Archaic Booze Distribution Laws and Distributors Harming Industry

After consumers’ demand for easy access to alcohol products via direct shipping is satisfied, the most important issue facing the alcohol industry is self-distribution—wineries, brewers and distillers possessing the right to self-distribute their products in-state and over state lines directly to retailers and restaurants rather than be forced to use wholesalers. Michigan brewers want to address this issue now, but as always they are opposed by greedy, rent-seeking wholesalers who can’t make a reasonable or rational case for their protected existence:

There’s a battle brewing when it comes to the state’s beer regulations — and it’s not a pint-sized problem.

In Michigan, brewers can only sell their beer to bars and retailers if they produce fewer than 1,000 barrels in a calendar year. After that threshold, they need to sign a contract with a distributor.

In Ohio, for comparison, state regulations allow brewers to self-distribute until they hit 100,000 barrels. 

Michigan’s regulation “leads to pretty tough decisions early on for small breweries like us,” says Dayne Barscht, managing partner of Eastern Market Brewing Company, a microbrewery located behind Shed 2 in the popular market. ”A lot of breweries focus on tap room sales or they will sign with a distributor early on in the process.”

Bartscht says a distributor could demand 30 to 40 percent of revenue, a prohibitive figure for his business. He has posted a petition advocating to raise that 1,000-barrel cap to 30,000 barrels – allowing breweries to sell their own beer to bars and stores for longer.

The wholesalers, however, are happy with the current system.

When reached by WDET, Spencer Nevins, president of the Michigan Beer and Wine Wholesalers Association, released a statement through a public relations firm citing how “craft beer production in Michigan was up 10% last year at a time when craft beer production declined across the country. There’s no doubt our rules and regulations have helped make Michigan the Great Beer State it is today.”

The truth is that Michigan’s craft brewers have increased their sales by 10% in 2018 despite the archaic and unnecessary restrictions on sales and marketing to which small Michigan brewers are forced to adhere.

One Response

  1. Helene - August 11, 2019

    You all in the States and Canada would be horrified (or delighted)-take your pick-by a diagram I drew for my Wine Production and Wine Marketing Students many years ago now. It’s a spaghetti-bowl, a bit like the intersecting motorways through major cities like Houston or Dallas or whichever.

    At least at present (pre-Brexit), any EU producer can ship to a consumer without the consumer paying C&E duties or VAT. But there are plenty of other routes to market: producer to importer; importer to consumer; importer to distributor or retailer; distributor to retailer or consumer or another distributor; retailer to consumer, and on-trade and off-trade have the same flexibility, apart from the C&E duties and VAT issues. Like I said, ‘A spaghetti bowl’ of options.

    Perhaps chaos, but it seems to work.

    After Brexit-who knows? I’m fairly certain that distribution of Beers, Wines and Spirits is NOT the UK’s or the rest of the EU governments’ highest priority? But the UK Beers, Wine and Spirits Industries do care, because they know that if C&E duties and VAT on the whole goes up, they will sell less through whichever channel.

    Anyone for a teetotal tomato juice with plenty of tabasco, worcestershire and lemon? Why not? Cheaper than a half of lager?

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