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Beer distributors vs craft brewers in legislature

January 23, 2014 | By | Comments More

400-CRAFT-BREWERSThe craft beer craze, which has seen smaller brewers grow rapidly in the last few years, has transformed the marketing of beer. Now, breweries cater to customers who select the types of beer, such as a pale ale or wheat beer, before selecting the brand; much in the same way wine drinkers opt for merlot or pinot noir.

Craft breweries in Florida want to get to a place where everybody knows their name. They think a few bills pending before the Legislature will help them get there.

The market disruption is also unsettling long-standing alcohol distribution laws in states as craft brewers seek a business model that challenges the legal framework for selling beer.

In Florida, craft breweries are piercing the three-tiered system of distribution in which manufacturers make beer, wholesalers distribute to retailers and retailers sell it to a thirsty public. The system was intended to prevent integration between the tiers – wholesalers can’t be manufacturers or retailers or own stake in them, etc. – but through exceptions in the law, brewpubs make craft brews and sell it onsite.

Now craft brewers want to change the law to allow them to offer free tastings and sell beer in 64-ounce containers. Current state law only allows for beer to be sold in 32-ounce containers or less.

“We’re looking for two things: give parity to distributors and vendors to do beer tastings at a location, which wine and spirits can already do; getting the 64-ounce bottle size legalized,” said Josh Aubuchon, a lobbyist for the Florida Brewers Guild, a trade group representing craft brewers.

A pair of bills to allow breweries to offer free tastings (SB 470) and sell 64-ounce installments, known as growlers, (SB 406), are before lawmakers but a clash between craft brewers and the large distributors threatens the bills’ progress.

The tasting bill was approved unanimously by the Senate Regulatory Affairs Committee on Thursday but the growler bill was postponed.

Eric Criss, president of Beer Industry of Florida, a trade group representing MillerCoors distributors, said he doesn’t mind seeing smaller brewers do well since some of his members distribute craft brews. But loopholes in the law allowing craft brewpubs to sell beer they didn’t manufacture are troublesome, he said.

“The distributor’s job is to sell the retailer a particular craft brand — to get a tap or shelf space, both of which are precious real estate. Those retailers have created business plans and made significant investments in their stores. Why should retailers be happy to put a craft beer supplier on their store shelves or on tap in their restaurant if that craft beer supplier is now the competition?” Criss said.

Criss’ said he isn’t necessarily opposed to the growler bill, but would like to see greater restrictions put on brewpubs and microbreweries that allow them to sell “guest taps”.

But for Mitch Rubin, lobbyist for Florida Beer Wholesalers, which distributes Anheuser-Busch and other beers, the clash is not one of large beer companies versus smaller brewers. Instead, it’s between distributors bound by the three-tiered system and the craft newcomers enjoying an exception to the system that puts the distributors’ members at a disadvantage. The exception in the law to the three-tiered system, created so that Anheuser-Busch could sell beer at its Busch Gardens theme park, is being abused by the brewpubs and is not what the Legislature intended, he said.

“The point is there is a third tier that (craft brewers) are not going to: real retail,” Rubin said.

The flap over the legislation has led Rep. Debbie Mayfield, R-Vero Beach, to attempt to develop a legislative package that helps craft brewers without upsetting the large distributor groups, bringing all sides of the beer wars together for happy hour.

“I’ve toured a lot of their (craft breweries) facilities, went to some of their conferences and spoke to them so we’ve had a really good dialogue and they’ve had some really good input on some of the changes that they would like to see. We’ll be rolling out a committee bill in the next week or two,” Mayfield said.

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Category: Government