The Florida Department of Business and Professional Regulation (DBPR) has filed two complaints against Blue Cloud Distributing, alleging the PepsiCo subsidiary violated statute in nine license applications for its locations across the state.
The DBPR claims Blue Cloud’s answers to the applications’ questions about ownership violated Section 559.791 of Florida statute, which prohibits “false swearing on application.”
“Specifically, Section 8 of the application required respondent to identify all ‘officers, directors and stockholders’ and to disclose the ownership shares, if any, held by each party,” the DBPR wrote in its complaints. “In response, respondent simply stated that ‘Blue Cloud Distribution, Inc.’ owned ‘100%’ of ownership shares within the corporation.”
However, “at all times material to this complaint, respondent was an affiliate of PepsiCo. Inc.,” the DBPR noted.
In its second count against Blue Cloud, the DBPR claims the distributor violated Section 563.022 of Florida law, which states that no “officer, director, agent, or employee of a manufacturer, or an affiliate of any manufacturer” “may have an interest in the license, business, assets or corporate stock of a licensed distributor.”
As “a licensed distributor,” Blue Cloud violated the statute “by being an affiliate of Pepsi, an affiliate manufacturer of Hard Mountain Dew,’ the DBPR wrote.
The formation of Blue Cloud was announced in 2021 and began to take shape last year as the distributor of Hard MTN Dew, which Boston Beer Company produces under a license agreement with PepsiCo, which owns the Mountain Dew soda brand.
Florida was one of three launch states in 2022, along with Iowa and Tennessee. The brand reached its 12th state last week when it launched in Arizona, according to its Instagram account.
The DBPR filed complaints against Blue Cloud’s nine applications – filed between October 2021 and June 2022 – for licenses for nine sites in Florida: Jacksonville, Gainesville, Fort Myers, Winter Haven, St. Petersburg, Melbourne, Daytona Beach, Orlando and Pompano Beach.
Last summer, Boston Beer CEO Dave Burwick said the companies planned to go “all out” on expanding to new markets in 2023 during a Q2 earnings call. He attributed the delayed roll out to “a slower than expected regulatory process.”
Regulatory challenges filed in other states include Virginia-based Blue Ridge Distributing and Reyes Beverage Group-owned Premium Distributors’ complaint that Boston Beer violated state franchise laws by appointing Blue Cloud as Hard MTN Dew’s distributor, rather than going through its existing network.
In addition to Hard MTN Dew, Blue Cloud also distributes Lipton Hard Tea, which FIFCO USA produces through a licensing agreement with PepsiCo. Lipton Hard Tea was announced in October 2022 and began to roll out last month. In the fall, Burwick said Boston Beer was first invited to produce the brand, but declined because it would be in direct competition with Twisted Tea, the company’s best-selling brand which flows through Boston Beer’s regular distribution network.
Blue Cloud has not returned a request for comment.