Ok, so I lied. Well, kind of.
But, I received a letter penned by Fish Brewing Company’s Sandy Berry. Since I promised to kill talk of I-1100 on this blog, I shelved it. But with election day coming tomorrow, I thought I had an obligation to let a brewer speak his mind on the debate. This is especially true because this brewer takes the opposite position of many others.
Read the letter below, and remember to vote tomorrow:
Why this brewery does not fear I-1100
By Dr. Sandy Berry, Director of Fish Brewing Company in Olympia
“The Greatest Threat to the Washington Craft Brewing Industry in a Decade” is the well intentioned but misguided campaign of the Washington Brewers Guild against Initiative 1100, and is based on fear of the unknown. Get over it and remember your strengths: great beer.
The greatest strength of the craft beer revolution is the ability to connect the local beer consumer with the truly local small brewer. This was true early on, and the craft beer market is still at its foundation a brewpub revolution. It’s brewpubs operating as brewpubs – not as regional-bottling wannabes.
The craft beer market is immune to the fears of bottling distribution hassles: shelf-space, distributor attention and pay-to-play ploys. The ability of brewpubs and craft breweries to make and direct-distribute draft beer in local markets will remain intact under I-1100. You are still as likely to have a new brewpub open down the street and succeed because it is local and makes great fresh beer.
Dismantling direct liquor distributor control has not hurt California, which has a vibrant craft beer and small-wine industry.
The myth is that the three-tier system is a small brewery’s friend. All emerging small breweries or brewpubs have stories of underperforming distributors that they may be required to use to extend geographical reach. Distributorships are a protected business model, so they do not always service their customer: the beer producers.
Imagine under I-1100 that there were no territories, just the entire state, with anybody able to become a distributor. Only those who gave true value to their brewery producers would succeed.
The fear is the sky is falling and it will squash the poor little craft brewer. Guess what? It already has fallen, and the Washington craft brewers have prospered. Many taverns are what I call “yellow” beer taverns, and are purveyors of mega-brewery beers. The traditional beer factory syndicates have lost a generation of beer drinkers by not understanding the importance of craft beer.
Having more direct yellow taverns would not attract the craft beer drinker, who will continue to support taverns that have craft tap handles and have a very local flavor. Besides, we already have chain craft-beer establishments, which function like tied houses but are not legally tied houses – McMenamins, the RAM – and brewpubs remain successful.
The fear is craft brewers will lose shelf space to mass-produced beers. Please. The “safeguards” of the current system have been so often circumvented or rarely enforced that we may as well legally remove them. We make a better product, sold to loyal beer drinkers who like local, fresh and interesting beer.
Loss of shelf space to liquor is another false fear. Shelf space will remain in the larger grocery stores for craft beers, because it is high profit and high volume for the grocer.
The Washington Brewers Guild and all craft brewers should remember their strength: the public and most legislators support your success story. You have good political capital in Olympia. The Legislature will still likely have to look at the issues around beer, wine and spirits even after I-1100 passes.
It is at this point, after I-1100 becomes law, where I think the craft brewing community will have a voice in addressing the realistic concerns of our small businesses.
The unspoken fear from brewers: the upper side of the craft beer pyramid (bottling or regional craft brewers as opposed to the truly small and pub craft brewers) are loathe to offend the hand that they think feeds them: beer distributors.
They don’t wish to be seen in support of dissolving that same distributor business system, with whom many brewers are secretly frustrated.
It’s time for the industry as a whole to stop protecting one side from another, and instead support changes to the law that open the marketplace to competition and innovative free enterprise – the very mantra of the craft brewer.
UPDATE: At the suggestion of some organizations, we have added some links to the resources section below.
This is the last of it – we promise.
Over a month ago, I decided to walk away from the topic described above in the title. The subject has become a sour discussion topic amongst beer aficionados, brewers and others who peddle the precious grog we love so dearly. So, we took a step back.
I received my ballot in my mailbox yesterday and revisited the debate for a moment. I realized that I still have yet to decide what is best for Washington state and its incredibly important brewing industry. I am back on the academic trail.
Rather than raise a flag for either side, I simply wanted to take a moment and remind you all of the following 5 things:
- Vote. Nothing is worse than avoiding the polls. You have a voice; let it be heard.
- Know. There are people in the broad spectrum of the brewing industry that support both sides of the Initiatives. There is some moderate solidarity amongst brewers that both Initiatives should go down, and there is some fairly strong solidarity amongst consumers that the Initiative(s) should pass.
- Read. There are a bounty of resources on the web that can help you see the potential impact of a passed Initiative v. the continued state of what we have today. Take the time to check them out. (See below for some links)
- Ask. Ask your brewer, ask your beer bar owner, and ask your bottle shop seller. These people are directly impacted by the Initiatives. While consumers have an interest in this potential legislation, business owners are the ones who are most invested. See how they feel. Don’t worry it won’t take many attempts to find people on both sides.
- Review. If you get through all these steps and you still cannot make up your mind – read the proposed law. Many of the commentators are focusing their attention on particular portions of the Initiatives. You can get a better look at the forest versus the trees, by giving them a read.
If you want a brief recap of the information we have provided over the past few months, you can follow this link to find a collection of articles on the topic. Furthermore, check out these resources:
- The Secretary of State’s Voter Information on Initiatives 1100 & 1105
- Seattlest’s Mostly Middle of the Road Perspective
- Yes to 1100 – The Support for 1100
- Liquor Reform – The Support for 1105
- Modernize Washington – More Support for 1100
- No to 1100/1105 – The Opposition to all things Initiative
- Protect Washington – More Opposition
- Protect Our Communities – More Opposition Focusing on Safety Issues
With only two weeks left until the vote, we are signing off from the subject. Good luck to all sides. As always, please leave any comments below.
You might be sick of Initiative 1100 by now (and please tell me below, if you are), but here is more fodder for the fire. Initiative 1100 is getting more and more face time, every time I turn on the tube.
The ad campaigns used by both sides showcase many in the local alcohol industry – some who are for it; others who are not. Here is a look at what is out there, so far.
You probably have already seen the videos put out by the “No To Initiative 1100/1105” campaign. The two that are most often shown (and perhaps the only two out there) profile Washington winemaker, Darby English, and a Washington corner store owner.
Here is Darby English talking about why he believes the Initiative will harm his business:
Other ads showcase the safety hazards that many are pushing as the negative impact of the Initiative. This one is from a local firefighter:
Another video was put out by the Teamsters, who put 700-800 people to work in the alcohol distribution business. Take a look:
But, where are the supporters videos? Until recently, it appeared that the “Yes to 1100” campaign wouldn’t put as much money into ads. But a recent video shows that maybe they were just saving all their guns for one ad. Check out this video of many of Seattle’s most prominent restaurateurs:
Many will say that this video is merely a collection of bar/restaurant owners, looking for cheaper liquor. But, the Yes to 1100 campaign has been out in the community getting video testimonials from many people in the alcohol industry. You can see some of these videos below.
Wallace Wright of the Meridian Market:
Jackie Moffit, local bartender and author of DrinkGal.com
Alison Helfen of the Wine Alley:
What I really wanted to show are the real people out there that will be impacted by the Initiative. Most of us are merely beverage consumers who care about the bottom line. Through these people’s stories, I think you can get a better idea of the impact of this legislation. Hopefully, it will help you make your choice next month.
I just read an excellent article put together by Seattle Times writer Melissa Allison. The article presents a duel look at the positions of supporters and opponents of Initiative 1100. Our blog has discussed I-1100 in the past, and if you still don’t know what it is, read these posts for more on the issue.
In any event, the article takes you on a whirlwind tour of the Initiative, what it seeks out to do, and who is on each side. For instance, did you know that Anheuser-Busch and MillerCoors have collectively donated at least $2 Million to the opposition party? Neither did we.
Mike Hale, of Hale’s Ales, a brewery between Fremont and Ballard, figures he would do well in an open market, and said the laws that I-1100 would nix are easily circumvented now.
“There are many loopholes and exceptions and shenanigans,” said Hale, who has brewed for 27 years and served on a state task force in 2006 with other industry representatives and the Liquor Control Board.
Hale’s Ales and others create products for Costco and other retailers that no one else buys — for example, beer on pallets without cardboard separations — and sell them at prices that might as well be volume discounts.
Some breweries pay consulting firms to place their beer at eye level in grocery stores, a service cheap or free to the grocers and therefore a gift in exchange for shelf space from breweries, Hale said.
“No one could enforce these silly laws,” he said. But the result is “supporting the middlemen culture [distributors], who have a guaranteed sweet spot.”
I am not sure how this fits into the big picture. Hales Ales is one of the few Washington brewers who bottles and has been selling in volume for some time. That might have an impact on their point of view.
The Guild‘s Heather McClung (Schooner Exact Brewing) made an appearance, resonating the Guild‘s position that I-1100 makes it more difficult for local brewers to sustain pricing and find shelf and bar space. Beer consumers can feel for the Guild’s position, as it certainly would be a blind-side change for brewers in Washington state.
But, its apparent that the Guild is ready for some change. Heather advised that the Guild would like to see slow and steady deregulation – as opposed to the sudden, complete deregulation in place under 1100.
In the end, the issue might come down to trusting Washington consumers to dictate the market. I think that the statement made by Ashley Bach, spokesman for the “Yes to 1100” campaign resonates much of the sentiment of beer consumers:
“Wineries and breweries are worried about the unknown, but the wine and beer industries are very well established in Washington and consumers are among the most sophisticated in the country and will seek out good products no matter who’s selling liquor in Washington state”
Regardless of where you lean, the article presents a good look at the pluses and minuses. This Initiative might come down to the final week of campaigning. For now, its a toss up for most consumers.
***This post was originally posted on BreweryLaw.com, perhaps the nation’s only blog devoted to beer law! The blog is published by Reiser Legal, LLC, a Seattle, Washington law office. Reiser Legal’s Douglas Reiser is our regular legal columnist.***
Recently, the Liquor Control Board (LCB) has been vocal about its disdain for the proposed Initiative. The Washington Wine Institute hosted Washington Liquor Control Board Deputy Director, Rick Garza, at a panel meeting in Woodinville, last month. The purpose of the panel was to show the public why most of the local beverage industry opposes the Initiative. The Washington Brewers Guild was also present, echoing the Wine Institute’s call. (You can listen to Garza’s presentation by following this link over at SoundPolitics.com)
Apparently, one concerned citizen is upset about the LCB’s public presence. A local Seattle man (and writer for SoundPolitics.com) has filed a Complaint with the State of Washington Executive Ethics Board against Garza, alleging that the LCB executive is illegally using public resources and misleading the public with false information.
If you are interested in the Complaint, you can find a brief summary by clicking on this link, and you can read the entire Complaint by following this link. The LCB’s position has been laid out in a series of slides that can be read by following this link.
This blog takes no position with regard to the Complaint. Furthermore, we have no supporting information which makes us believe that the LCB is misleading the public.
It is, however, apparent that the LCB is openly involved in the “Vote No” movement. Recent materials illustrate that they believe the passing of Initiative 1100 will cost millions, necessitating a dip into the State’s general fund to meet LCB budget requirements.
Of course, the war of words will only gain steam as we approach November. Feel free to leave comments below if you have something to add to the discussion.
Well, its getting even more interesting. The battle over Washington State Initiatives 1100 & 1105 is heating up, more and more, each and every day.
In case you don’t know, Initiative 1100 was introduced back in June 2010 to privatize liquor sales in Washington and to deregulate much of the industry, allowing alcohol to be sold more freely. Initiative 1105 is very similar, but institutes price controls for liquor permits based upon the volume sold. There is much more on these initiatives here on Wikipedia, here on Beer Blotter, and here on Washington Beer Blog.
But recently, the government stuck its head in to the fight – providing a bounty of scary statistics. The Office of Financial Management purportedly performed a study, finding that the State stands to lose between $277 – 730 Million (depending on the measure that passes) if the Initiatives become law.
Opponents of the statistics say that the State is failing to run the numbers on the increase in alcohol taxes that will be raised by private sales of liquor. Furthermore, the State failed to measure the expected increase in alcohol sales in general, due to deregulation of the distribution and sales system.
But now, we have a purported beverage industry blogger bringing a fresh perspective to the Initiatives. Yes 1100–No 1105 is a blog written by an anonymous source, urging consumer to say Yes to 1100 and No to 1105. According to the blogger, the problem with 1105 is that its backed by enormous out of state distributors, hoping to gain a monopoly on the sale of alcohol.
The blogger has even pointed out that Young’s Columbia (one of the great beer distributors we have here in Washington) has contributed a hefty sum to the NO to 1100/1105 campaign put on by Washington Beer & Wine Wholesales PAC. This comes just after Young’s committed $1 Million to the campaign to pass 1105.
Apparently, its 1105 or nothing at all for the distributor. The blogger also has a sneaking suspicion that 1105 was a smokescreen to drag down 1100, all with the intention of supporting a NO campaign in the end. We will never know, and we aren’t speculating either way.
Here is the blogger’s short statement:
Washington State will vote on two liquor privatization initiatives this November– Initiative 1100 and Initiative 1105. I-1100 will provide a fair marketplace for consumers, while improving the Liquor Control Board’s ability to enforce important alcohol safety laws. I-1105 would only guarantee monopoly privileges to the large out-of-state wholesalers who put 1105 on the ballot, with no benefits for consumers and no improvements in public health and safety.
Anyways, we at Beer Blotter have vowed to stay out of the fight and reserve our opinions for vote day. But, we are committed to providing readers with all the resources they can grab, so that you can make an informed decision – come vote day.
Check out the Yes 1100 — No 1105 blog, as well as the vast assortment of other resources and make your own call. Leave comments below if you have something to say.
***This article was originally posted on BreweryLaw.com, a beer law blog published by Reiser Legal, our legal writers***
The recent initiative to privatize liquor sales in the State of Washington is picking up steam. Though this is not about beer, there are many in the beer industry who are probably interested in a major change in alcoholic beverage regulation in our fine state.
Initiative 1100 is the proposed legislation. The group behind this initiative is Modernize Washington, a Seattle based public interest group, providing not only the spirit behind the proposed law – but the statutory language itself.
A recent press release from Costco, showing support for the bill, puts the issue at the forefront of legislation challenges in Olympia. Of course companies like Costco, who has over 400 retail locations – all selling alcohol, stand to gain significantly from having access to liquor, for sale in their stores.
The proposed initiative would enable retail outlets like Costco to obtain licenses from the state of Washington, permitting it to sell liquor and permitting it to obtain liquor from almost any source – including the producers themselves.
Modernize Washington provides the following list of items that are at the heart of Initiative 1100. Take a gander for yourself:
- Washington State’s Liquor Control Board [LCB] will no longer sell liquor.
- LCB will end their current contracts with contract liquor stores.
- Current operators in good standing of contract stores will receive licenses to continue in business as a private retailer, if they wish to continue operating.
- LCB will no longer distribute spirits. The state distribution warehouse will be sold to generate money for the state.
- A new distributor can be licensed and may buy from any licensed distillery and sell to licensed vendors just like beer and wine sellers.
- Any store or distributor currently licensed to sell beer or wine, and in good standing, will be able to obtain a license to sell spirits, for an additional license fee.
- Local jurisdictions throughout the State can determine how many outlets they will allow in their city via zoning regulations.
- The state’s ‘mark-up’ on spirits is eliminated.
- The existing tax on liquor will remain and it will be up to the Legislature to adjust the amount of tax.
- The initiative mentions a 10% tax on purchases of spirits by restaurants. This is not a new tax or a tax increase. This is a technical update to current law, and merely requires private sellers to collect the existing tax which is now collected only by state stores.
- Repeals the “Three-Tier System”, a set of Prohibition-era “blue laws” which grant monopoly privileges to middlemen, at the detriment of consumers.
- Frees the LCB from the burden of enforcing outdated and unhelpful “blue laws”. The LCB will instead focus its mission on enforcement of licensing laws and education against under age drinking and general abuse of alcohol.
- All license fees from the new licenses to sell spirits may only be used for enforcing liquor laws and educating the public against underage drinking and other abusive alcohol consumption.
One of the points that strikes me as impressive, is their attempt to undermine the historic “Three Tier” distribution system that has followed alcohol sales from the end of Prohibition. The system demands that alcohol funnel through three sparties – the producer, the distributor and the retailer.
Over the past decade or so, states have weakened their stance on preserving this archaic system by permitting exceptions for brewpubs and even small breweries who sell and distribute their own products.
Modernize Washington has a copy of Initiative 1100 on their website. Take a gander at Section 15 on Page 9-10 of the document. This is one of the sections that directly repeals the “Three-Tier” distribution system that craft brewers, winemakers and distillers have grown to despise. This Section allows distillers to sell their alcohol to consumers and distributors on their own – without a middle man.
I welcome any comments on your views of Initiative 1100. As the document is extensive, we will continue to discuss its impact – as we learn more behind the initiative’s intent and application.
Leave your comments below.