Written by Package stores in Tennessee have received welcome clarification from the Tennessee Alcoholic Beverage Commission (TABC) regarding customer loyalty programs.
After a recent discussion with TABC Counsel Reese Bourne, the agency confirmed that retail package stores may allow customers to redeem loyalty points or rewards toward purchases of beer, wine, and spirits, provided the discount does not result in a sale below the applicable legal cost threshold.
For several years, the TABC’s position was that while package stores could offer loyalty programs, rewards earned through those programs could not be applied to alcoholic beverage purchases. The agency has now clarified that this interpretation has changed.
Although the most recent TABC Director’s Memorandum addresses the issue more broadly and does not specifically discuss retail package store loyalty programs, its guidance is consistent with the agency’s current position.
During our discussion, we also noted that Tennessee’s Retail Food Store statutes (T.C.A. § 57-3-800 et seq.), which govern wine sales in grocery stores, expressly prohibit the use of loyalty rewards on alcohol purchases. As a result, grocery store loyalty programs—such as Kroger Plus rewards or Amazon benefits at Whole Foods—cannot be used to discount wine purchases. No comparable prohibition exists for licensed retail package stores.
Package store owners should remember that loyalty programs must still comply with Tennessee’s minimum pricing requirements. Any redemption of points or rewards must not reduce the selling price below the applicable legal minimum.
Current minimum markup requirements include:
- Beer: No statutory minimum markup requirement.
- Wine: Minimum 20% markup above wholesaler cost (T.C.A. § 57-3-902).
- Spirits: Stores must continue to comply with all applicable pricing requirements under Tennessee law.
Retailers should also maintain records and safeguards within their loyalty program to demonstrate compliance. For example, the program should prevent customers from redeeming an excessive number of points on a single transaction if doing so would result in a below-cost sale. Maintaining clear documentation and reporting capabilities will help demonstrate compliance if the TABC ever reviews the program.
This clarification provides additional flexibility for Tennessee package stores looking to enhance customer retention through loyalty programs while remaining compliant with state law. Businesses considering implementing or updating a loyalty program should review their policies and pricing systems to ensure they remain within Tennessee’s regulatory requirements.
If you have questions about implementing a compliant loyalty program or other Tennessee alcohol regulatory matters, the attorneys at Harrington Beverage Law are available to help.
Last modified: July 21, 2026
