Regulations Getting Between You and Your Beer

 

Anheuser-Busch InBev’s attempted merger with Grupo Modelo has stimulated discussion over whether the merger will result in higher beer prices or may prevent small, independent brewers from introducing new beers. This makes an opportune time to reexamine regulations that surely do impact prices and impede the ability of small, independent brewers to bring new beers to market. In particular, I am referring to the current, government-imposed three-tier system for alcohol distribution.

A relic of Prohibition-era America, the three-tier system prohibits breweries from selling beer directly to retailers; they are instead forced to use a middleman—i.e., a distributor. Likewise, this system prohibits breweries from selling beer directly to consumers; only licensed retailers are permitted to sell alcohol to consumers. (There are a few exceptions to this regulatory framework. E.g., restaurants that brew their own beer, such as Gordon Biersch and B.J.’s Restaurant and Brewery, are thankfully not forced to use a middleman.)

What are the consequences of depriving breweries of the freedom to sell directly to consumers? Here are two worth knowing:

1. Breweries are prevented from engaging in vertical integration. Vertical integration is when a business purchases some of the companies involved in its supply chain. E.g., in addition to owning the licensing rights to its beverages, Coca-Cola also owns a private fleet of trucks as well as several private bottling plants. Businesses often vertically integrate because this enables them to cut costs—and therefore possibly offer lower prices to consumers—by better coordinating the operations of their distribution network with their production.But unfortunately for brewers and beer drinkers alike, the government-imposed three-tier system bans brewers from owning their own distribution fleet, no matter how much money this could save Anheuser-Busch InBev or MillerCoors.
2. Breweries have more obstacles to bringing their beer to market. In a free market, if a craft brewer—i.e., a small, independent brewer—wants to see his beer on shelves, he mainly has to convince the retailer to carry his product. As any entrepreneur in branded food and beverages can attest, it can be really tough to get and stay on the shelves of major retailers.

However, with the government-imposed three-tier system, a craft brewer now has two main layers of individuals that he must win over: He must convince a distributor that his product is worthy of space on his truck, in addition to having to have retailers convinced that his beer is worth keeping on shelves. Since he is legally prevented from trucking his own beer to a retailer willing to sell it, a craft brewer is forced to deal with a middleman. This could be especially difficult because truck space is limited and distributors often sign exclusive deals with larger brewers.

Isn’t it time to reconsider why the law should force brewers to have to deal with middlemen?

NPR’s World Beer Map: Two brewers, 210 brands

I saw this on the NPR blog this morning about the global reach of Anheuser-Busch and SAB-Miller and it’s fascinating/chilling in equal parts, because craft brewing was the reaction to this sort of merger mania, which in 1978 left the U.S. with fewer than 80 breweries — a number that the smart money at the time predicted would get even smaller. We’ve more breweries now than ever before, but this is a good reminder that for the big beer beer companies, beer is just the widget they happen to sell — they’re really focused on the business side of things, and rarely do MBAs make good brewers (though former Econ profs, such as Gigantic’s Van Havig…that seems to be another story entirely…) . Here’s the blog post along with NPR’s map, but definitely go read the original, which lists each of the 210 brands by the country in which it’s sold…

In the past decade, a few big beer companies went on a buying spree, spending some $195 billion to buy up brewers around the world, according to Bloomberg.

The two biggest beer companies on the planet, Anheuser-Busch InBev and SABMiller, now own more than 200 brands in 42 countries — 18 in the U.S.

Beer drinkers can be excused for not noticing. Unlike, say, airlines, which fold their acquisitions into one big, global brand, big beer companies tend to keep the brands they buy in the market.

As a result, the two biggest beer companies on the planet — Anheuser-Busch InBev and SABMiller — now own more than 200 brands based in 42 countries (including 18 in the U.S. alone) — use NPR’s handy guide so you know whose beer you’re really drinking.

— John Foyston

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January BING Meeting at Sidebar

Just a quick post letting fellow BINGsters and guests know that our next meeting is on Monday January 7th at 5:30pm at Lompoc’s Sidebar…..hope to see you there!!

 

If you are interested in attending a BING meeting, finding out more about BING or joining BING…..feel free to shoot us an email at bingoregon@gmail.com.

 

Cheers,

Jason Jordan founding member of B.I.N.G.

BEER BLAST…The U.S. brewery count keeps climbing, Raise Your Glass!!

The American craft beer revolution marches on.  From an all-time low of 44 in the late 1970s, the nation is now dotted with
some 2,130 breweries changing the way we drink beer every day. Portland, Oregon, with its abundant real estate, low-ish brewers’ taxes, and access to pristine raw materials from hardy hops to high mountain water leads the way with over fifty breweries in the Rose City (the state has 153 operated by 120 companies overall). Vermont leads the way per capita, with a busy brewery for every 26,073 people. And according to figures recently released by the Brewers
Association, over 1,300 breweries are in planning across the U.S., which will send our total well north of 3,000–most in the world. Thirsty yet?

Almost no matter how you look at it, this craft beer revolution is a good thing. According the Brewers Association, it helps generate jobs (over 100,000 so far) and economic activity (an estimated $3 billion annually in California alone, according to a recent study by the California Craft Brewers Association), and most importantly, provides the beautiful experience of better beer made by
humans, not robots. We’ve heard a few curmudgeons mutter aloud about whether or not there are “too many breweries.” To those killjoys we pose a simple question: has anyone ever complained about “too many wineries”? (There are over 7,000 by the way.) How about, “too many kittens?” We’ll reserve the innovative,
locally-made—and most of all, delicious—creations of craft beer America for cheerier company.

Portland – the world class beer city!

USA Today once again included our amazing city in a list of the top Beer Cities in the World!

Check out this story by clicking here

There are many reasons to be thankful that we live in Portland!

Next Meeting December 10th

With the Holiday schedule, we have to be flexible this month and move our meeting date.

Monday December 10th at the New Old Lompoc Sidebar on N Williams Ave

5:30 to 7:00pm

An evite will be coming soon – we look forward to seeing you there.

Cheers!

B.I.N.G. Founder recognized with national industry award.

Thanks to all of the B.I.N.G. members that continue to support me and Rose City Label.

I am very honored and humbled by this award.

Please click here to learn more.

Is There Such a Thing as Too Many Breweries?

Not Too Big, but Too Many?

June 15, 2012 written by jslawcenter

United States microbreweries, regional breweries, and brew pubs per capita by state. Brewery data from the state locator at http://www.brewersassociation.org/pages/directories/find-us-brewery. Population data from Wikipedia. National totals: 54 regional craft breweries, 377 microbreweries, 975 brewpubs, for a total of 1406. Highest five per capita are Vermont (29.0 per million), Maine (24.3), Montana (24.0), Oregon (21.6), and Alaska (19.0). Data current as of February 28, 2008. (Photo credit: Wikipedia)

I’ve been thinking about the craft beer market lately.

I work with several craft breweries and folks who want to get into the craft beer and beverage industry and I’ve been reading a lot about new breweries opening, new beers out there, and what the latest and greatest “extreme” beer to come down the pike.

“Oh look, a beer that’s higher in alcohol than my favorite bourbon!” or “Wow! I’ve never had a beer dry-hopped with turnips!” (you get the idea).

Also I’ve been drinking since the mid 90′s and I remember the boom/bust of the 1990s brewpub.

And, I’ve read that now we have more breweries in the US than we did pre-prohibition. Which is great. But it makes me wonder… is it too much?

I love craft beer, and I”ll be the first one to order the new beer I’ve never heard of before. And I totally support local beer and local ingredients, etc. I’ve argued that you can’t be too big to be a craft brewery (it’s about the craft, not about the size of your fermenters, at least in my opinion). But, it seems that everyone with a plastic bucket and a bag of grain is opening up a brewery. Is there enough room in the industry, in the marketplace, for all the players?

I go in the grocery store and its clear that there’s serious politics involved for shelf space in the beer aisle. If you don’t believe me, check out Beer Wars. As we add additional breweries, that’s only going to get more cut-throat.

Now, a key difference between now and the mid-90s is that in the mid-90s a lot of the beer was crap. I’m not pointing any fingers, but a stainless steel pot and a bag of hops, does not a brewer make. At least now, the beer is good. Not all of it is great, but nearly all of it is good.

Making good beer isn’t an option anymore. If you’re not making good beer, you don’t get out of the gate. But, on the other hand, making great beer isn’t a sure thing either. I’ve seen people with great beer not get off the ground because they’ve got other issues working against them (you know, like they’re a jerk or something). You’ve got to make great beer and have your marketing/business strategy straight to stay in the game. Is there a point where there are so many craft breweries that, as an industry, we’re all hurt?

NC is one of the fastest growing beer markets in the world right now, and I love it. But it makes me wonder if this growth curve is sustainable? Are we headed for another brewery shake out or market consolidation? I think the Beer Culture has changed in the last 20 years (good Lord, the mid-90s *WAS* almost 20 years ago!) Do you think that makes a difference?

Related articles
•Why the hell would you open a brewery? (jslawcenter.wordpress.com)
•Craft Beer Demand Brews Up Businesses in Eastern Iowa (thegazette.com)
•The Coolest Craft Cans (aleheads.com)
•Where We Stand (aleheads.com)
•Why Cans Are Good For Beer (triplepundit.com)

B.I.N.G. has its advantages

All because I am a member of BING I got the opportunity to brew a batch of craft homebrew with Larry Clouser, future brewery/owner of Pono Brewing. Larry was kind enough to research several different wheat beer recipes until finding the perfect style, a Bavarian Hefe-Weizen. I wanted to learn how to brew the all grain way and Larry showed me how, on his Brew Magic System. We sampled several different authentic German style Hefe-Weizens during the brew process for inspiration, as if I was not already inspired by the pure wisdom of the craft brewing process that Larry possessed and so graciously bequeathed unto me. I can’t wait to sample the end product and hope to be able to share some with you all.

Cheers from one of the Founding Members of B.I.N.G!!

Jason Jordan

Next Meeting September 12th

Join us for our next meeting at Crosby Hop Farm – September 12th.  This first annual BING Harvest Festival is going to be a great way to learn and network with other professionals, and to have a great time learning about this 5th generation family business.

Contact a Founder for more details.