Forbes: Pushback Against Tasting Rooms

Likely, but not here. 50 states=50 countries.

 

Tom, that is my understanding of the motivation for the three tier system as well. Prior to implementing these systems breweries would own retailers (e.g., Tied Houses, Saloons,...) and there were indeed abuses because of this 'monopoly'. The motivation for the three tier system was that the independent middle men (e.g., Wholesale Distributors) would encourage proper competition of products.

I think that some folks view the elimination of the mandate for a three tier system as being beneficial for some craft breweries but as history tells us the BIG breweries will also utilize this change to their benefit. This is where indeed the saying of "be careful what you wish for" applies.

Cheers!

 

True. I could have pointed out that was the motivation in some but not all states.

 

• Approved bill, which sets out to “shorten tasting room hours and require that brewers wishing to direct-sell more than 2,000 cases per year must sell them to distributors and buy them back, presumably at retail prices”

Despite the idiot laws of Maryland stated above, brewery laws have been loosened up since a few years ago when it used to be mandatory to give a tour for all guests. I guess these laws are why beer purchases on site are so darn expensive in MD. 32oz crowlers for $10 of a 5% very average ales are pretty much the norm. Equivalent of a $5 pint while sitting in the taproom. Bottle shops still have the edge on quality & value compared to most local brewery options. Most local partrons are to romanticized with new/local beer thought to see the truth however.

 

Indeed, I'd also suggest that the history tells us that what would happen today is that the big kids would be much more effective at shutting down or even preventing the development of small breweries focused on producing flavorful beer.

 

FWIW that would be my expectation.

If folks today are concerned about BIG BEER 'killing' craft brewing then just see what happens if three tier systems are no longer mandated.

Cheers!

 

That's the urban versus mostly rural distribution aspect that's always seems to exist.

 

Indeed. I'd also suspect that different religious groups played a bigger or different role in some states than in others.

 

That sounds like a "legal" shakedown to me. The beer would never even have to leave the brewery. Just send a check to the distributor.

 

Lots of states allow either the brewer or the distributor to pay the state excise tax, and an out-of-state brewery that did its own distribution would simply be granted a wholesale license which would include the requirement to pay the excise tax.

Pretty sure you've claimed that before, but Anheuser-Busch has wholesale branches ("Wholly-owned Distributors" in their jargon) in numerous states in which they do not operate a brewery (a quick look at an older list turns up MA, OR, HI, WA and formerly KY). Brooklyn Brewery owned a Massachusetts distributorship. Coors once owned distributors in WA, CA, ID, MO, NE. Ballantine ran wholesale branches in most of the New England states, as well as NY, PA, FL, MD, etc.

 

In my area, sometimes its a brand new brewery who may have only one or two beers on tap, or maybe ZERO (as they are just starting). They then buy kegs from local competing breweries (likely with their permission) and everyone wins out. AB INBEV wants to make it seem like there is some undercutting going on.

At least in my state, tap room licensed facilities can sell any other beer (and now wine) that is produced within the state without additional hurdles. It's why when Stone collabed with Marble, Marble couldnt sell the CA produced keg in house. Distributors hate this fact, yet when certain breweries get to within a certain size, they do tend to use a distributor (instead of self distribution), so the whole thing seems to balance out.

I can see where distributors are coming from. But its also within the discretion of each brewery how and where and why they want to have a taproom (in NM, you can now have up to three tap rooms). I have seen some breweries not expand too crazy, because of their keg distribution foot print to that area. It's about respect and again, doing what them deem is best for business. ie why open a tap room that would essentially take away your own sales albeit from restraunts/other beer stores. But I think the bigger picture is distributors want their cut. They need to get with the times and provide some incentives as to why breweries shouldn't self distribute. Yet the only incentives they seem to take notice of are the AB INBEV driven ones.

It also doesnt help that you have to jump through so many hoops in regards to licenses and permits. It's why so many breweries here have chosen not to serve food (and bring in food trucks). These places dont want to find or use these sorts of loopholes, but the bureaucratic process makes it impossible most of the time.

Lastly, I want to say, they all pay the excise taxes, but in general, most can avoid having to buy a $100k + liquor license, which in my state, its has a set number and you have to buy from other another (how is that fair?). So I really dont see whats so bad about using the loopholes provided

 

While I can see distributors arguing against breweries/taprooms acting as distributors of beers other than their own, it is ridiculous for the brewery's own beers. One local brewery has a taproom at the brewery but also has a taproom in the "beer district". I went to the non-brewery taproom recently and the taptender said that the beers there are limited to those that they distribute since they must get their beers through a distributor. This is ridiculous. It precludes them serving their small batches at both taprooms. They should be able to freely sell all of their beers at all (two) of their taprooms without paying a distributor to handle it.

 

This is one of my favorite things about Capitalism: "We're for an open and free market...unless it stops benefiting us, then we regulate it so we can still win."

I'm not saying unregulated Capitalism is the answer (that would lead to a whole heap of different problems), but I hate when laws are created for the explicit purpose of propping up antiquated and rightly-suffering systems and/or to stifle innovation and little guy success. It's stuff like this that contributes to the death of the "American Dream;" how are you supposed to make something of nothing if the game is quite literally rigged against you (unless you play ball)?

 

, Yes, you are correct. My only excuse can be found in one of my bad habits. When some others (not including you or @Ranbot ) seem to want the world to be a uniformly either or black or white place, I sometimes fall into the trap of expressing myself by ignoring the nuances and stating things as if they were in fact either black or white. Thanks for helping me to remember that the world is not an only black or white kind of place.

 

As noted by others, there is no universal Mandatory "Three Tier System" in the US - based on the SCOTUS interpretation of the 21st Amendment, every state has written its own alcoholic beverage laws. The main post-Repeal Federal law, the FAA Act, does not mention a mandatory three-tier system in its Tied House prohibition laws. The "Three Tier" term doesn't even exist in until the 1940-50s, in studies of the industry.

Many states have always allowed breweries to distribute, including CA, PA, NY, NJ - the 1940 US census showed that only 50.2% of the beer sold in the US went through a wholesaler, with the remainder brewery/brewery "branch" > retailer. Mandatory Three Tier systems developed mostly post-WWII in states with few or no breweries - laws created to protect (then) small, local companies from large out-of-state breweries.

Also mentioned above, a three tier system for beer distribution would continue to exist if all the mandatory laws were repealed (just as it does in many industries not as heavily regulated as alcohol). I've never seen the stats collected in any those full/no limit Self-Distribution states but I'd guess that most beer in most of those states goes voluntarily through a wholesaler and not brewery>retailer.

One aspect of the current status is that in the craft era alone, while the number of US breweries has greatly increased, the number of licensed wholesalers has continued to decrease through mergers and due to the fact that we are down to 2 large national brewers from the 6-7 that existed in the 1970s.

There were still over 5,000 licensed wholesalers (down from 10-17,000 in the early post-Repeal 1930s) in the 1970s when US brewers numbered 40-50. Today, with between 3 and 4 thousand "distributing" (i.e., not counting brewpubs) breweries, the US is down to only between 2,000-3,000 distributors (the figure differs between that of the US Bureau of Labor Statistics and the National Beer Wholesalers of America.) And many of those wholesale distributors are owned by multi-state chains and are, needless to say, much larger companies than the vast majority of today's breweries. So, the very opposite of the situation within the industry when the Mandatory Three Tier laws were enacted.

See Brewers Association - Self Distribution Laws

 

Brewpubs have been legal in NJ since the early 1990s. The have a separate brewers license, called a "Restricted Brewery License" and are also required to have a "Plenary Retail Consumption License".

 

Aren't Brewpubs limited by the number of barrels they can brew, though?

 

I would say what's special about DC is that if you want a keg of Pliny's even though it isn't distributed there, as a bar owner you can go buy it and serve it legally. That is what getting rid of the mandatory laws allow.

 

That's why there are only 14 brewpubs in NJ and most of them are old.

 

Yeah, they upped the limit to 10k bbl (up from 3k) with those 2012 revisions (which also increased the number of brewpubs that could be owned from 2 to 10). But how many NJ breweries currently brew over that? Anheuser Busch and Flying Fish?

Still, that wasn't the OP's claim.

I agree that NJ should get rid of the separate "brewpub" license and the added requirement of needing an On-Premise license (usually very expensive in most affluent towns) but the restaurant and bar owners - who have previous bought those expensive licenses - are a strong political force.