News Pretty Things goes to town on "pay to play" in Massachusetts

Discussion in 'Beer News & Releases' started by Todd, Oct 14, 2014.

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  1. BerkBrewJ

    BerkBrewJ Initiate (0) Oct 7, 2009 Massachusetts

    Not to confuse the issue, but it is important to remember that for most breweries, distributors are an important (and active) participant in how their beer gets to market.
     
  2. JackHorzempa

    JackHorzempa Poo-Bah (2,934) Dec 15, 2005 Pennsylvania
    Supporter

    Is your point that it is the distributors who are breaking the law vs. the breweries?

    Cheers!
     
  3. breadwinner

    breadwinner Meyvn (1,139) Mar 6, 2014 California
    Beer Trader

    I understand what you're getting at, but it's a loose comparison, IMO. We're talking about a fixed number of taps at a bar - the proverbial zero sum game - versus a competition in which anyone who wants to enter can do so. In addition, if I recall correctly, the cost to enter the competition is $185/beer or something like that. Honestly, even for small breweries, that's just not that much money. I can only surmise that pay-to-play involves a helluva lot more $$$ than that.
     
    drtth likes this.
  4. Darklight

    Darklight Aspirant (241) Jun 27, 2006 Pennsylvania
    Beer Trader

    In a 3 Tier system wouldn't it have to be the distributor that is breaking the law?
     
  5. BrainalLeakage

    BrainalLeakage Initiate (0) Jun 17, 2014 Rhode Island

    I don't want to defend the practice and I would rather beers be selected based on merit, popularity, etc so the ones that survive do so based on making a good beer vs being able to afford placement...but I can feel for bar owners and liquor store owners also. Especially at smaller establishments. I mean, at least here in Providence, when school is out, it's not always easy to fill your place up. If you can get a little extra help offsetting your bills during the lean times by selling a beer that is pretty similar to another one you were considering, I can see the temptation. I don't think it is strictly limited to "big greedy corporate monster bar owner guy".
     
  6. JackHorzempa

    JackHorzempa Poo-Bah (2,934) Dec 15, 2005 Pennsylvania
    Supporter

    I must first caveat that I do not work in the beer industry so take what I have to say with that in mind.

    Yes, beer bars do purchase their beers from distributors but breweries do have sales reps who call upon retail customers. I happened to be in a local Whole Foods Pub drinking a draft pint when I noticed a gentleman who had a Brewery logged shirt on. I asked him if he worked for that Brewery. He responded: yes, I am a sales representative. I had a 15-20 minute conversation where I learned a lot about the upcoming plans of that brewery. Now, I have no specific information here but it is possible (but I would suggest unlikely?) that as part of that sales representative’s visit to the bar that something may have occurred to encourage that his brewery’s beers be put on tap.

    So, it seems to me that it is not only the distributors who can ‘influence’ things here.

    Cheers!
     
  7. paulys55

    paulys55 Zealot (582) Aug 2, 2010 Pennsylvania
    Beer Trader

    They just buy beer that they think will sell well or that they like or that they think, 'this is a great beer and I want to offer it to my customers? Instead of buying beer because they got a free neon or 3 products from one brewery because they get a quantity discount or have 5 lines dedicated to one brewery because said brewery gave them money towards their draft system...
     
  8. AshlandNacho

    AshlandNacho Aspirant (228) Apr 14, 2013 Massachusetts
    Beer Trader

    I think this is a great point. While the practice itself is deceitful (and illegal - although debatable based on the merits of how strongly the policiing body wants to enforce it) it's worrisome when you see people calling for names for boycotts.

    To me the big issue is with the large brewers and bar owners who are doing this strictly for a market share grab or for the benefit of these kickbacks. You can't paint everyone with a broad brush though (hello social media generation). How do you fault the small brewer where choosing to engage in these practices is the difference between having your taps in some locations or no locations - and in all likelihood; staying in business. Or how do you fault the restaurant owner where $10,000 is the difference between being able to pay your bills and your mortgage or choosing between one or the other?

    At the end of the day it's an issue for the industry - the consumer can 'vote with their wallet' but is better served being more well-informed when doing so.
     
  9. Jirin

    Jirin Aspirant (282) Apr 28, 2013 Massachusetts

    It's unethical because capitalism only functions correctly in an environment of fair competition, where you increase your sales by offering a superior product at a superior price, rather than by making secret deals to shut competitors out of the market. It's the same reason price fixing is illegal.
     
  10. TWStandley

    TWStandley Defender (617) Jan 15, 2008 Massachusetts
    Beer Trader

    I have mixed feelings on this to be honest. Obviously being a fan of craft beer, small breweries, local breweries, etc., I'd love for there to be more of a level playing field but I don't think you can fault a bar for dedicating "bought" lines to breweries who are paying for it. After all, the bar is a business trying to make money. To turn away free money would be foolish.

    At the end of the day you aren't forced to buy beer so if you have an issue with it simply don't buy it. It is on us as consumers to vote with our wallet.
     
  11. drtth

    drtth Poo-Bah (3,007) Nov 25, 2007 Pennsylvania

    Except that one is illegal and and the other is not.
     
    needbiggerboat, jrnyc and F2brewers like this.
  12. DrMeasle

    DrMeasle Initiate (0) Aug 22, 2008 Massachusetts

    To clear up some confusion that keeps being repeated here. Buying tap lines is illegal. The choice is not "take free money or not". It is "break the law or not". Some people choose to break the law and some do not.

    Why is it illegal? Review Federal Anti-trust Laws. Also, specifically to MA, alcohol promotion at every level of the industry is illegal. Remember, that's why there's no happy hour in MA.

    Does it benefit the average BA? Absolutely not. If you are willing to break the law are you then willing to pass on your savings to the consumer? The restaurant group called out by PT is not lowering prices, but I'm sure their share holders are getting better off.
     
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  13. HuskyHawk

    HuskyHawk Devotee (465) Jun 5, 2014 Massachusetts

    That's not necessarily legal either. It could easily be considered an unlawful tying agreement under antitrust laws.
     
  14. drtth

    drtth Poo-Bah (3,007) Nov 25, 2007 Pennsylvania

    I suppose it depends on how its handled, but as I mentioned in an earlier thread, its appears to be quite legal in PA for an importing distributor to allocate cases (and presumably kegs) of limited release beers on a percentage basis to those retailers who sell the highest amounts of that brewery's product during the rest of the year.
     
    #94 drtth, Oct 14, 2014
    Last edited: Oct 14, 2014
  15. DrinkNewport

    DrinkNewport Initiate (0) Apr 29, 2013 Rhode Island

    But if you're offering an inferior product, you can only make so many "secret deals" before you lose all your money. The only reason a bar owner is going to agree to such a deal is because he's facing a decision between two "comparable" products (say Sam Adams Rebel and Lagunitas IPA) and one of them has decided to sweeten the deal.

    The funny thing about the whole "buying lines" thing is that all it's doing is reducing the cost of the beer for the bar. For example, if you're going to go through 20 kegs of whatever beer in 6 months at $100 a keg, the bar's cost is $2000. If the distributor/brewery gives the bar $500 cash for the privilege, all they've done is reduce the cost for the bar down to $1500.

    Of course, this kind of thing is rampant throughout the industry. If Bud Light offers you a chance to win a trip to Tahiti for you and five of your closest friends, they're doing the same thing. Of course, their sales are falling, so all these "bribes", discounts and marketing gimmicks can only take you so far if your product is falling out of favor with the market as a whole.

    It also seems like this is a pretty damn hard law to enforce, short of the cops opening up their own bar as a sting. The distributors know who the bar owners are and the bar owners know who their reps are...and they both feel they're benefitting from the arrangement.
     
  16. Guzzle_McBrew

    Guzzle_McBrew Devotee (417) Feb 17, 2014 Connecticut
    Beer Trader

    I love that Pretty Things and @Paquette are out there swinging on this bullshit.


    Hit 'em with the 'Fringe'!
    (Delicious PT Beer for those that don't know. Try one.)
     
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  17. DrinkNewport

    DrinkNewport Initiate (0) Apr 29, 2013 Rhode Island

    Seriously? It's pretty damn unlikely that anyone is going to go anti-trust on a 100,000-barrel-a-year brewery tying their limited-editions to year-round sales.

    If they do, I'm outta here. I'll go somewhere with a freer market...like France.
     
  18. BRYeleJR

    BRYeleJR Disciple (318) May 18, 2013 Massachusetts
    Beer Trader

    And Gordon Wilcox of Wilcox Hospitality Group has responded, posting this on Twitter. Lower Depths, Tip Tap Room, Bukowski's all tweeted it as well.

    ---
    https://app.box.com/s/f7pk06ins2dpbg4zdlkl

    Dear Dann,

    Today, I found myself awakened with a flurry of social media activity regarding your interpretation of my company buying practices and that we “illegally sell or buy” draft lines. Though common practice of giving away kegs or other gifts to move product may be common with other companies, I am forced to question your own practices. I personally don’t even know you, never asked you for a damn thing, never intend to ask you for a damn thing and will not serve your inferior product.

    The reason your product is inferior for my clientele is simply based on price vs. quality. Local cases in point: Slumbrew , BBC. Mayflower, Two Roads, Trillium, Otter Creek, Peak, Nightshift, Bantam, Notch and Jack’s Abbey. These quality brewers sell at $99 to $170 per keg. On the larger scale, Stone, Harpoon, and Sam Adams bought hops for small brewers during shortages to keep small business afloat. They too provide affordable quality brews for my clientele and have done so through the good times and bad times that I’ve owned these bars for the past twenty-five years.

    Pretty things equals “not so pretty pricing” at $200 per keg. To pass that on to my customers puts me in a different price point as a restaurant owner. I operate restaurants at a mid-range price point paired with high quality chef driven food in order to compliment and support local small brewers. I understand you want to be avant-garde and have the most expensive beer on the market. It does not work for us, Dann.

    Therefore, I will continue to stay with the small brewers and local small businesses that have channeled this influx of home-crafted, wonderful brews. We as a small business were at the forefront of this movement. Small brick and mortar restaurants are what made Pretty Things. And now from me to you, as I’ve done with large companies in the past, I have decided to never serve your product. Not only will I not sell your product because it is both inferior for the price, it is unfortunate that you would lump our small businesses into the “pay2play” category.

    I hope in your late-night apparent drunken tweeting, you have not hurt all of the other small businesses and small local crafters out there today. We will continue to support the small local brewers, we just won’t be supporting you.

    Sincerely,
    Gordon Wilcox
    Wilcox Hospitality Group
    ---
     
  19. Todd

    Todd Founder (5,493) Aug 23, 1996 California
    Staff Subscriber

    This just became personal (well, it did when Dann called the Wilcox group out), but the underlying issue is still important.
     
  20. Rekrule

    Rekrule Initiate (0) Nov 11, 2011 Massachusetts

  21. Handle

    Handle Initiate (145) Mar 16, 2009 North Carolina

    He left out the part where he dropped the mic.
     
  22. Cfahooligan

    Cfahooligan Events Director (583) Mar 19, 2001 California
    Staff

  23. ZDSmith87

    ZDSmith87 Aspirant (234) Jul 18, 2014 Massachusetts
    Beer Trader

    My favorite line.
     
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  24. kevinmcgowan

    kevinmcgowan Initiate (0) May 26, 2013 Massachusetts

    I don't know how Wilcox can, with a straight face, blame it on the price of the beer while having multiple local beers (some from breweries he calls out in the letter) currently selling at $7.50-$9 at Tip Tap Room.
     
  25. Respirologist

    Respirologist Initiate (170) Feb 26, 2013 Massachusetts
    Beer Trader

    Always 3 sides to the story

    Side A.

    Side B.

    The Truth
     
  26. HuskyHawk

    HuskyHawk Devotee (465) Jun 5, 2014 Massachusetts

    I think that is totally legit. But it's a subtle difference. Also, there is so much competition in this space that none of the small brewers are likely to be the target of any antitrust investigation. Market shares are all way too small.
     
  27. emannths

    emannths Initiate (188) Sep 21, 2007 Massachusetts

    So, I don't see a denial here...?
     
  28. zid

    zid Crusader (789) Feb 15, 2010 New York
    Beer Trader

     
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  29. wrightwb

    wrightwb Initiate (0) Aug 11, 2014 Connecticut
    Beer Trader

    Am I the only person who thinks this sentence makes no sense? Is he trying to say that "pay to play" is common?
     
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  30. Rekrule

    Rekrule Initiate (0) Nov 11, 2011 Massachusetts

    He didn't deny at all, just attacked. It's like he learned to argue reading these forums.
     
  31. Todd

    Todd Founder (5,493) Aug 23, 1996 California
    Staff Subscriber

    Indeed. Both sides are just calling each other out. It's pot shots. I'm just getting bits and pieces behind the scenes, but no one is telling the full story yet.
     
    HuskyHawk likes this.
  32. mschofield

    mschofield Meyvn (1,450) Oct 16, 2002 Massachusetts
    Subscriber

    Problem is Pretty Things states "they're not on at Buks because they don't pay for lines" the implication is all of the beers that are on at Buks paid to be on. So .. Jack's Abby, Harpoon, Notch, Berkshire (who already had to come out and refute it in this thread)
     
  33. Guzzle_McBrew

    Guzzle_McBrew Devotee (417) Feb 17, 2014 Connecticut
    Beer Trader

    Sounds to me like 'Though pay to play is normal [read:what you said is accurate], I am forced to ask you to question your own practices [I think you should charge less [and pay to play]].
     
  34. Rekrule

    Rekrule Initiate (0) Nov 11, 2011 Massachusetts

    Translation: People give us free beer and other goodies so we will move their product, I am forced to question why you don't do that and also charge more.
     
  35. greenmtn1111

    greenmtn1111 Initiate (133) May 15, 2009 Massachusetts
    Beer Trader

    Or from watching any political debate ever.
     
    jmdrpi, paulys55 and Rekrule like this.
  36. BumpkinBrewer

    BumpkinBrewer Disciple (353) Jan 6, 2010 Massachusetts
    Beer Trader

    Interesting twitter post...

    GuinnessQuality
    ‏@Guinnessentials
    5h5 hours ago
    @PrettyBeer kicked out of a very large bar in Boston. Wanted $30k in cash day before Paddys. Said no! Lost the line.
     
  37. BerkBrewJ

    BerkBrewJ Initiate (0) Oct 7, 2009 Massachusetts

    My point is that it is not just breweries engaging in these practices. I've seen distributors do it as often, if not more so, than the breweries themselves. In addition, the distributors and the LARGE brands they represent started this practice well before craft beer was a blip on the beer sales radar. I'm privy to a lot more of what goes on out there than most, so just wanting to make sure people see as much of the picture as I am comfortable revealing on a public forum.
     
  38. Todd

    Todd Founder (5,493) Aug 23, 1996 California
    Staff Subscriber

  39. HuskyHawk

    HuskyHawk Devotee (465) Jun 5, 2014 Massachusetts

    He does nothing to refute the allegation. That being said, I don't have a reason to doubt the fact that Pretty Things is expensive compared to their competition. These issues are complex, and while pay to play is probably hurting PT, their pricing probably is as well. Both things can be true.
     
  40. djbrown13

    djbrown13 Aspirant (231) Jul 19, 2012 Massachusetts

    I admit I know nothing about what bars typically pay for kegs, and in an average month I likely spend more on beer at liquor stores than at bars, but I wouldn't say Pretty Things offerings cost more, certainly not significantly more, than the offerings of all the other breweries listed in Wilcox's response.
     
    imscotty likes this.
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