ABC’s of Celebrity Booze Endorsements

Endorsements from celebrities can boost sales of craft beverage products.  This success rate has prompted several celebrities to create their own booze brands.  Just to name a few:

Justin Timberlake- Co-founded 901 Tequila.
Dan Aykroyd – Crystal Head Vodka
Dave Matthews – Dreaming Trees Wine
Marilyn Manson – Mansinthe
Wil Wheaton – Stone Farking Wheaton Wootstout
Brad Pitt and Angelina Jolie – 2012 Chateau Miraval Cotes de Provence Rose
Hanson – Mmmhops
The Grateful Dead – Dogfish Head American Beauty
DJ Pauly D – Remix
Kenny Chesney – Blue Chair Bay Premium Rum

What does a craft beverage company pay for a celebrity endorsement as a brand ambassador? Of course, each deal is unique, but typical industry deals include one or more of the following compensation components:

  1. Upfront Payment
  2. Royalty payments for each use of the name, image or voice
  3. Future sales proceeds such as a phantom equity agreement

A recent dispute between Pabst and Snoop Dogg centered on breach of a phantom equity clause in his endorsement contract for Colt 45.  Pabst sold an entire portfolio to another entity, but allegedly it did not compensate Snoop Dogg for the portion of the sale price attributable to the Colt 45 brand.

While this situation involved big names and businesses, the same principles apply to endorsements by local or regional celebrities for craft beverage producers.  Many times these arrangements are informal – a friendly “handshake agreement.”  What seems collegial at the time can be the genesis of a future dispute.  Clear written agreements can avoid expensive battles in court and the negative public relations associated with litigation.

An endorsement agreement should contain the following critical clauses:

  • Exclusivity Obligations
  • Specific Termination Rights
  • Brand Damage Mitigation Measures
  • Trademark and Intellectual Property Rights

Artistic craft beverage people love collaborations with celebrity artists and sports figures.  If the opportunity arises, take advantage and enjoy the experience.  Just be smart about it.

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