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.
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.
I want to take a quick moment and point to Seattle Beer News‘ latest article on Initiative 1100, the proposed bill to privatize liquor sales and deregulate alcohol sales in the State of Washington. We briefly discussed this in the past, posting an article from BreweryLaw.com.
The author at Seattle Beer News, Geoff Kaiser, wrote a think piece about the new proposition, considering the Washington Brewers Guild. The Guild recently released a presser openly opposing the proposed legislation, citing concerns that “I-1100 is the greatest threat the Washington craft brewing industry has experienced in a decade.”
I first want to applaud Geoff for his very honest portrayal of the tug and pull he is experiencing on the issue. Truly, he is correct to say that there are many arguments to be made in support of, and in opposition to, Initiative 1100.
Chiefly, Washington brewers are focusing on the fear that an open marketplace allows massive beer sellers (Costco, Binnys, MillerCoors, etc.) free reign to cause disruption to the beer market in Washington.
Of course, the Guild is correct to state that passage of deregulation opens up the market and can cause disruption. But, as an open market fan, you certainly hope that opens opportunities to all people and businesses. The key in deregulation is to find your niche, become innovative and be more efficient. You have to beat the big guys – and Washington brewers can do that!
Anyways, we are not going to tell anyone how to vote. But, please read the Brewers Guild position, because you should see both the good and the bad of I-1100 before you decide to vote. Brewers know the business and their opinion should resonate well in the beer community. But, fear can be blinding.