| Distributors, Humbug!
by Richard N. Charles
Bob - Being a beer drinker in Boston is great. We have some fine stuff
but there are some shaky deals going on I'd like to alert your readers
to. Not long ago State regulators here accused the company that
distributes much of the craft beer ito bars and liquor stores
throughout the state of unfair trade practices that limit consumer
choices and harms small brewers. That's not good to say the least.
The Alcoholic Beverages Control Commission (ABCC) said Craft Beer
Guild LLC violated a state rule against offering inducements to retailers
to stock its products over those of competitors and a state law that
prohibits distributors from charging different prices for the same
products. FIFA officials have nothing on these guys.
According to a report I read those were only the first charges to
emerge from a six-month probe into so-called pay-to-play practices
that curtail my and every other MA beer drinkers' choices by favoring
one company’s products over another’s.
In this game of pay-to-play, distributors pay bars to have their beers
served and a competitor’s excluded;on the other side of the coin,
sometimes retailers demand free booze, rebates, or expensive
equipment from distributors in exchange for stocking their products.
Small craft brewers, in particular, say they cannot afford to compete
against bigger, more established brands for the limited number of tap
lines at bars. These brewers have quietly complained that the practice
is rampant but their voice hadn't been hear. Even more depressing is
that no business had been charged over the practice in 15 years.
This corruption only serves to show why the three tiered system
doesn't work. Question: why is beer different from laws demanding
fair competition in the marketplace? Answer:- because beer distributors
are an unnecessary business group mandated into existence by law.
If this remnant of post-Prohibition days remains in tack (as it
surely will) the only answer is to have strong rules to prevent it from
being more powerful than the brewers and/or bars.
And if you wonder why I don't expect fundamental changes in the
structure of these laws it might help to note that alcohol trade
associations and distributors are big donors to more than a few
state representatives. Then again, that may mean nothing. Sure.
A while ago,here in Boston, it seems like Yuengling suddenly appeared
in just about every bar overnight. It wasn't because of demand from
true craft beer lovers. As most of us would agree Yuengling is not a
craft beer. Rice does not belong in beer. The fact of the matter is that
Yuengling used it's ties with distributors to make inroads in Boston that
would not have been possible if there was a truly free marketplace.
Nonetheless consumers did speak and Yuenging sales tanked. People
tried the beer, found out it was wanting, and let the taps stand idle.
Think of all the good breweries that were denied access to those taps
usurped by Yuengling. Think of all the great beers consumers were
not given an opportunity to drink.
If you're wondering why a craft brewery wouldn't seek out a new
distributor if it's current one was intentionally limiting its sales the
answer is simple. Here in MA if you are a brewery and you don't like the
way your distributor is handling your product, too bad You are stuck
with that distributor for as long as they want to hold you It's unfair
but it's the law. And it's one way big breweries work with distributors
to force the little guy out of the market to share a bigger pot.
Thanks Bob for letting me rant a bit. I'm a lover of craft beer and a
believer in the free market. When it comes to the beer business
those two beliefs can make for some upsetting times.
Thanks for your article Richard. You've certainly explained your
feelings towards distributors and given us something to think about.
I'd like to invite everyone to send me their own columns about anything
related to beer/drinking/booze just as John did. I select the best and
publish them here. So join in and get writing.
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