LAS VEGAS—The National Beer Wholesalers Association (NBWA) honored several talented industry leaders today during NBWA’S 76^th Annual Convention and Trade Show held September 29 – October 2 at Caesars Palace in Las Vegas, Nevada.

The NBWA Life Service Award is presented to beer distributors who have dedicated a lifetime of service to the industry, community and fellow distributors. The first NBWA Life Service Award was presented to Joseph “Joe” DeMarco, chairman of the Board of Directors for High Grade Beverage based in South Brunswick, New Jersey. DeMarco has run High Grade Beverage in New Jersey since 1961.

“In addition to decades of participation in the New York and New Jersey state beer distributor associations, Joe has devoted years of service as a valuable member of the NBWA Board of Directors,” NBWA President and CEO Craig Purser said. “On top of his contributions to the beer distribution industry, he has worked with countless community organizations. From his service to St. Peter’s Medical Center to the American Cancer Society, Knights of Columbus and New Brunswick Elks, he is a true humanitarian and role model for other business leaders.”

A second NBWA Life Service Award was presented to Bill Olson, president of the Associated Beer Distributors of Illinois (ABDI). Olson began his career with ABDI in January 1985, working as an advocate for beer distributor interests and state-based alcohol regulation. He has served as president of the Wholesale Beer Association Executives and has been an active representative on the NBWA Industry Affairs Committee.

“Bill has been a champion for Illinois distributors the past 28 years, delivering results and serving with distinction,” Purser said.

NBWA 2012-2013 Chairman of the Board Bob Archer added, “Bill confronted head on an issue in Illinois involving the independence of beer distributors and the existing rights of small brewers. He persevered through intense, and some might say unprecedented, opposition by building a coalition of large and small brewers, retailers, distributors and public health groups to help clarify the separate and distinct roles of brewers and distributors. The compromise he helped achieve ensures that the state’s small brewers can maintain their current rights, while at the same time maintaining strong three-tier protections for the state of Illinois.”

The NBWA Public Affairs Award recognizes outstanding efforts to advocate for and promote the beer distribution industry through effective communications and public affairs initiatives.  It was presented to Louis Glunz Beer, Inc. of Lincolnwood, Illinois. “There are so many new labels of beer entering the market today because independent distributors like Louis Glunz Beer, Inc. invest in new brands,” said Purser. “Distributors around the country promote new labels through point-of-sale promotional efforts, creative marketing, and working with brewers and retailers to help provide the customer with what works for them. But Louis Glunz Beer, Inc. also works to build brands through great public relations and earned media.”

The Whitey Littlefield Award was presented in memory of the man who served as the NBWA Political Action Committee (PAC) chairman 14 years ago and established the Chairman’s Circle recognition group to recognize those individuals who give the maximum contribution. Knowing that PAC support must be both deep and wide in order for it to grow, Whitey Littlefield also believed strongly in “drilling it down.” In that spirit, the Whitey Littlefield Award was presented to General Distributors, Inc., in Oregon City, Oregon, which has 10 employees participating in the NBWA PAC.

The R. Kenneth Kerr Award was presented in memory of the man who more than 30 years ago was an instrumental leader in the creation of the NBWA PAC.  The award is presented to a distributor member who goes above and beyond to make sure the PAC grows year after year. This year’s award was presented to Travis Markstein, president of Markstein Beverage Company in San Marcos, California. As NBWA’s PAC chair last year, Markstein ensured that the NBWA PAC reached the $2 million mark as the association kick off its 75^th anniversary year.

The National Beer Wholesalers Association (NBWA) represents the interests of America’s 3,300 licensed, independent beer distributor operations in every state, congressional district and media market across the country. Beer distributors are committed to ensuring alcohol is provided safely and responsibly to consumers of legal drinking age through the three-tier, state-based system of alcohol regulation and distribution. To learn more about America’s beer distributors, visitwww.AmericasBeerDistributors.com. For additional updates from NBWA, follow @NBWABeer on Twitter, watch NBWA videos on www.youtube.com/NBWABeer and visit www.facebook.com/NBWABeer.

LAS VEGAS, NV – The National Beer Wholesalers Association (NBWA) kicked off the first full day of its 76^thAnnual Convention and Trade Show today at Caesars Palace in Las Vegas, Nevada. NBWA President & CEO Craig Purser kicked off the General Session by welcoming a record audience of nearly 4,000 Convention attendees, saying, “Your presence here shows the great energy that is fueling the beer distribution industry right now.”

NBWA’s outgoing Chairman of the Board Bob Archer applauded the NBWA membership for their dedicated participation in the association and their growing involvement in the political process. He thanked beer distributor members for their efforts to build relationships and encouraged them to schedule warehouse tours to highlight the commercial and economic value they deliver in their communities.

Archer noted the first ever distributor-focused economic impact study released by NBWA stating, “This report provides an in-depth, state-by-state view of beer distributors’ economic impact ranging from the jobs we provide to the charitable causes we support in our local communities. Distributors employ 130,000 people. Beer distributors add over $54 billion dollars to the nation’s gross domestic product each year. And beer distributors annually contribute roughly $175 million to our communities.” A video highlighting the economic report also debuted as part of the newly-created NBWA-TV newscasts airing during the Convention.

To highlight the great work that beer distribution companies and their 130,000 employees do in communities across the country, NBWA launched the Share Your Story Contest. NBWA President & CEO Craig Purser recognized the winners of this year’s contest, Kristin Jones and Cristie Tiwari of J. J. Taylor in Jupiter, Florida, who won a trip to attend this year’s Convention for their video submission.

“We received impressive submissions – both essays and video – from employees in all sorts of jobs, working for distributors large and small, urban and rural, from coast to coast,” Purser said. “And one common theme appeared in all of these entries – how great it is to work in the beer distribution industry.”

Purser added, “The American beer distribution industry is strong because of the amazing people who work in it and the passion they have for the work they do in communities across the country. This video exemplifies why we are all proud to be a part of this great industry.”

Convention attendees also heard from Jim Johnson, a professor at the University of North Carolina at Chapel Hill, who spoke about how changing demographics related to age, gender, race, geography and marriage – including a shift in population concentration to the South and the “graying” and “browning” of America – may impact the future of the beer industry.

“We need to recognize the economic value of multi-ethnic and multi-generational markets,” Johnson said. “Our markets are changing and we have to be sensitive to the diversity that exists.”

Johnson also stressed the importance of education to prepare strong employees for the future, when there will be four generations in the workplace. He noted the value of NBWA’s Next Generation group and added, “Multi-generational diversity can be a game changer and it can be a competitive advantage for you.”

The General Session program concluded with a presentation by Joe Scarborough and Mika Brzezinski, co-hosts of MSNBC’s Morning Joe. Former Congressman Joe Scarborough pulled from his experience as an influential player in Republican politics, balanced by his Democratic co-host and veteran journalist Mika Brzezinski, to offer insightful perspective on the current political landscape and the headlines of the day.

Following the General Session program, the Trade Show opened featuring products and services from nearly 300 exhibitors, including more than 500 labels of imported and domestic beer, non-alcoholic beverages, warehousing technology, financial services software and promotional products.

NBWA’s 76^th Annual Convention and Trade Show continues Tuesday, October 1, at Caesars Palace in Las Vegas, Nevada. To view NBWA-TV reports from the Convention, please visit NBWA’s YouTube channel atwww.youtube.com/NBWABeer. Follow the conversation on Twitter using #NBWAVegas, and download the Convention mobile app.

###

The National Beer Wholesalers Association (NBWA) represents the interests of America’s 3,300 licensed, independent beer distributor operations in every state, congressional district and media market across the country. Beer distributors are committed to ensuring alcohol is provided safely and responsibly to consumers of legal drinking age through the three-tier, state-based system of alcohol regulation and distribution. To learn more about America’s beer distributors, visitwww.AmericasBeerDistributors.com. For additional updates from NBWA, follow @NBWABeer on Twitter, watch NBWA videos on www.youtube.com/NBWABeer and visit www.facebook.com/NBWABeer.

ALEXANDRIA, VA—This Tuesday, America’s beer distributors will join citizens throughout the country in commemorating Constitution Day, which celebrates the formation and signing of the U.S. Constitution on September 17, 1787. National Beer Wholesalers Association (NBWA)President & CEO Craig Purser issued the following statement:

“NBWA raises a glass in celebration of our nation’s Constitution, including its role in establishing the effective state-based alcohol regulatory system that we have in America today. Alcohol is the only product in commerce with two constitutional amendments of its own. The 18^th Amendment, which established National Prohibition, was a failure because it was a one-size-fits-all policy imposed by the federal government on a large and diverse population. The 21^st Amendment recognized this failure and not only repealed the 18^thAmendment but established today’s successful system of alcohol regulation and distribution, which gives each state primary authority to enact and enforce alcohol laws consistent with the desires and needs of its citizens.  America’s 3,300 independent, licensed beer distributors – and the 130,000 men and women in the industry – are proud to be part of this effective system of alcohol controls that works to protect the public and provide consumers with unparalleled choice and variety.”

The National Beer Wholesalers Association (NBWA) represents the interests of America’s 3,300 licensed, independent beer distributor operations in every state, congressional district and media market across the country. Beer distributors are committed to ensuring alcohol is provided safely and responsibly to consumers of legal drinking age through the three-tier, state-based system of alcohol regulation and distribution. To learn more about America’s beer distributors, visit www.AmericasBeerDistributors.com. For additional updates from NBWA, follow @NBWABeer on Twitter and visit NBWA on Facebook atwww.facebook.com/NBWABeer.

ALEXANDRIA, VA – The National Beer Wholesalers Association (NBWA) is excited to announce Kristin Jones and Cristie Tiwari of J. J. Taylor Companies, Inc., in Jupiter, Florida, as the winners of the first ever Share Your Story Contest. Beer distribution employees who have never attended the NBWA Annual Convention & Trade Show were invited to submit written or video entries. The contest highlights many of the 130,000 men and women who make up the beer distribution industry, from truck drivers, inventory specialists and graphic artists to sales representatives, fork lift drivers and receptionists.

“Kristin and Cristie submitted a creative and compelling video in which they discuss why they love working in the beer distribution industry, what they do and how J.J. Taylor provides value to the community,” said NBWA President & CEO Craig Purser.

I know, it’s not exactly a monster claim. Put down the phone, Matilda, no need to ring up the Guinness World Records people. But it’s something, and I’ll take whatever glory I can get at this point in my career.

To those who have been gunning for this distinction, I regret to report that I’ve had several unfair advantages. My mother, father and grandparents on both sides were soda bottlers and beer distributors, so I started attending both soda bottler and beer distributor conventions while still wet behind the ears. Pepsi convention in Orlando, Schweppes in Vegas, 7-UP (owned by Philip Morris at the time) in Richmond, Lone Star in Houston, Cerveceria Cuauhtemoc in Grand Cayman, S&P (now called Pabst) in Los Angeles, California Cooler in Chicago, etc. etc. Yes, at a Pepsi meeting I met Joan Crawford, and though I was a child, for the record she didn’t beat me with a wire hanger. And yes, at a Lone Star meeting I met Willie Nelson. And got my picture taken with Sonny and Cher, curiously enough.

Upon graduation from college and being cast into the cold cruel world by my wretched parents, I went to work for a Miller beer distributor in Houston, which also sold a myriad of other beers, fizzy waters, teas and juices whose parent companies—all vying for the fleeting attention of their distributor—threw elaborate shows for us to attend. Again I was on the distributor convention road. Then I started Beer Business Daily, which eventually afforded me the invitations of most all brewers and importers to attend their national distributor meetings each year. Anheuser-Busch and MillerCoors even took to having two meetings a year. Plus the National Beer Wholesalers Association’s two meetings a year, plus the Craft Brewers Conference, plus SAVOR, plus the GABF, plus the myriad state distributor meetings I attend each year. I wasn’t allowed at first to attend the annual Beer Institute meetings since August Busch III blackballed me. But the late Beer Institute president Jeff Becker would sneak me in. “Don’t worry, pal,” he said with a smile and a wink. “He doesn’t even know what you look like. Just don’t draw attention to yourself.” I sat in the back and never made eye contact with anybody.

Then I started a wine and spirits trade publication and started attending all of their conventions, seminars and confabs as well. Meetings meetings meetings. Sometimes I’d go to the restroom and accidentally board a plane heading to an industry conference. Sometimes I’d kiss my wife, Lulu, on the cheek good night, lay my head on my pillow—and wake up on stage at the Craft Brewers Conference in San Diego.

Pretty soon I achieved Executive Platinum status on American Airlines, which allows me to board the plane before others and sit in the front where there are no chickens, pigs or, most importantly, human babies. And the beer is free. Being from San Antonio—not exactly a hub—I naturally have to fly to Dallas to fly anywhere else. I fly to Dallas so much that sometimes I forget myself and fly to Dallas just to pee and then fly back home. I’m not certain, but I may have a second family in Dallas. I think they live under the bar at the Terminal D Admirals Club, and they might be Vietnamese. If you see them, tell them I love them, and green cards and cash are forthcoming as promised.

The golden age of beer company distributor conferences, I fear, has come and gone. In the old days, the big brewers’ conventions held for their distributors were a spectacle to behold, although the degree of spectacle depended largely on market share. Anheuser-Busch, which had 50 percent of the market, threw the best parties. Lobsters piled up a mile high on ice, free Dove Bars (don’t go well with beer, though), those giant shrimp people call prawns, George Strait playing in one room and Elton John in another, August Busch III arriving dramatically on the putting green self-piloting his jet helicopter; his son August IV arriving much more modestly in a fleet of armored black Suburbans piloted by mercs in the employ of Blackwater, later to ferry him and his entourage late night to clubs. Those were the days.

You tear the pull-tab off a tallboy can of Oasis, a double IPA from a microbrewery halfway across the continent that showed up without fanfare a local retail outlet.

You have the bartender draw you a pint of The Public, a hoppy pale ale from the first packaging brewery in Washington, DC, since the Eisenhower Administration.

Did you ever think about the long and winding road that your beer took from the brewery to your lips?

It’s a Big Beer World

There are over 13,000 brands of beer registered in this country, according to the National Association of Beer Wholesalers. Some accounts, like the Westover Market in Falls Church, VA, will take whatever you’ve got. The grocery store lines it shelves with over 1,000 brands for takeout and operates a small bar and beer garden. “It’s chaos!” laughs Zachary Duarte as he shows me their cold room, which contains an Everest of kegs and cardboard cartons, alongside boxfuls of dormant tap handles.

Most businesses need to be more selective. Recently, I was allowed to sit in on a meeting between Dogfish Head Craft Brewery’s Sam Calagione, a partner in Manhattan’s recently-opened Birreria brewpub, and the managerial staff as they plotted beer orders. The group poured over a printout listing units sold over the past month for 35 brands: house-brewed and guest beers, bottled and draft. Written next to each were comments like “sold three 50-liter kegs in five days,” “spikes depending on crowd,” “failed to sell well.” Calagione says he’s a proponent of “craft beer Darwinism”: “If a beer is doing well, award the brewery with another tap to see how it goes.”

Birreria, perched on the fifteenth story of a high-rise cater-corner from Manhattan’s famous Flatiron Building, attracts a young, adventurous, well-heeled crowd who are willing to pay $10 a pint for house beers like the chestnut mild and thyme pale ale, and as much as $38 a bottle for some of the specialty imports from Calagione’s Italian partners in the venture. “People want a back story here. They want to have fun,” remarks general manager Allen Arthur.

Judging from this and other reports in the mainstream press, you’d think that last spring’s Supreme Court ruling on direct shipping unleashed a deluge of alcohol across state borders.

Nothing could be further from the truth.

Although small wineries and their allies declared victory (“the best day for wine lovers since the invention of the corkscrew,” crowed attorney Clint Boleck), the High Court’s ruling could conceivably make it more difficult for small wineries and small breweries to get their product to market. In the long run it could mean less choice for you, the consumer.

Let’s recap

In a 5-4 decision, the Supreme Court largely left intact the 21st Amendment, which gives states the power to regulate alcohol however they see fit. But that power isn’t absolute. The states of Michigan and New York erred, the justices decided, in granting in-state wineries the right to mail their wares directly to customers, while denying this privilege to out-of-state wineries. States must regulate wineries “on even-handed terms,” wrote Justice Anthony Kennedy in the majority opinion.

As a result, Michigan, New York and about eight or nine other states with similar polices must “level up” or “level down,” in the words of Marc Sorini, legal counsel for the Brewers Association. They must extend the direct shipping privilege to all wineries or rescind it for in-state businesses. Whether they become stricter or more lenient may depend on who has the more powerful lobby, the small vintners or the wholesalers.

What does it mean for brewers? In the short run, it has very little effect. States must also adopt an evenhanded policy with regard to breweries, but, actually, there isn’t a great deal of beer being shipped through the mail … nor is there any great outcry on the part of brewers for this privilege. It’s a matter of economics. You can send a $50 bottle of Chardonnay through the mail profitably, but it’s much harder to justify shipping a $7.95 six-pack of IPA cross-country when the postage exceeds the cost of the beer. This is one reason why you don’t see many beer-of-the-month clubs anymore.

However, the ruling on direct shipping might have serious long-term consequences for small brewers.

Potential Impacts

The Supreme Court’s insistence on even-handedness could be applied to all facets of alcohol regulation. And many states grant small brewers within their borders the right to distribute their own beer, while forbidding out-of-state brewers from doing so.

Does this amount to illegal protectionism? If they lost the right to self-distribute, many smaller, start-up breweries would fold very quickly. It isn’t easy to find a wholesaler nowadays if you don’t have a beer with a proven track record. The number of wholesalers has plummeted from over 5,000 in 1972 to fewer than 2,000 active businesses away. And large breweries, Anheuser-Busch in particular, can exert enormous influence on their wholesalers not to carry rivals’ products. There are smaller wholesalers who specialize in domestic craft beer and exotic imports, but these are few and far between.

Larger craft breweries that self-distribute in backyard, like California’s Stone Brewing Co., could lose a very lucrative sideline.

The fallout from the Supreme Court decision might also affect brewpubs. What is a brewpub anyway? It’s a restaurant that possesses a license to brew its own beer and sell it directly to the customer. Almost all states (Montana is the only exception I can think of) grant this privilege to certain businesses in-state, while insisting that out-of-state brewers sell their beer through a wholesaler. Do we see a pattern of discrimination here?

Seeking Equal Treatment Under The Law

Already, trouble is brewing in the form of a lawsuit brought against the State of Washington by the big-box chain store Costco. Costco is seeking the right to eliminate the middleman and to buy beer directly from the manufacturer, which would enable it to pass on extra savings to the consumer. If Costco is successful, other chains, like Wal-Mart, might do the same. And they might seize on the issue of equal treatment under the law to further their ends.

To head off any more lawsuits, the wholesalers’ powerful lobby, the National Beer Wholesalers Associations, has urged the states not to “Swiss-cheese” the law by granting exemptions to the three-tier system.

Charlie Papazian, president of the Brewers Association (which represents the smaller craft brewers), likewise defends the three-tier system, but insists that “exceptions … are needed for small businesses.”

Let’s sum things up: the Supreme Court ruling probably generates more questions than answers. The controversy over direct shipping will continue, but the battlefield will shift from the federal courts to the states.

“It will be an interesting next few years for state legislatures,” concluded Sorini.

For generations, smokers have been using those words to downplay the consequences of their nicotine habit.

Soon, drinkers may be using that expression as well.

The latest controversy in the alcoholic beverage biz is being generated by a device called AWOL or Alcohol Without Liquid. An Englishman named Dominic Simler is credited with inventing the machine, which converts alcohol into a vapor that you inhale to get a buzz on. Since last year, a company called Spirit Partners, Inc. has been peddling AWOL machines in the United States.

The contraption is similar to the inhalers used by asthmatics, although Newsweek described it more colorfully as resembling “a crack pipe attached to a hookah.” The AWOL contraption consists of a vaporizer, which you pour booze into, and an oxygen generator, which pumps oxygen into the mix to produce a mist that you can safely take into your lungs. The machine is supposed to be calibrated so that it takes about a quarter-hour to inhale one standard shot of hard liquor. The marketers recommend that customers limit their use to no more than two such sessions per 24-hour period.

When used responsibly, they insist, AWOL will produce a “euphoric high” without the throbbing head and dry heaves of a hangover the next morning, and without those nasty calories in a mug of lager or rum and Coke attaching themselves to your hips.

Taunting the Law

Obviously, the device will have little appeal for craft beer drinkers, since it eliminates any possibility of connoisseurship. Alcohol is alcohol, whether you derive it from a vintage 1980 Thomas Hardy’s or a budget-brand malt liquor. (In fact, an advertisement for AWOL recommends using an 80-proof spirit, which pretty much rules out malt beverages… the world’s strongest beer, Boston Beer Co.’s Utopias, is “only” 50 proof.)

However, the machine has attracted the attention of lawmakers like a matador taunting a bull with a red cape. At least a dozen states are considering legislation to ban the device, fearing it may mislead bar patrons to underestimate their ingestion of alcohol and result in health problems and highway fatalities. New York’s state liquor authority was mulling whether AWOL violated a 1934 law mandating that alcohol must be served from the same container in which it was delivered. When Spirit Partners premiered their machine at The Trust Lounge in New York City last August, the marketers reportedly filled it with Gatorade instead of booze to stay within the law.

There has also been concern about whether inhaled alcohol would register on a Breathalyzer test, since it doesn’t pass through the digestive tract. Kevin Morse, president of Spirit Partners, has denied that his device will create any problem in law enforcement. “One of the ways alcohol leaves the body is through the mouth… Therefore, contrary to reports, the alcohol will definitely register on the Intoxylizer 5000… which is used by law-enforcement officials to apprehend drivers who are under the influence of alcohol.”

Nevertheless, Congressman Bob Beauprez of Colorado has introduced a bill, The Alcohol Without Liquid Machine Safety Act of 2005 (H.R. 613), which would temporarily prohibit AWOL machines until such a time as the Food and Drug Administration deems the device safe for public use. (Because it’s a machine and not a beverage, AWOL falls outside the jurisdiction of the federal Tax and Trade Bureau, which regulates beer, wine and spirits.)

The National Beer Wholesalers Association, the brewing industry’s most influential lobbying organization, is supporting Beauprez’s bill. “Beer is meant to be enjoyed responsibly, not inhaled,” asserted NBWA president David Rehr. “These machines are a misrepresentation of consumer choice and undermine the goal of responsible consumption that beer wholesalers work so hard to promote.”

In the long run, however, the indignation of state and national lawmakers may turn out to be an unnecessary fuss over a short-lived fad. The Newsweek article quoted one New Jersey bar owner as complaining about the machine, “It didn’t do anything except burn our throats. The biggest high you get is from hyperventilation.”

AWOL machines are intended for the over-21 crowd, but underage drinkers in the Washington, DC suburbs are using a low-tech device to pump more alcohol down their throats. According to the Montgomery County Gazette, some Maryland hardware stores are reporting a run on funnels and plastic tubing, which teenagers fashion into “beer bongs.” The idea is to pour the beer into the funnel and suck it up as quickly as it flows through the tube. Police can’t arrest minors for mere possession of a funnel, but they are urging citizens to monitor hardware stores for suspicious purchases.

Whatever happened to sipping and savoring? That’s the question we’d like to ask.

High on his list of priorities are legal challenges to the three-tier system that has existed since Repeal.

In 2000, wine writers Ray and Eleanor Heald sued the State of Michigan to overturn the state’s ban on direct shipments from out-of-state wineries. The status of their case has flip-flopped once already: a federal judge upheld the state’s law, but the 6th US Court of Appeals threw out Michigan’s ban as unconstitutional.

On January 30, Michigan attorney general Mike Cox filed an appeal with the highest arbiter in the land, the Supreme Court. What that court decides will be binding not only on Michigan but on all 49 other states. It will affect not just wine but all alcoholic beverages.

At the heart of the issue is an apparent contradiction in the US Constitution. The 21st Amendment, which repealed Prohibition, gives states broad powers with regard to alcohol. It reads in part: “The transportation or importation into any state…of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

That’s why, for instance, in Maryland, if an out-of-state brewer (or an in-state one, for that matter) ships a few bottles directly to your doorstep, the state can charge you both with a felony.

Section 8 of the Constitution, however, grants Congress the exclusive right “to regulate Commerce…among the several States.” That’s why Virginia, for example, can’t slap an embargo on sweaters knitted in Pennsylvania.

So which section trumps the other?

The NBWA has weighed in on Michigan’s side, supporting the right of states to regulate alcohol. “Beer is unlike other commodities,” commented Rehr. “We have a controlled system, orderly markets, and we need to respect the fact that different people in different states have different views on alcohol.”

“You can never anticipate what the Supreme Court will do,” admits Rehr. Nevertheless, he thinks it unlikely that the court would trash the entire system, although it might strike down individual state laws.

Market Protections

The 21st Amendment does not specifically require a three-tier system, whereby a wholesaler or distributor acts as a middleman between the company that manufactures the alcohol and the retailer who sells it to you or me. But all states adopted some form of this system back in 1933, partly to curb the power of the large breweries. Otherwise, they could buy up chains of pubs and operate them as “tied houses,” creating a monopoly for their products. In this respect, the three-tier system protects small breweries’ access to market.

However, mergers have reduced the number of wholesalers, and the surviving entities are often uninterested in low-volume products. In many states, small brewers are effectively locked out of the market if they can’t find a wholesaler. Or they’re bound to a wholesaler by contracts that are difficult to break, even if they think the wholesaler is doing a poor job.

At least one large retailer has been chafing under the three-tier system. Costco, a “big box” retail chain based in Issaquah, WA, has sued that state’s liquor control board, claiming it violates antitrust laws and artificially inflates prices for consumers. Specifically, Costco wants the ability to buy alcohol directly from the manufacturer, and be eligible for discounts and favorable credit terms.

The NBWA is afraid that if Costco is successful, it could lead to similar suits by chain stores in other states. This would not only deprive wholesalers of their share of the pie, but also give the big chains a significant pricing advantage over smaller “mom-and-pop” outlets. The result could be “crushing” for small breweries, argues the NBWA’s Rehr. Stores like Costco “define consumer choice as the lowest possible price,” he says. “They have minimal beer selection for the connoisseur.”

Indeed, scanning the beer selection in chains like 7-11 or Safeway or CVS, you might find Sam Adams or Sierra Nevada, but you’re not likely to find offbeat, low-volume products like those of Hair of the Dog or New Glarus or Belgium’s Trappist breweries.

The Brewers’ Association of America, which represents the nation’s smaller beer makers, hasn’t taken an official stand in either case.

Its president, Daniel Bradford, agrees that the present system needs some tweaking. “A lot of laws were designed to protect small wholesalers from big brewers. Now we have big wholesalers and small brewers.”

But he asserts, “For small brewers, having an independent network of wholesalers is important for our success.”