beer wars

here's an interesting tidbit from matt at DCE

http://www.chicagobusiness.com/cgi-bin/ ... =&seenIt=1

outlining the lack of BELL'S BEER in chicago

My brother in law will be happy. He's been whining about no Bell's in Chi-town for awhile now.

I think of him evertime I enjoy a refreshing Bells here in Louisville. Sometimes I even send him an e-mail while I'm drinking a Bells just so he knows at least somebody can still get some!

Cheers,

Doug.

I give a lot of credit to Larry Bell, for finding an interesting loophole to get distribution back into Chicago. He is a pioneer in the midwest for craft beer and was getting the shaft by his distributor in Illinois. The way the laws are written there, he would not be able to break that contract for several more years, so he made the decision to pull out of one of the busiest markets in the country rather than deal with the said distributor. This was a very clever way to get back in that market.

Link to an interview with Larry Bell about the situation.

http://chicagoist.com/2007/12/04/interv ... y.php#more

Ironically, National Wine and Spirits does business in Indiana as well too. They have pulled some interesting things over the past few years, including a price increase across the board on their products. The beauty of that is, with the existing liquor laws, they have a monopoly on brands in the state, so they could jack up the prices, and you could not go somewhere else and purchase it from another wholesaler at a better price. Sounds like Wal-marts grand plan.

we'll see how larry's battle in cout goes with the new "kalamazoo" branding

this is just one more shining example of the antiquated distribution laws that affect beer in every state


anyone have any way to cure the current problems with beer distribution???

Democracy in action, beer-style. Will the forces of 3-tiered darkness defeat the reBell's army? Or will Larry Bellwalker discover the art of harnessing The Force (or should it be called The Mash)?

One way to fight back is by buying Bell's beer (and other regionals, locals, crafts and micros) and encouraging others to do the same. You should also think about becoming a Beer Activist.
http://www.supportyourlocalbrewery.org/index.aspx

any suggestions on how to change the three tier system

that would
- benefit craft brewers
- not punish mega brewers for their success and dominance
- benefit the consumer (greater variety, lower prices)

should the 3 tier system be eliminated entirely???

[Robin Garr]

any suggestions on how to change the three tier system

The three-tier system is also a huge problem in the wine arena, particularly with its efforts to do everything possible to prevent wine geeks from being able to purchase wine direct from producers or from out-of-state vendors by mail order or over the Internet.

The well-heeled liquor/wine/beer distribution lobbies pay big bucks to keep things this way, and it's difficult to change because - thanks to the wording of the 21st Amendment (repeal of Prohibition), such matters are governed by the individual states, not the federal government.

The distributors lost a huge case in the US Supreme Court a couple of years ago, but the way it's playing out, they're simply going to the state legislatures in an effort to hang on to their monopoly.

And the big problem is that they've got boatloads of money and slather it on the willing legislators like pure creamery butter. "Our" side - small wineries, microbrewers, and wine and beer geeks - doesn't have anything like that kind of money or political organization.

I don't know if you can eliminate the system, but it would be nice to tweak it for the little guys.

from the Beer Activist web-site:

SELF-DISTRIBUTION
The American consumer should have access to the widest range of domestically produced beers made available by licensed breweries. The success or failure of a beer should depend on consumer demand, rather than artificial barriers to distribution. The absence of a willing and/or viable wholesaler should not prevent a small brewer's products from reaching a retailer who is willing to sell them.

We support state laws that respect and enhance consumer choice in the marketplace. We believe that to provide the greatest ongoing choice for consumers, small brewers need the right to act as their own wholesaler and be allowed to distribute to retailers. Such brewers should be subject to all laws and taxes applicable to both brewers and wholesalers.

FRANCHISE LAWS / ACCESS TO MARKET
We believe that small brewers and wholesalers should be free to establish enforceable contracts between the parties that both parties agree are fair and equitable. Franchise laws were enacted to protect wholesalers from the undue bargaining power of their largest suppliers. Applying those laws to relations between small brewers and wholesalers is unfair and against free market principles.

Where franchise laws exist, we believe that any brewer contributing less than 20% of a wholesaler's volume should be exempted from those laws and free to establish a mutually beneficial contract with that wholesaler. Without the leverage inherent in being a large part of a wholesaler's business, a small brewer and wholesaler can negotiate a fair contract at arm's length.

INDEPENDENT WHOLESALERS
We support the independence of wholesalers and believe independent wholesalers are wholesalers who are contractually and economically free to allocate their efforts among the brands they sell without the undue influence of their largest suppliers. Each brand gets the attention it deserves on its own merits in the marketplace.

[Robin Garr]

from the Beer Activist web-site:

Those are lofty goals, and I agree with them strongly, Jeremy. They are also echoed in a similar organization for wine geeks, <b>Free the Grapes</b>.

They both face the same virtually insurmountable challenge, though: They're small and under-funded and represent a faithful but very minor constituency. The distribution industry is huge and fat with bucks, and they've been greasing the state legislatures since 1933. Actually, their predecessors, the organized crime syndicates, were greasing the state legislatures before that.

The biggest worry I would have with the elimination of the 3 tier system would be the loss of a lot of the products that we carry today. In the craft beer market, 99% of the breweries could not afford to get their products outside of their local market. And while I really enjoy the brews that are made here locally, I also like to expand my horizon with imports and beers from around the country. Take away the 3 tier, and I would be lucky to get Sam Adams and Sierra Nevada, let alone the numerous other brands that I carry.

The large liquor companies would quickly align themselves with the Wal-marts, Costco's, and other large chain stores to sell directly to them at unfair pricing that would eventually drive all the small businesses out (Kind of like what those chain stores do now to local businesses) Soon enough, the only place to buy different beers, wines, and liquors would be those chains, and then your choices would be limited to the producers that they deal with today who could afford to distribute directly to the retailers. Wino's, enjoy your Robert Mondavi, Beer snobs, I hope you like High Life.

There are definite things that could be adjusted in the 3 tier system. The monopolies that it creates in the 2nd tier that allows a sole provider of each brand in a territory can create a lot of issues for you the consumer, and me the retailer. If wholesaler A decides to enact a $4.50 price increase per case on all of their products, regardless of where the case costs $20 or $300, we the liquor retailers have no other place to go purchase those products due to the territory laws that are in place. We then pass along this cost to you the consumer. In the end we both get hosed because there is not place else for the retailer to buy from. (By the way this did happen to us in Indiana earlier this year with one of our wholesalers.) In most businesses, if a supplier jacks their prices up, you have an opportunity to get it from another supplier, but the 3 tier system eliminates that opportunity for us.

Obviously there are other issues that the 3 tier system invokes as well. If a customer wants to purchase a wine that we currently do not have access to, then they should be able to purchase it from the winery (or brewery for that matter), until the product ever gets regular distribution in the state. The lawmakers will make all the noise about how this will get alcohol in the hands of minors, and all the other lame arguments they make, but it all boils down to a loss of excise tax revenue that the state will not earn if you purchase direct. A large percentage of what we all pay for liquor, wine, and beer is tax revenue for the state, and there is no way they are going to watch that cash cow go away. Figure out how the state will collect their money, and you will get these laws passed.

Enough ranting from me. Obviously I sit on the fence with this issue. It has its pluses and minuses, but to me the positives outweigh the negatives (for now!)

for the most part i agree with Todd that the current system enables us to get a greater variety of products at a usually reasonable price


i'm really curious about new innovations (to the current system) that would be mutually beneficial for all parties currently involved in the beer business

i'm not sure how to fix the problems with the current system, but i believe discussion of the issues involved may lead us to a more viable system that will get the beer to the the consumer

how can we make it easier for a brewery to introduce their beers into new states ?

The large liquor companies would quickly align themselves with the Wal-marts, Costco's, and other large chain stores to sell directly to them at unfair pricing that would eventually drive all the small businesses out (Kind of like what those chain stores do now to local businesses)

Well, it certainly would make Robert happy.