| 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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