With craft beer being the only segment of the brewing industry showing strong growth, you’d think that state governments trying to fix our current economic woes would be doing everything they can to help one of the few bright spots in American business. But never underestimate the power of lobbying by interests with more money than the craft brewers, namely beer distributors and Milwaukee-based powerhouse Miller Brewing, operating in the U.S. as MillerCoors, but also part of the international conglomerate SABMiller. (And thanks to a number of people who sent me different links to this emerging story.)
Right now in Wisconsin, there’s a battle brewing and it looks like the state’s many craft brewers will be hit the hardest by a proposed new wholesale bill that was recently approved by the state Legislature’s Joint Finance Committee. The bill is backed and supported by the Wisconsin Beer Distributors Association, the Tavern League of Wisconsin, the Wisconsin Grocers Association, the Wisconsin Petroleum Marketers & Convenience Stores Association, the Wisconsin Wine & Spirits Institute and MillerCoors. In other words, all the big players, with money, who do most of their business with the big, corporate beer companies.
They claim that the new bill is designed “to stop St. Louis-based Budweiser and Bud Light brewer Anheuser-Busch from buying wholesale distributors in Wisconsin.” And that might be understandable and even believable, except for one little detail. Not only was the Wisconsin Brewers Guild (which represents over 35 independent, small craft brewers) not consulted on the bill, several of the provisions of the bill actively harm the small brewers, and those same provisions have nothing whatsoever to do with Anheuser-Busch InBev in the least. Obviously, someone is lying.
Here’s how several local news outlets in Wisconsin are reporting on the story. First, here’s the Isthmus Daily Page:
Current state law severely restricts the options brewers have to distribute their beer. Only breweries that produce less than 50,000 barrels of beer per year are allowed to sell their beer directly to retailers. All others must contract with wholesalers for distribution.
Worried that perhaps microbrewers were operating in too free a market, legislative Republicans have proposed even more restrictions on the beer distribution business. The legislation that passed JFC gets rid of any exemptions that allow some microbreweries to distribute their own beer, as well as forbids breweries from selling beer on their own property, either as a bar or a retailer.
And what would Walker-era legislation be if it didn’t offer more power to state government? The legislation also takes the power of licensing of wholesalers away from municipalities and puts them under the control of the state Department of Revenue.
But what will most likely happen in reality is that small brewers will have a much harder time bringing their beer to market. Whether the bill actually targets small brewers, or it’s an unintended consequence, is unclear but I can’t help but think that legislators — elected officials, after all — have a duty to look out for all of their constituencies, and should understand how their actions effect everyone. I know that’s overly idealistic, but that’s how it’s supposed to work and I’ll always continue to hope for at least that much. The fact that the big players all had a say but the small brewers did not speaks volumes about how this is working in reality, and it’s a pretty ugly picture, if not of outright corruption, then at least of unseemly favoritism.
Here’s what Sprecher Brewing president Jeff Hamilton had to say about the bill, as quoted in The Milwaukee Business Journal:
“This is limiting our business model,” said Hamilton, who also serves as president of the Wisconsin Brewers Guild. “The current system is working just fine.”
MillerCoors and the state’s distributors “went out on their own” in promoting and developing the legislation, Hamilton said.
“We didn’t have a say and it is devastating to our business,” he said.
Hamilton believes the target of the legislation isn’t Anheuser-Busch but rather craft brewers that have been rapidly growing as major brewers have struggled.
“It’s hedging against future competition,” he said.
Consolidation among the state’s distributors has made it more challenging for smaller brewers to sell their products, given the number of brands distributors carry, Hamilton said. The legislation also would thwart plans by some craft brewers to start their own distributorship.
A spokesman for MillerCoors, Nehl Horton, even acknowledges it would limit craft brewers’ options, but insists that it wasn’t their intention. To which I can only say, so what? They had to have known how this would affect craft brewers, but MillerCoors obviously didn’t care. Why should they? But the fourteen Wisconsin legislators, they should have cared about how this would effect viable Wisconsin businesses.
Obnoxiously, Horton added that “the fundamental issue is whether small craft brewers want to be brewers or want to be brewers, wholesalers and retailers.” Given the way small brewers have been treated by distributors and retailers over the years, as they struggled against some pretty big, entrenched institutions to change how people thought about beer, that’s an awfully insulting thing to say. Craft brewers have had to find creative ways to gain access to market out of necessity, including doing their own selling and distributing, precisely because of all the roadblocks put in their way by distributors, retailers and big brewers, the very people who are trying once more to harm their business with this new legislation. So to hear MillerCoors suggest that small brewers should behave more like them, after making it impossible for them to do so for decades, is a pretty offensive thing to say.
And now even the bars and restaurants, many of whom undoubtedly serve craft beer, are also out to get the brewers, too, as the new bill also takes away their ability to sell their own beer, even on their own property. As the Daily Page notes:
But why forbid brewers from operating pubs and restaurants — at least one on their property? It seems a rather blatant attempt to appease the Tavern League, which supported the legislation, and hopes that brewpubs don’t threaten their businesses.
Again, Wisconsin legislators had to know what they were doing, but did it anyway. June 15th, the provisions of the new wholesaler bill comes up for a full vote. Hopefully, an action alert from Support Your Local Brewery will be forthcoming.
And finally, here’s a television report from Channel 9 WAOW, in central Wisconsin: