Distributors Folly
                              by Elena Parkinson

Hi Bob -

I'm an avid and long time reader of your column.  It's always
interesting to see what beer people around the world have on their
mind.  I especially enjoyed last month's article about beer issues in
Canada since I often travel there.  That motivated me to tell you and
your readers about some beer news here in my home state of North
Carolina.

Craft brewers here are in a tizzy over a law that requires them to
hand over substantial control of their product to an outside
company.  Hard to believe but wait until you get the rest of the story.

Lawyers representing two Charlotte craft breweries, both of which I  
regularly go to, filed a court action demanding documents and
communications including e-mails between state legislators,
lobbyists and beer wholesalers.  It seems a lot of groups are in on
this power grab.  One might say the fix was in.

The breweries are Olde Mecklenburg Brewery and Noda Brewing.  
They also filed another suit seeking state alcohol commission
records describing agreements between wholesalers and major
brewers.

These current lawsuits come after one they filed one last year.  It
seems that for years local beer-makers had tried and failed  to get
the state to change a law that forces brewers to hand over
distribution to another company if they ever sell about enough beer
in a year to fill an Olympic-size swimming pool.  Butting their heads
against a bureaucratic wall the only alternative left for the brewers
was to go to court.

The Charlotte breweries claim in their suit that the law in question is
unconstitutional because once the you've sold more than 25,000
barrels in a year, they're required to give up pricing and sales
control of their products to middlemen for virtually as long as their
beers are brewed. Brewers hitting that cap must sell everything to a
wholesaler, which then sells to stores or taverns. And that's not even
close to being fair, if you ask me.

I understand that many states have similar self-distribution limits but
even in states like Colorado and Washington, famous for their craft
brewing industry and culture the caps that are much, much higher.

In my opinion the current law gives wholesalers the power to decide
which brands succeed and that's not what our economic system is
about.  I understand  how the three-tiered system works - the
producer (brewery) sells it to the distributor who sells it to the  to
retailers who sell it to us, the beer-loving public.  It's a throw back to
post Prohibition designed to prevent tied houses run by big beer.
Maybe it worked for a while but now it gives too much power to the
middleman.  

Let's let breweries decide if they want to self distribute or if they wish
to sign up with a distributor regardless of what amount they produce.
And if they do opt for a distributor make it a simple short term
contract with no lasting obligations.  I think that's good for craft and
for those of us who love their product.

Thanks for reading!
----------
You make a good case for your position, Elana. I tend agree that in
some cases distributors can determine the fate of a small craft brewery
and that's not fair. On the other hand distributors do perform a needed
service and have also helped fuel the growth of craft beer.
Many thanks for sharing with us - please write again!

I'd like to  invite everyone to send me their own columns about anything
related to beer in any way just as Elena did.   I select the best and
publish them here.  So join in and get writing!

Cheers!
Bob
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Bob Montemurro
"the ombudsman of beer"

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