.
- Long-term bonding: Contracts are designed to last a long time, often 5, 10 years or longer. This creates a huge barrier to selling your business or changing your concept.
- Unbalanced contracts: The brewery, a large professional organization, submits a standard contract to the operator, who is often in a weaker negotiating position. These contracts often contain strict damage clauses or vague clauses in favor of the brewer.
An overview of the legal outline
Because of these severe criticisms and obvious economic imbalances, legislators have intervened on several levels. A modern brewery contract is governed not only by what you sign, but also by a web of compelling legislation.
Below is an overview of the crucial legal topics. Each topic is complex and is covered in a separate, in-depth page.
The bottom line: the liquor purchase obligation
This is the heart of the agreement. How far does exclusivity extend? Does it apply only to lager, or also to specialty beers, wines, soft drinks and even coffee? And what happens if you exceed the agreed minimum amount of drinks in a year? Can the brewery prohibit you from selling beverages it does not have in its range?
Read our in-depth analysis of the liquor purchase requirement here.
The limits: competition law and the duration of the contract
You cannot commit yourself indefinitely. Both Belgian and European competition law sets strict limits on exclusive purchasing agreements. The goal is to prevent breweries from ‘foreclosing’ the market and making competition impossible. The maximum duration of your contract and the extent of your exclusivity are directly affected by these rules. A contract that lasts too long may be void (in part).
Discover the impact of competition law on the duration of your contract here.
The ‘benefits’ dissected: trade lease and loan
The ‘benefits’ you receive are legally separate contracts, each with their own rules. If you rent the property from the brewery, the Belgian Commercial Lease Law applies. This law is of mandatory law, which means the brewery cannot simply deviate from it in the contract. You have specific rights, such as the right to rent renewal, which protect you. The money loan and loan also have their own legal consequences, such as in terms of maintenance or return at the end of the contract.
Read all about the legal side of brewery financing and leasing here.
Modern protection: the unfair clauses in a B2B relationship
Since the introduction of specific rules on unfair clauses in the Code of Economic Law, as a hospitality operator you enjoy additional protection against unfair contract clauses. Clauses that create an ‘apparent imbalance’ between the rights and obligations of the parties may be considered unlawful and therefore void. Consider clauses that give the brewery the right to simply change the price, or that make you bear all the risks. The ‘abuse of circumstances’ also provides a new avenue to challenge contracts entered into while you were in a vulnerable position.
Find out how B2B contract laws protect you from unfair terms.
When things go wrong: conflict, force majeure and litigation
A 10-year contract inevitably collides with unforeseen circumstances. What if you cannot fulfill your obligations due to force majeure (such as mandatory COVID closures )? What if market conditions change drastically (hardship)? What penalties can the brewery impose for breach of contract? And what steps can you take yourself? In addition to the courts, there is also a low-threshold Liquor Purchase Contract Reconciliation Committee, which can mediate disputes.
What to do in the event of a conflict? Read about remedies and dispute resolution here.
Conclusion: a brewing contract is a marathon, not a sprint
A brewery contract lays the foundation for what should be a lasting partnership based on cooperation and trust. However, practice in Belgium shows that it is above all a hard business agreement with far-reaching legal and financial consequences.
Signing a brewery contract is one of the most important decisions in the life of your hospitality business. The crucial phase is the pre-contractual phase. The information you receive before signing and the negotiation of terms will determine your success.
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