Mass. Brewers' Guild pushes for new distribution laws
Date: 2/20/2012February 20, 2012
By Chris Mazachrism@thereminder.com
GREATER SPRINGFIELD Small craft brewers in Western Massachusetts and throughout the Commonwealth could soon have greater flexibility in how and where their product is distributed.
That, at least, is the hope of the Massachusetts Brewers' Guild, to which South Deerfield's Berkshire Brewing Company belongs. The Guild is imploring the state to accept legislation, House Bill 1897, which would allow small brewers to move from one distributor to another if it is unhappy with the way its beer is being dispensed to bars, restaurants and liquor stores.
"This legislation gives small breweries the opportunity to engage their wholesalers and tell them that it's not working," Rob Martin, president of the Massachusetts Brewers Guild and Ipswich Ale, said.
The proposed legislation would allow breweries to negotiate a price with their distributors in order to be released from their agreement. If an agreement is not reached within 90 days of a brewer approaching its wholesaler, the two sides would go to a binding arbitration session.
In order to qualify as a small brewer, a company must produce less than six million barrels globally. By comparison, Anheuser Busch produced 400 million barrels last year and Miller-Coors made more than 100 million, Martin said.
"We're hoping that there will be a vote on March 21," he said. "We've had great support. When we brought this legislation out a year ago, we had 61 co-sponsors, which is really, really impressive. The only reason we didn't have more is because we don't employ lobbyists."
Martin explained that while the current laws and regulation at one time served a purpose, the climate of the industry has changed so dramatically that it is actually a hindrance to businesses.
Brewing in the United States was a thriving industry, with almost 1,800 breweries operating nationwide until prohibition wiped out most of them, he explained. By 1970, only approximately 40 breweries were in operation and only one in Massachusetts.
"Obviously, with so few and a demand to be met, these breweries kept getting bigger and bigger and bigger and the beer was being distributed primarily through 'mom and pop' wholesalers," he said. "The legislation we have now was pushed through in the early 1970s to protect the 'mom and pops' from the large breweries simply moving from one to another simply because they could."
Today, he said, nearly 1,900 small breweries exist across the country, while there are approximately 10 major distributors.
"The dynamic has really changed," he said, explaining that it is now the large distributors that are able to hold onto the rights of small breweries' products, regardless of whether or not the brewer is happy with the distributor's service.
Martin added that even if a distributor decides it no longer wants to sell beer, it is not compelled to release the rights to the product.
"At one point [Ipswich Ale Brewery] had a specific brand of beer that was not selling well and we felt we needed a different distributor because they really weren't doing anything with it," he said. "Wholesaler 'A,' which had the rights to the product, wouldn't give it up, even though they weren't doing anything with it. We offered to pay them and they wouldn't do it and another wholesaler who was interested in selling the product also offered to throw something in, but they wouldn't let it go and eventually, we had to stop making it because it wasn't economically feasible for us anymore."
Martin also said the current laws prevent many breweries from expanding, which would create more jobs.
"Some brewers out there would like to get into distribution, but when you make that decision, you're married to it," he said.
Distributors are driven mainly by one of the two major brewing companies Anheuser Busch and Miller-Coors.
"When marching orders are given, it's the ones from those companies that wholesalers are going to listen to," he said. "Ultimately there is a pecking order and when you're at the bottom, with no flexibility in where you're going to go, you have no share of mind and no leverage, which affects expansion. The brands don't grow and in order to create employment, those brands have to grow."
State Sen. Michael Knapik, a member of the committee considering the legislation, could not contacted for comment as of press time. Gary Bogoff, Massachusetts Brewers' Guild vice president and BBC co-founder, was also unreachable.