Pulllng Back the Curtain: Booze Wholesalers Fear Competition

fearCompetition. That’s the problem.

I hope my regular readers will forgive me for so often returning to the issue of the Craft Beer Extortion Bill (SB 1714) now working its way through the Florida legislature. However, it is such a startlingly instructive example of how the expressions of fealty to the Three Tier System we hear from lawmakers and distributors is really nothing more than a mask for a cynical ploy maintain power at all costs. The issue begs to be examined.

Let me review.

Beer distributors in Florida have worked to have a law introduced that if passed, would force Florida brewers to sell their cans and bottles of beer to wholesalers. The wholesalers will pick up the beer from the tasting rooms, bring it to their warehouses, unload it, then re-load it on to the trucks, and return it to the same brewery tasting room where the same cans and bottles could only then be sold direct to the public. For this service, the brewery would pay a 30% mark up fee to the distributor. In other words….extortion.

This would represent a change in the law. Currently, Florida brewers, like Florida wineries and distillers, may simply produce their goods and sell them in their tasting room.

How is this crazy scheme justified? The following is from Mitch Rubin, the executive director of the Florida Beer Wholesalers Association speaking on WSRQ Sarasota Talk Radio:

“What we’re very concerned about is, really what folks do is get a brewery license, get this retail license, but then brew the beer at some centralized facility…and then ship the beer into this so-called brewery. Then it goes out to the consumer through the retail portion of the premises in competition with distributors and retailers.”

Competition….That’s the problem.

In fact, this has always been the problem for beer, wine and spirit wholesalers. They can’t and won’t abide competition, even if it represents the tiniest portion of the market. When small wineries wanted to ship their wines to states where distributors wouldn’t distribute their wine, distributors objected. When wineries and brewers wanted to sell their own product directly to retailers because they didn’t need a distributor, distributors objected. Now, when brewers simply want to sell their own beer out of their own tasting room, the distributors object.

Mr. Rubin’s admission that his problem with this is the competition it forces wholesalers to face is both surprisingly honest and instructive. Usually, and throughout the debate over this bill, we hear distributors tell us we must “maintain the three-tier system”. They never say why it must be maintained, only that it must be. But Mr. Rubin pulls back the curtain: Competition….that’s the problem.

Mr. Rubin and the distributors fear of competition is understandable. Everyone likes to be the owner of a monopoly. The problem is that neither Mr. Rubin, the bill’s sponsor Kelli Stargel, nor any wholesalers can actually explain the harm that is visited on society or the state of Florida by allowing brewers to sell their own cans and bottles of beer out of their own tasting rooms. In fact, throughout the debate over this bill, no supporter of the Craft Beer Extortion Bill has offered any list of problems that have arisen from brewers selling beer out of their tasting rooms. Furthermore, no one has pointed to any complaints that retailers of beer in Florida have made over brewers selling bottles and cans of their beer out of their tasting rooms.

But there is a problem nonetheless…Competition.

But here’s the thing. The wholesalers and the bill sponsor Senator Kelli Stargel are gong to lose this attempt to extort money from craft brewers. The money grab this bill represents and the dark hole of corrupt partnerships between lawmakers and wholesalers that it has uncovered has unleashed a torrent of push back, anger and action on the part of brewers and the fans of craft brewing. And if there is one thing I’ve learned from watching this battle play out and talking with people, it’s that you don’t want to piss off fans of craft brew and the brewers they love.

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