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Discussion in 'Beer News & Releases' started by Todd, Oct 14, 2014.
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Correct ... when Yuengling blanketed MA with glassware the ABCC said that was ok.
If there has been no investigation or action taken regarding this law for 18 years, the most likely end result is the investigation will fade from the headlines and nothing will be done this time, either. </cynical response>
You're right, I missed that there are actually three people involved there: the licensee, the persuader, and the purchaser. However, advertising materials in general would be covered under the letter of the law: they are given by the licensee to a restaurant (the persuader) to encourage customers (the purchaser) to buy that brand's products. That's almost certainly not the intent, but given the lack of details about who the "persons" may be, that's how it reads.
Now advertising materials are of "substantial value"?
Bukowski's new draft system was paid for out of their own pocket, at least that is what I have been told since it was installed.
There is something bigger going on than just Pretty Things as all of the Craft Brewers Guild beers are no longer there or at other establishments within the group. So why isn't Sierra Nevada or other bigger brands within the CBG portfolio speaking out about this? Why has no one from the CBG made a comment?
Is there a number that defines "substantial value"?
Is a big neon sign advertising a beer substantial, or is 100 pint glasses substantial?
Probably because to Sierra Nevada, losing two bars is a drop in the bucket for them, whereas for Pretty things, that could be a lot more substantial.
I'll take a stab at this. Sierra, given their size, isn't too concerned with the loss of one account. They'll put their trust in CBG and move on, deciding it's not worth raising a stink.
Why has no one from CBG made a comment? Because even if its their policy NOT to engage in P2P, they deal with bars that make requests. And if those bars feel they might be outed by CBG, they'll hesitate to do business with CBG.
Pretty Things have themselves to worry about. CBG has a whole portfolio of brands they have to do right by.
They have 8-9 places within the group with possibly more coming soon. Pretty Things is usually not on tap at their establishments from what I remember though they did serve bottles up until yesterday. Has anyone else within the CBG portfolio stood behind Dann to back up the allegations yet?
How many taps did that free up and what were they replaced with?
One of them has done so right in this very thread.
Let the witch hunt begin!
That was not my intention and i apologize if it came off that way. As I'm not familiar with the place I was curious how much of their product did they change and if the replacements were craft or local options.
I second the above post. Comparing price to quality for bombers at the retail level, it is hard to beat Pretty Things. I find it hard to believe that their keg price is out of whack for what they offer.
I imagine that as distributors found out about the removal of a competitor, they all swooped in with options to fill those taps. As far as I can tell, they remain as craft and local as they were before Craft was out, just different breweries represented by different distributors.
Pretty Things keg prices are completely competitive. For how much I like their stuff personally versus other keg prices, I think they're a little low.
I would love to hear Shaun Hill's (likely unprintable) response to this question. No beer for you!
Drunk tweets are not necessarily wrong or insubstantial.
In vino veritas
Dann (yes, we know you're lurking): plenty of bars here in VT would be happy to pour Pretty Things, and many of us would be happy to drink it. Jack D'Or available in Waterbury?...mmmm... just saying.
How do you know? He's not logged on here since the end of September.
His drunk tweets will go down as legendary if something ends up happening to the Wilcox Group or Buks. Don't mistake my posts as an anti-sentiment. I currently think they were a mistake but that doesn't mean that is how the situation will end. It doesn't mean I hope it back fires on him.
This thread is out of control, I liken this issue the same as if my customer sits sits at the bar and I buy them a pint on the house is that wrong ? Illegal ? Bribery? A Kickback ? Yes, but this is common practice in the industry. Some bars give free food too. The beer wholesalers are doing the same thing just on a larger scale .
Again hate the game not the player!
It seems every purveyor and industry does some sort of this practice in some form. That said Dann nice job on the new Bocky bier, and Craft is rockin a awesome beer book and I hear Gordon's places are jammin. Let's all have a beer together and get over this. Who's buyin? Cheers
I am a member of the brewing industry. While you might have your opinions about my remaining anonymous, I apologize, but it would be too damaging to my company to reveal myself. We are a substantial player in the Boston market, among others, and I have regular dealings with the parties involved in this ordeal - Wilcox Group (Parish 1, Parish 2, Bukowski 1, Bukowski 2, Tip Tap Room, Rattlesnake, Estelle's, and Lower Depths), Craft Brewer's Guild of Boston (subsidiary of L. Knife & Sons), and a player not mentioned too much, but playing a major roll in the paying side of things, Burke Distributing.
Yes, I could be bogus, I could be making this up, however I've been reading too much stuff - much of which is way off base - and would like to contribute some inside information to this situation. I do not claim to know every detail, however I will impart my knowledge as well as answer any questions I may know the answer to. Take it for what it's worth.
To start, there is one question that I positively know the answer to: Why did Wilcox stop carrying CBG products? It comes down to the wholesalers. Wilcox looks for (and receives) monetary kickbacks from his wholesalers. He does a lot of volume in his accounts, and to be blunt, he's got them by the balls. There are so many breweries now in everyone's portfolio (making the wholesalers themselves replaceable) that a threat to drop any distributor that refuses is one to be taken seriously. A month or so ago, he upped the ask and CBG refused to be extorted any more. Wilcox wasn't bluffing and is refusing business to all of their brands - including Allagash, Lagunitas, Founders, Troegs, Pretty Things, Magic Hat, Wachusett, Brooklyn, Down East Cider, Six Point, etc. Atlantic still pays, as does Burke, who has VERY deep pockets (Boston Beer is worth a lot of money). The pay2play in this situation wasn't necessarily coming from the brewers, but rather the distributors. Sometimes the distributors pay for it all, sometimes they co-op payment.
(warning, my opinion of Gordon Wilcox is quite biased as I find him to be a scumbag of the highest level. He's a grumpy old man, but I do respect his establishments. For the most part his bars/restaurant are pretty damn good)
Gordon Wilcox's public letter (besides being quite petty) contains a few lies, some of which are easily researched by checking out the Mass Beverage Journal, which has pricing on all beer distributed in MA. The only thing I'm unsure of in this situation is if certain breweries have any additional payment beyond that of the wholesaler (which is something I'm certain of). If they do, I'm not aware of it. I won't get into it, but the whole "PT beer sucks and their prices are too high" is laughable. A side note, the guy is a terrible liar. He could have come up with any number of reasons that he gave CBG the boot - unreliable reps, inadequate deliveries/inventory, immoral business practices, etc. But he chose to say PT beer sucks and is more expensive than his other beer. HUUUGE mistake on his part. Huge.
The second point I'd like to make is that paying for lines does not mean the beer is bad. In some cases you've got struggling breweries trying to stay relevant, but in other situations you'd be VERY surprised to know who gets in on the action. The same goes for bars. There are some places you'd never guess are taking payment, and others you'd assume are, and they don't. Even if your beer is great, you're not getting too many lines downtown or in Faneuil without someone putting money down.
"Programming" - pay2play - is done at almost every major chain/restaurant group. Sometimes it's a simple $50 "menu rewrite fee," sometimes it can be a few grand for a line for the season, sometimes it's free product (1 free keg for ever 10 sold). Usually it's only for draft - bottles/cans are typically on merit. Sometimes though, if a brewer is big enough, like a Yuengling or Sam, they'll get pumped for cash off draft as well.
Grouping is another way to go about it - major discounts on product if the brewery is given multiple line - "if you have X and Y on draft, we'll give you Z on the house."
Also, don't think small breweries can't afford to pay for a line. Let's look at a scenario of a cash up front line. If the account is moving decent volume, they might go through 10 half barrels/month. That's 120 half barrels for that year. If the frontline price on those barrels is $170, they might be looking at about $115/keg (minus the wholesaler cut). That's just shy of $14k in revenue from that line for the year. At a 50% margin you're looking at $7k net. So when the bar is hitting the brewer for a couple grand for the line (and the underlying threat is "if you don't do it, I know the next guy will"), they still have plenty of margin to work with depending on their annual brewing capacity, i.e. if they're not constrained by capacity, they have the choice of producing the beer and netting $5k rather than $7k, or passing up the line and netting $0. PLUS, if they say no that line might just go to MillerCoors (perhaps a Blue Moon) or ABI (Shock Top anyone?). So what do they do? Pass up the money to be righteous and end up being the reason the bar has Batch 19 instead of something good? Take the deal? And don't think these small breweries can't afford a couple grand now for more down the line. Most breweries (even the small ones) have more money invested in their hosing than you do in your car.
I could go on, but I'll stop now and answer some questions.
@anonymousbrewingindustry: Much of this has already been discussed off the record amongst others. By posting like this you're part of the problem we've been talking about in this thread; people with information who are too afraid to go on the record. You know this already. But I fully understand your fear of reprisal.
I still challenge you and others to go on the record. Help the industry.
I'm not a lawyer or investigator either. I cut and bend metal. How would I as a person who is outside and not knowledgeable about the inner workings of the industry be better equipped or more inclined to start making inquiries than you? Saying you're not in the business of filing complaints comes off as just putting your head in the sand and hoping that someone else is going to pick up the dirty end of the stick. You are far more invested in the business of making and selling beer than I will ever be yet what you said above makes me feel you are content to let your fellow brewers and favorite accounts potentially go on with this practice and act helpless while asking me/us to do the work you are unwilling to do. It's hard for me to get that outraged over the whole deal when the majority of folks with real skin in the game just let it lay.
It's called "The Whistleblower's Dilemma". You can google it, I won't add more noise to this thread. The short version is, the more you know, the more you have to lose. And the people who lose the most are often the good guys. 18+ years since the last bust and the industry continues to shuffle along. The consumer is the ultimate loser. No outrage there either. This is the status quo. Move along...
I understand their situation in that respect. If you come out and cut your own throat for a potential gain on the part of your colleagues you're still left bleeding and probably dead. That unfortunate expectation still doesn't put consumers in any better position to start making calls for investigations. We don't have the ammunition in the form of inside knowledge like the brewers, distributors and bars/retailers. If there's no solidarity with corresponding action on the part of the brewers then there is likely no solution to be effected anywhere. As mentioned several times so far the state's position on enforcement for this particular problem is like Chinatown - as little as possible.
Wilcox Group dropping CBG hurts PT because PT can't just move on to another distributor that hasn't annoyed Wilcox.
Just as licenses and tap lines are sold, brands are sold between distributors. Most states have draconian franchise laws favoring the wholesaler. Think Tesla Motorcars. And Beer Wholesalers like it that way. L. Knife owns distributors in seven or eight northeast states.
Some states allow limited self distribution for smaller brewers to avoid this quagmire. Enlightened brewers, like our friends at BBC and Harpoon, have their own distribution companies.
The three tier system was design to prevent national mega-breweries from having undue influence on retailers, but it turns out that it's guvmint cheese for huge brewers. Maybe it's time to rethink that system.
This would be a more productive use of energy than trying to figure out what law or regulation was danced over by which party when all the laws and regulations are part of a flawed design from a bygone era. Middlemen are disappearing from our economy. When was the last time you used a travel agent to buy plane tickets?
Like Realtors, Stock Brokers and Insurance Agents, Beer Wholesalers remain because of state laws purporting to protect consumers. If you're sick of being protected from potentially unsatisfying beer, speak up. Call your rep. Call Patrick.
Dirty Old Boston will always be Dirty no matter how much scrubbing we do on the outside. Just know that.
Level the playing field.
Anonymous, while overall I see a lot of truth in your post, your financial model seems high both in volume and in margin. I doubt most small breweries are moving 10 1/2BBL kegs a month at most places. That is more than 2 kegs a week. I doubt most brewers are getting 50% margins. So, a few thousand $ for a line is going to be a huge expense that will eliminate that option for consumers.
@toddalstrom I think it's naive to use the phrasing "you're part of the problem." The better phrasing may have been "you're not part of the solution." Maybe. But maybe there is no solution. Brewing is a business. Money is what keeps everyone motivated. There is a balance that plays out naturally. Everyone is a part of that balance, from the brewer to the wholesaler to the retailer, all the way down to you the consumer. Each level has choices to make, and those choices are all dependent on one another.
The brewer needs to make sure they don't charge too much as to make the beer cost more than someone is willing to pay for a tasty beverage, or too little that they aren't making enough money to 1) pay for the grueling work that is brewing and 2) fund innovation (how do you think Sam Adams has such an awesome brewery tour, consistent beer, Brewing the American Dream...).
The wholesaler needs to make sure they make enough margin to pay for very intricate sales and delivery systems that are crucial in keeping the product stored properly, efficiently ordered, and delivered fresh.
The bar is just taking care of every kind of consumer. If they think they can get by with selling lines for a ton of money, they better be sure their clientele care about price over quality. Some do. There are plenty of bars to get a Bud Light for $3, and plenty of bars to get a Stone IPA for $8. To each their own
The consumer has final say. You choose who you patronize. If you're complaining about pay to play, yet you still go to Tip Tap Room because it's so convenient after work, or that sports bar that has 200 big screen TVs, realize that you're sacrificing the beer for the cost of real estate, aesthetic, TVs, whatever.
Going on record won't help the industry and challenging anyone to do so is ignorant. These are people's livelihoods. Most people aren't going to risk that to fix a working system. Perfect? Certainly not, nothing is. Everyone from August Busch to your local brewer started with a dream and an equal opportunity. What they make of it is up to them, and ultimately you, the consumer.
That number is not high. You wouldn't pay a few grand for a line in Malden that moves 2 barrels a month. Top money comes for top lines. If you're on tap at the right place, you'll move volume regardless of who you are. Sure, BL will move more volume than "local IPA" but I promise if you're on an 8 knob system in Faneuil, you'll move a lot of product regardless of your size. At that point, it's up to your quality of beer, and consistency.
As for margin, 50% is a good number to use.
Agree with most of your points in both posts about the reasons for anonymity. That said why not fight back the same surreptitious way the whole thing is done right now.
Anonymously make a list of all Boston establishments known NOT to be involved in pay to play. A list like that circulated widely enough might make enough of a difference to a large enough group of Bostonians to hurt these folks in the only place they care about, the cash register. Better yet, it would reward the honest establishments.
Better would be a list of places known to do it, and circulate it widely, and do it openly. Challenge the authorities to do their jobs, and the big media not to keep silent about it, and the public to care.
If there aren't any that don't do pay to play, than this discussion is moot, there is nothing anyone can do, because if the problem is that widespread, and there is no enforcement, it is obvious there are others involved in the pay to play, the ones charged with enforcing the laws, and if the corruption is in there too, well...
I guess if this is legal or not depends on the state. Does anyone one know about the law or lack of one in NJ?
First, it's not as black and white as you'd want it to be. One brewery might be right in saying "Bar X doesn't do programming," however they might be the only ones not dealing. Or vice versa. Sometimes you don't get hit up for a year or two. Plus, nothing good can happen with a large anonymous list of accusations (irony, yes). No chance that goes smoothly.
The second is that most people don't care. Your community is, and excuse me for saying it, the extremists of beer. Wilcox wipes his ass with the revenue from people who care enough that they'd boycott a convenient bar or delicious restaurant (I despise Wilcox but I'm going to keep patronizing some of his accounts because they have great food). The VAST majority of people either have no idea about any of this (nor would they care to), or have heard but don't care enough to alter their routine/plans. You guys might make the most noise, but noise doesn't buy beer. John and Jane happy hour business man and woman buy beer. The Smiths on vacation buy beer. The college kids buy beer. You matter very little to a restaurant/bar in a prime location, which is where the majority of big programming happens. This isn't racial equality or religious war. It's a niche segment of a niche industry. It's cold to say, but nobody outside this bubble really gives a shit about any of this. I do, and you do. But as a whole, it's not enough. There will always be places like Meadhall, Deep Ellum, etc that do things the right way, but this niche group isn't big enough to change folks like Wilcox, Briar, Lyons, Glynn.
NJ's ABC Handbook cites the Federal law from the FAA:
NJ law also has regulations about "promotional material":
Some states (or maybe it's the Feds?) had/have a dollar limit on promotional material, which is why expensive neon signs are typically stamped as being the property of the brewery right on the metal shroud of the transformer (and, in theory, only being loaned to the retailers).
In NJ, brewery clocks used to be illegal and then there was actually a short period (circa late 70s) when brewery logoed coasters were deemed illegal by the NJ ABC.
(Contrary to what you'd at first think, that was a great period - a lot of bars went searching throught their cellars for old coasters and it was a bonanza for coaster collectors - I remember a New Brunswick bar using Schaefer Braunlager coasters. Still got a few.)
You are not the "you". There are people out there that have direct knowledge of shenanigans. We avoid shenanigans like the plague because we knew a day of reckoning would come. And it has. No one asks us for anything because they know we won't do it. There are tons of "you" that have the evidence. In my post I reiterated what we have heard that supports Dann's specific contentions. There is no doubt that these things may be in the "grey area" and only the ABCC can say whether there is a violation. So, no we wont be bothering the ABCC or burdening our fellow brewers and favorite accounts with huge legal fees when we don't even know what sufficient evidence would be. What we know for sure is that we lose tap lines for no reason but pay to play.
Your attitude sucks. With that attitude I surprised you can change your pants. Anything can be changed. Anything. It doesn't take some large mob to do so. It takes one person who is knowledgeable and passionate enough to try to correct a wrong. It's an illegal practice. It won't take an act of god to get some traction on it.
Send me the damn list. There are news outlets that love, LOVE, 'gotcha' stories like this. I'll have it in everyone that matters hands in a week. Fear has you all twisted up.