Tuesday, March 12, 2013

When We Don't Talk, We All Lose

Due to the lack of a free market where alcohol is concerned, the beer industry in Utah and it's consumers are likely to take a big hit from legislation that pits brewery against brewery.

Last year Uinta Brewing & the Utah Brewers Cooperative reached the state's ceiling on how much beer they were allowed to make and still be considered a small brewery. If they were to reach "large" brewery status, the required markup on their beers would skyrocket. This would slash profits and raise the price of their beers. SB248 was written to raise the ceiling from 60,000 barrels if beer to 100,000. Not a bad thing, right?

Well, it would be great if there wasn't a provision in the same bill that also requires all small breweries to retain the services of a distributor even if their operations are too small to justify the expense. Most of Utah's small breweries (Desert Edge, RedRock, Moab etc) self distribute. Their accounts are too small or too few and the added cost of a third party basically means they'll have to stop sending their beers to bars or pass the price hike on to you. 

You see? Everybody looses here. The 2013 Legislature is in its final days, rewriting SB248 to fix all of its problems is likely not realistic. It has already passed in the Senate and is awaiting a vote in the House. It doesn't look good. 

Utah's unique laws and culture create a alcohol community that cannot prosper if it's splintered. Nobody outside of Utah's alcohol manufacturing industry is more passionate about locally made beer than me, so when I beg all of Utah's breweries, wineries & distilleries to get their asses in gear and unify into a cohesive guild or interest group, I do it ensure that complete F'ups like this become a thing of the past.


34 comments:

Mark Alston said...

Yep. Knowing that the big boys were pushing for this pre session and then seeing these provisions specifically designed to f' the little guys pisses me off. It's one thing to lobby for changes that benefit you. It's another to lobby for changes to penalize others for your competitive benefit. I knew it wasn't going to be good when they told me they were working with Sen. Valentine to sponsor the bill.

Douglas said...

I think Mark makes a solid point here. It's not that they were not talking, instead it seems that the larger breweries tried to harm the smaller ones purposely. I will recant this if I learn otherwise, but right now it looks like Greg Schirf and others lobbied for a bill designed to lower their taxes and significantly harm the smaller places.

KAGent777 said...

Well said Mikey! The idea you are talking about here is exactly what I was advocating for the other day. We need one solid interest group voicing one cohesive message.

I hope there is some other explanation behind why Schirf is behind this. As it stands now, Akkham's razor tells me that his thinking is wrong. Mr. Schirf, please come on here and correct the record if it can be corrected.

Still enjoying my homebrew,
Scott

Mikey said...

Everyone is assuming the "Distributor" part of the bill was crafted with imput from the breweries. To my knowledge requiring a distributor for small breweries does not affect the how the bigger guys operate. Any info to the contrary?

Douglas said...

Well, we know that certain people from the bigger places were involved in writing this bill. And they voiced support when it crucially passed the committee stage in the Senate. I think that everybody needs to speak up honestly here. I doubt we will get the true story at any point. I find it hard to believe that the bigger breweries would want to harm the smaller ones, but this is the result if this passes. Also, no doubt the distributors lobbied for this.

holly said...

The bill is already amended to define a small brewer as not producing more than 70,000 barrels (rather than the original 100,000). While that is up from the current 60,000, seems like a very poor trade.

I don't think it should be government's place to dictate that a private company out-source a particular part of their business. This is not independent testing for alcohol levels or safety. What other small industries are required to employ a third party to get their products to a retailer?

Representative contacted.

KAGent777 said...

I do not understand why a distributor should be required at all. Required, is not free to chose how you will run the business you have built. If I managed a brewery I would hire a distributor when I felt it would benefit my business.

Mikey, you raise a good point about where this "Distributor" language came from. It simply does not look good for Schirf and others to support the bill when it appears to aid his brewery, while simultaneously hindering smaller breweries by requiring an added expense. Perception and reality may not mesh.

Scott

Douglas said...

One thing is clear: requiring breweries to use distributors serves no public interest and harms economic freedom. The true question here is how did this language get put into the bill? Who supported it? In a democracy, this should be clear, but shamefully we may never know.

Drew Armstrong said...

Learn from the Realtors... We started small and banded together... Hired a lobbyist/attorney full time... and now we are a force to be reckoned with on the hill... In a way the system sucks... But it is what it is...

kent said...

Just mailed my rep. Fingers crossed.

Mark Alston said...

The arrow of blame seems to be pointing toward the Utah Beer Wholesalers Association. They are the ones who would most directly benefit from the changes and are financial supporters of Sen Valentine. They also publicly spoke in favor of the bill at the committee meeting.

Regardless, word on the street is that it looks like it may die.

Douglas said...

http://www.followthemoney.org/database/topcontributor.phtml?u=9299&y=2012

This tells you a lot!

KAGent777 said...

http://www.followthemoney.org/database/StateGlance/contributor.phtml?d=1324501441

What do we know about this group? Of the Alcohol associated groups that contributed to Valentine, they provided 2500$ compared to Utah Beer Wholsalers, which contributed 500.

Distilled Spirits Council is out of DC and seems to have given only one political contribution, this 2500 to Valentine. I will dig a little more on them and seem if I find anything interesting.

Mark Alston said...

Seems like they are quite pro consumer. Their policy page leave nothing I disagree with. Probably a case of trying to get cozy with the one guy you need on your side if you are going to get any alcohol legislation done. http://www.discus.org/

Mark Alston said...

If you go to the National Beer Wholesalers Association page you can see their rationale for pushing all beer through distributors. Without them we'd apparently be drinking poison and dying all the time.

http://nbwa.org/about/what-is-a-beer-distributor

Here is a decent article outlining the fight over self distribution http://www.examiner.com/article/small-brewers-battle-for-self-distribution-rights-getting-beer-to-you

Also this page shows you the states that still have self distribution. http://www.brewersassociation.org/pages/government-affairs/self-distribution-laws

Apparently the NBWA is really trying to eliminate these self distribution laws and we just got to experience the methods.

kent said...

I just received a very positive response from my representative:

Kent: thanks for writing me. I am getting a lot of e-mail traffic on this issue, and my understanding is that the language you mention would be extremely hard for small breweries. I've heard from one in Moab who would be almost wiped out by putting them at the mercy of the distributors, who often tend to be at the mercy of the larger distributors. I'll look into the issue right now and will keep you posted. Thank you for taking the time to write; I appreciate it!

So here's to hoping...

Douglas said...

Who was that from Ken?

Douglas said...

oops, Kent!

kent said...

Derek Browne.

Mark Alston said...

The word I am getting is that all the calls and emails is working. A contact at Uinta says that it probably won't pass.

Douglas said...

It would have to pass by Thursday! Get those emails and calls out.

Chris Detrick said...

Bummer. The zion curtain still stands.

http://www.sltrib.com/sltrib/politics/55993976-90/alcohol-area-assault-bill.html.csp

Mikey said...

@Chris. Can't say that I'm shocked. Primitive minds churn primitive ideas.

Douglas said...

Any news?

Mikey said...

Didn't see it on the schedule for today. They'll probably leave it till tomorrow.

Mikey said...

By the way, if you'd like to hear the committee meeting transcript follow this link. It's about one hour 15 minutes in.
http://utahlegislature.granicus.com/MediaPlayer.php?view_id=64&clip_id=2950

Douglas said...

Thank you for the audio!

Douglas said...

Wow! Listen to Greg Schirf's comments. His comments on how they vetted the bill and about Valentine are...interesting.

Ed said...

Yyyeah--That's an interesting perspective ;)

Chris Detrick said...

It is past midnight, so this bill should be dead, no?

The last action on it was on the 11th.

http://le.utah.gov/DynaBill/statusProx.jsp?bill=SB0248&sessionid=2013GS

kent said...

Yep, looks like it was filed with defeated bills.

http://le.utah.gov/~2013/bills/static/sb0248.html

Click on the bill status link.

Ed said...

Good news... Thanks again to everyone who was on top of this.

beer muse said...

Senator Valentine seems to be doing a great job at tearing at the fabric of the craft beer community. When I heard Schirf's comments, I kept thinking, I wish he would have said, "This bill will benefit me and others, but I don't like the provision that will hurt smaller producers."
As a community, I think we could be more united when up against wolves in sheep's clothing such as the senator.

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