Strange Alliance

November 1, 2006 By Greg Kitsock

Politics can generate some surprising alliances. In July, the National Beer Wholesalers Association—the brewing industry’s most influential lobbying group—found itself siding with MADD, the Center for Science in the Public Interest, the Center on Alcohol Marketing and Youth and similar anti-alcohol organizations. Their common ground was support for H.R. 864, the Sober Truth on Preventing Underage Drinking Act, a bill that’s won plaudits from many organizations the NBWA has in the past derided as neo-Prohibitionist.

The STOP Act, as it’s commonly known, was introduced in 2005 by Rep. Lucille Roybal-Allard (D-CA). It would authorize about $20 million in Fiscal Year 2006 for a number of anti-underage drinking measures, including:

*a national media campaign to discourage underage drinking;

*grants for communities and institutions of higher education to combat drinking by minors;

* setting up an interagency coordinating committee to focus on the problem;

*additional research by HHS on underage drinking, as well as a comprehensive annual report to Congress.

The NBWA didn’t reverse its opposition to the bill without some major concessions. For instance, the original language called for a ban on all alcohol advertising in college sports broadcasts. That recommendation is gone.

The bill’s sponsors also excised an entire section titled “Findings,” which contained some highly disputed figures on the extent of the problem (i.e., that over 11% of the alcohol drunk in this country is consumed by minors, and that 40% of all college students are “binge drinkers”).

But the real clincher, as far as the NBWA is concerned, was the addition of a paragraph that states in part:

“Alcohol is a unique product and should be regulated differently than other products by the states and federal government. States have primary authority to regulate alcohol and have a responsibility to fight youth access to alcohol and reduce underage drinking, and the federal government should support and supplement these state efforts. A state-based system of alcohol regulation from production through consumption is critical to addressing the issue of access to alcohol by minors… ”

Why should this language—which is purely supportive, and entails no action on the part of Congress—be so important to the NBWA?

Traditionally, the states have enforced a strict three-tier system, in which alcoholic beverages must pass through a wholesaler en route from the manufacturer to you, the consumer. But the NBWA sees the system being challenged by the big-box chain store Costco and the nation’s small wineries. In 2005, the wineries won a major legal victory when the Supreme Court ruled that if states allowed in-state wineries to ship their products directly to consumers, they couldn’t deny this right to out-of-state wineries.

MADD, like-minded groups and the NBWA have opposed direct shipping on the grounds that it could make it easy for minors to obtain booze through the mail. It’s a debatable point: one could argue that teenagers are much more likely to use fake IDs at some convenience store than to order alcohol via credit card over the Internet and take the chance that their parents will intercept the package. But it’s forged a common interest between the NBWA and its erstwhile enemies.

The NBWA would like to see the entire beer industry endorse H.R. 864. As of early August, however, the Beer Institute, which represents the large brewers and importers, had yet to sign on. The organization had denounced the original version of the STOP Act as “duplicative and unbalanced.” A source close to the Beer Institute said the quibble with the revised bill is a matter of “terminology rather than issues,” and that the group is working with the Wine Institute and the Distilled Spirits Council of the United States to reach a consensus.

The Brewers Association, which represents the nation’s 1,400 small brewers, had yet to take a stand on the STOP Act as we went to press. But the BA earlier this year charted a course that might put it at odds with the NBWA. On May 8, the BA’s board of directors voted to endorse the right of all small brewers to self-distribute their own products to retailers. (Some states already grant this right, but not all.) The BA contends that microbreweries need this option to grow their business because of the declining number of wholesalers (about 1,800 nationwide, down from over 5,000 a generation ago), and because consolidation has produced huge businesses that often don’t want to handle low-volume products.

The NBWA, on the other hand, has urged the states not to “swiss-cheese” their three-tier laws by allowing more exceptions.

If the industry is to present a unified front on the STOP Act, it might require a lot of diplomacy.