It's about the beer
Gina Miller and Bill Keeper
Hey Bill, remember when we were thinking of starting a brewpub? In a way I'm glad we never
did since it would have taken a gargantuan effort on both our parts just to crack local, state
and federal red tape involved in most things about beer. That got me to revisit some of our
research on the subject and it's hard not to reach the conclusion that the inordinate amount of
government regulations about beer appear to favor the most established brewers.
Needless to say, craft brewing is more popular than ever. Even neighborhood "dive" bars
have some sort of, at least to them, craft beer. Yet despite the public clamor for good beer a
home brewer who wants to turn a hobby into a commercial enterprise is facing multiple
obstacles, some of them being simply ridiculous. One new brewery that did not prepare any
food, was told they must install a hood for a food oven that they didn't have nor intended to.
Another upstart brewery that not use poultry in their beer recipe, was almost prevented from
operating at all because they lacked equipment to handle raw chicken. Huh?
At the federal level brewers must first have approve from regulators before they can pour and
sell their first beer – or even brand it with their own label. Sometimes, this lone step can take
as long as 100 days. And depending on their methods of brewing and ingredients, their
formula may also need to be approved – and this can take an additional two months.
Next, at the state level, brewers have additional rules to comply with – and often they are
redundant. In Virginia, for example, the first step is to obtain a state license, and regulators
can deny them for any number of reasons that are subjective – such as, a belief that the
brewer is “physically unable to carry out the business of brewing,” that he/she does not have
“good moral character,” or that he/she fails “to demonstrate financial responsibility.” Also,
licenses can be denied if regulators decide that there are already enough brewers in the area,
figuring that one more would be detrimental to the region’s “interest, morals, safety or welfare.”
Give me a "huh?" please Bill.
Now I hate to sound like a conspiracy nut but - ah you knew that but was coming - I think that
this regulatory maze is no accident. Might it be that the big beer companies have colluded with
politicians to horde profits and limit new competition? Okay, maybe that's a stretch but maybe
not. A friend of mine is a brewer in Virginia and he had to complete nearly a dozen separate
regulatory steps before he could sell his beer. That sounds like some of the regulatory barriers
faced by entrepreneurs in Venezuela or China, not the free enterprise friendly USA.
Bill, I'll admit that while no single regulation appears to be ultimately overwhelming, the sheer
number of them do. Many regulators fail to look at the bigger picture, and don’t see that
regulations at the federal, state and local levels are piled one on top of one another. The
resulting practical effect of all these regs is to lend privilege to existing firms and industries at
newcomers’ expense. And to consumers too. The big boys win again. Boo!
Cut back the red tape and watch more new beer begin flowing. Now that's something I knew
we agree on, right?
That's it from me, chug-a-lug, Bill.....see you next time.
Hey Gina, you got me with your last line. Of course more craft beer is a good thing but please
remember not all (and maybe none) of the new breweries you envision will be on the level of a
Founders, Stone, or Bell's.
Of course I agree that some of the government's regulations are puzzling. I'm sure you
remember that we were going to install several state of the art dishwashers in our would-be pub
but the health department still demanded we also have a three compartment sink.
Look Gina, in general, I'm a free market type like you. Let the consumer determine the success
or failure of a business. Lower the barriers for entrance to any industry. In a way, craft beer has
been the template for the little guy successfully beating the big guy if given a chance to
compete. Check the sales numbers for craft beer vs. the macro swill and you'll see what I mean.
Could that possibly means those regulations we lament are not as inhibiting as they seem? Oh,
don't get mad. Of course they are, it's just the power of good beer in action and the impact of
the federal deregulation of brewing in the 1970s.
Here's one regulation that I find particularly irksome - the three tier system. When Prohibition
was repealed in 1933, this system was put in place. A brewery (producer) must get their beer to a
distributor/wholesaler (middle man) who then gets that beer onto the shelves of grocery stores,
and into bars, restaurants etc. This means a brewery can’t just bottle a beer and sell it directly to
the consumer. That means the Anheuser-Busch InBevs and MillerCoors of the world can really
let they money speak to the middlemen and their monopoly on distribution. If the distributors stay
away from craft beer or simply don't push it too hard they get to keep the big profit macro beer
accounts. Business is business and that means your local beer store's shelves are fully stocked
with the multitude of so called varieties of Bud and their brethren while craft breweries fight and
die for any remaining shelf space. We the consumers never get a chance to buy the craft
newbie which means we can't let our dollar freely vote in the marketplace. That just doesn't
To be fair, one of the main reasons brewing regulations are so complicated, is that the 50
individual states each control alcohol beverage production and sales with differing laws from
state to state, due "Section Two" of the 21st Amendment that repealed Prohibition on a national
Now I'm not for dumping every regulation on the books, be they about beer or any other product.
Many discourage manufacturers from bringing out shoddy products by establishing certain
standards. Many protect consumers from harmful items, things that could injure many people.
The economic laws of supply and demand would eventually rid the marketplace of them but far
too slowly to protect the unsuspecting early buyers.
So my final take on all this is...... well, ah.......hmmm..... oh, let's just go get a beer.
Here's looking at you, kid! See you next month.