Brewers Association

It’s the Law!

You hardly need to be reminded that the brewing industry is heavily regulated, especially at the state level. Staff of the Brewers Association, the craft brewers’ industry trade group, have been busy sorting out state laws in several key areas and have summarized them on the BA’s website. The summaries include these six areas:

  • Barrel cap laws, which restrict larger breweries’ ability to sell beer on-premises.
  • Franchise laws, which spell out the circumstances under which a brewery may terminate its contractual relationship with a wholesaler.
  • Growler laws, which specify who (breweries, brewpubs, and retailers) are allowed to fill growlers.
  • Self-distribution laws, which provide whether a brewery may sell directly to retailers and, if so, how many barrels it may self-distribute.
  • State excise tax rates.
  • Laws specifying whether a brewery sell beer at retail and/or offer samples.

The Brewers Association cautions that its information should not be considered the final word on the law. If you notice something that needs to be updated (this being an odd-numbered year, state legislatures are hard at work), the BA would like to hear about it, and it has provided a feedback form.

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The Friday Mash (Red Cross Edition)

On this day in 1863, a group of citizens of Geneva, Switzerland, founded an organization called the International Committee for Relief to the Wounded–now known as the International Committee of the Red Cross.

And now….The Mash!

We begin in England, where festival organizers in two of the country’s most famous beer cities, Norwich and Sheffield, are joining forces to promote their local products and attract beer tourists.

The Norwegian supermarket chain Rema 1000 is feeling the backlash after it took several local breweries’ products off the shelves. Some Rema customers switched to competitors’ stores.

Are you a DIYer who loves craft beer? You might like the Kinkajou Bottle Cutting and Candle Making Kit. You can give the candles to friends—and show off your collection to them.

“Pepper”, a robot from Japan’s SoftBank, has his first job: greeter at the Pyramid Taproom in Oakland International Airport. When not posing for selfies, he’s working on his speech-recognition skills.

A faith ministry in Nebraska has started a fund-raising campaign to buy out four stores that sell millions of cans of beer in a tiny village next to the alcoholism-plagued Pine Ridge Indian Reservation.

Heroica, a brewery in Brazil, is flavoring its Kuromatsu Kamikaze IPA with branches of bonsai trees, brought over by a Japanese family more than a century ago. Some bonsai trees are worth $20,000.

Finally, Bart Watson, the Brewers Association’s chief economist, told a gathering of brewing professionals that it’s still possible for a microbrewery to grow to regional status, but very few will succeed in doing so.

The Friday Mash (National Geographic Edition)

On this day in 1888, the National Geographic Society was formed. The Society’s logo, a bright yellow box, appears on National Geographic magazine, which is published in 40 languages around the world.

And now…The Mash!

We begin in Pennsylvania, where the beer police caught up with Travis John Miller, who was selling the contents of his beer cellar on Craigslist. Miller faces a misdemeanor charge of selling alcohol without a license.

Swedish brewer Fredrik Tunedal, who often came home from work covered in malt dust, has released a Shower Beer. Its flavor profile includes a soapy taste, which Tunedal calls “on-point” for his product.

Keurig Green Mountain has partnered with Anheuser-Busch InBev to develop a line of instant beers—and other instant adult beverages—that Keurig owners can make at home.

The CEO of Constellation Brands, which imports Corona and Modelo beer, said that he doesn’t expect President-elect Donald Trump’s trade policy to raise the price of Mexican brands.

Despite a dismal 5-7 record, the University of Texas finished #1 in the country—in beer sales, that is. By season’s end, Longhorns fans spent $5.26 on alcohol for every fan in attendance.

Bart Watson, the Brewers Association’s chief economist, disputes studies showing that beer sales have fallen in states where recreational marijuana is legal. Watson argues that pot is just one of many variables affecting sales.

Finally, in Adelaide, Australia, the woman-owned Sparkke Change Beverage Company is putting feminist messages on cans of its beer. It’s an effort to start conversations in the country’s male-dominated beer culture.

BA Fires Back at Carlos Brito

Anheuser-Busch InBev CEO Carlos Brito stirred up a hornets’ nest by saying that “consumers are a bit tired of choice.” Bob Pease, the president of the Brewers Association, was quick to respond.

Pease pointed out that the 2016 Great American Beer Festival attracted a sellout crowd of 60,000, who sampled more than 3,800 from 780 breweries; and that the ability to choose from that many alternatives is “a central value of our democracy and a core tenet of ‘being American’.”

The BA head also asserted that Brito’s comment smacked of self-aggrandizement. He said that A-B InBev entered the craft beer market by acquiring a portfolio of craft breweries, and is about to use its economic power to push its brands onto store shelves and tap handles—and push out truly independent brands. Pease observed, “That’s reducing choice all right—but not based on beer lover demand.”

Peace also suggested that consumers will rebel against A-B InBev’s attempt to limit their choices. A recent Nielsen survey found 58 percent of American craft beer drinkers want even more flavors to choose from, and about 65 percent said they drink more craft beer specifically because craft offers more variety.

The Friday Mash (“Be Prepared” Edition)

On this date in 1907, Sir Robert Baden-Powell set up the Brownsea Island Scout camp on the south coast of England. That nine-day event—we assume that no beer was served to campers—was the foundation of the Scouting movement.

And now…The Mash!

We begin in Scotland, where the Innis & Gunn brewery has released a “Vintage” beer that is meant to be aged. One bottle has been put inside a time capsule, which is not to be opened until 2116.

Old Style beer will return to its La Crosse, Wisconsin, birthplace. The brewery will make an Oktoberfest-style version of the 114-year-old brand for the city’s annual Oktoberfest U.S.A.

After winning his third Tour de France, Britain’s Chris Froome celebrated in style. In the Tour’s final stage, he handed out bottles of beer to his teammates.

According to the libertarian magazine Reason, state beer laws continued “a slow creep in the right direction.” However, many bad laws remain on the books.

The Smithsonian has posted a want ad for a beer historian/scholar. This three-year position, funded by the Brewers Association, will pay $64,650 plus benefits.

Some breweries try too hard to be original, and wind up giving their beers awful names. Thrillist.com calls out some of the worst offenders.

Finally, Jim Vorel of Atlanta magazine criticizes Terrapin Brewing Company for selling a majority interest to MillerCoors—and then keeping mum about the transaction on social media.

Big Wins for Small Brewers

As expected, the U.S. Justice Department has approved the merger between Anheuser-Busch InBev and SAB Miller. However, MarketWatch.com’s Jason Notte reports that the Brewers Association, which represents craft brewers, won major concessions from the government:

  • A-B, which sells 10 percent of beer through company-owned distributors, can’t acquire any more distributors.
  • A-B  can’t require independent distributors to drop competing brands, and can’t offer incentives that would reward distributors for giving A-B brands preferential.
  • Any future craft brewery acquisitions by A-B must first receive Justice Department approval.

Notte attributes the craft brewers’ win to the Brewers Association’s paying more attention to government relations. The BA has hired a full-time lobbyist in Washington; and, earlier this year, it flew craft brewery executives to the capital to ask members of Congress for tax relief.

According to Notte, state capitals will become the next battleground, now that states–even thouse as small as North Dakota–have enough craft brewers to form a trade association. Some of the issues these associations will raise include bars selling tap handles to the highest bidders, supermarkets putting distributors in charge of choosing their inventory, and limits on the number of liquor licenses.

More About That Big Beer Merger

Bob Pease of the Brewers Association has sobering news for craft beer lovers. In a New York Times op-ed earlier this month, Pease warned that the coming merger between Anheuser-Busch InBev and SABMiller will have an impact on your local beer selection that you hadn’t expected.

The problem is rooted in the three-tier system of liquor regulation, which forces craft breweries to sell their beer through distributors. In some states, the law allows big breweries to own distributors. Making matters worse, the distribution industry has undergone consolidation, and many areas of the country are served by a handful of distributors.

A-B, which controls 45 percent of the U.S. beer industry, has been particularly aggressive, buying five independent distributors—a move that has led to a Justice Department investigation. The brewery also compensates its distributors using a formula that in effect penalizes them for handling craft brands rather than A-B brands. That, too, is being investigated.

Pease hopes that the when the Justice Department gives final approval to the InBev-SAB merger, it will take steps to keep the beer market competitive. He points out that in 2013, it prohibited A-B InBev from interfering with independent distributors that sold Mexico’s Modelo beer. Pease urges Justice to give craft brand distributors similar protection, require A-B to reduce its stake in distributors, and bar compensation systems that favor A-B’s own brands.

Beer…By the Numbers

  • Most expensive beer at a major league ballpark: $8.75 (Boston Red Sox, Chicago Cubs, Philadelphia Phillies).
  • Cheapest beer at a major league ballpark: $4 (Arizona Diamondbacks, Cleveland Indians).
  • Average cost of a beer at a major league ballpark: $5.96 (down 13 cents from last year)
  • Per-household legal marijuana sales in Spokane County, Washington, in 2015: $225.64.
  • Per-household beer sales in Spokane County in 2015: $232.70.
  • San Diego’s brewery count at the end of 2015: 114.
  • Its brewery count at the beginning of 2015: 97.
  • Dollar value of the U.S. beer market: $105.9 billion.
  • Craft beer’s share of the U.S. beer market: $22.3 billion (21.1 percent).
  • Extra large breweries’ (over 6 million barrels per year) share of U.S. brewery population: 0.4 percent.
  • Extra large breweries’ share of U.S. beer production: 84.3 percent.
  • Small breweries’ (under 7,500 barrels per year) share of the U.S. brewery population: 92.8 percent.
  • Small breweries’ share of U.S. beer production: 1.6 percent.
  • Styles in the Brewers Association’s 2016 Beer Style Guidelines: 162.
  • Net change in styles from 2015: +7.
  • Judge Rejects BA’s Definition of “Craft Beer”

    Last week, U.S. District Judge Gonzalo Curiel rejected, at least for the time being, the Brewers Association’s definition of craft beer: production under 6 million barrels a year, less than 25-percent controlled by a big brewer, and using “only traditional or innovative brewing ingredients.”

    G. Clay Whittaker of The Daily Beast argues that Judge Curiel has in effect given every brewer in America the green light to describe its beer as “craft.” (Which is ironic considering that Anheuser-Busch InBev, during Super Bowl 49, ran an ad making fun of the entire segment.)

    Judge Curiel gave the plaintiff, Evan Parent, the opportunity to amend his complaint, which might eventually lead to a legal definition of what craft beer is. Then again, the phrase “craft beer” could go the way of “the Champagne of bottled beers,” an advertising slogan that expresses a meaningless opinion about the product.

    Brewers Association on A-B InBev and SABMiller

    Yesterday, it was reported that Anheuser-Busch InBev is working to acquire SABMiller. Paul Gatza, the head of the Brewers Association, issued a statement about the proposed deal.

    If acquisition goes through, Gatza believes the federal government would order the combined business to divest itself of Miller brands in the United States. The brands, which are profitable, could be bought by MolsonCoors, or possibly Constellation Brands, Heineken, or Carlsberg. The acquisition would also have an effect on the ten-year joint venture between Miller and Coors, which runs until 2018. It’s unclear what will happen to the Leinenkugel family of beers, currently owned by Miller.

    Gatza believes the takeover would have little impact on what American craft breweries will produce, or their acceptance by the nation’s beer drinkers. He also believes beer distribution won’t change much. He’s less sure of what effect the takeover will have on the wave of mergers and acquisitions in the craft brewing industry, or whether consumers will view craft beer as less of a reflection of the brewers’ “personal passion.” About this he says, “Time will tell all.”

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