US. Small Brewers Seek to Modernize Archaic Laws to Reflect Changes in the Beer Industry

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The past 40 years have seen enormous innovation and change in American businesses. One of the industries that has completely reinvented itself is the beer business. In 1970 there were fewer than 100 breweries operating in the United States. Consumers had limited choices. Today, two enormous global brewers produce over 90% of the beer made in the US but there is a growing segment of the US beer industry that did not even exist 40 years ago – craft brewers. And it is American craft brewing that is on the rise, creating jobs and bringing quality and innovation to store shelves.

“After decades of the same regulations, today’s marketplace has made Massachusetts state law damaging for small brewers in our state, jeopardizing both consumer choice and the hundreds of jobs in our industry”

While the industry has changed dramatically, the laws that regulate brewers and their distributors (also called wholesalers) have not. Laws passed in 1971 were written to protect small, local wholesalers from the powerful and dominant national brewers. Specifically, Massachusetts passed laws making it difficult, if not impossible, for a brewery to ever switch distributors. Distributors in those days represented very few brands, and the loss of any one of them was potentially catastrophic.
Today, thanks to the American Craft Beer Revolution, there are more than 1,200 small breweries nationwide, including almost forty brewers here in Massachusetts. The archaic laws of the 1970s need to be modernized to reflect the new marketplace, and State Representative Alice Peisch (D- Wellesley) filed legislation, HD 2759, to bring the law in sync with the American beer business in the 21st century. The legislation is lauded by the Brewers Association, who represents all craft brewers nationwide.
“Modernizing the current law to allow for more flexibility for small brewers and more choice for consumers is what today’s marketplace needs. This bill will allow small brewers to make their product more widely available, while also giving adequate protections to wholesalers,” said Representative Peisch. “I look forward to working with all interested parties to make this bill a reality.”
The legislation that Representative Peisch filed is carefully worded so that it will continue to protect wholesalers from the big, national brewers, but it will create opportunity for small brewers to switch distributors if the brewer feels they would be better served moving to a different distributor who would help make their beer more widely available at retail. Substantial compensation would be offered to the existing distributor by the small brewer.
Increasingly, the smallest craft brewers are reporting that some wholesalers focus on big brands while neglecting to deliver their craft beer brands to stores and restaurants, allowing them instead to collect dust and go stale in warehouses. Brewers have little recourse even when a wholesaler fails to perform. This is occurring at a time when consumers are clamoring for high quality, innovative craft beers. The Massachusetts Brewers’ Guild wants to support every brewery’s opportunity to succeed. This legislation is critical for the job security of the hundreds of workers employed at breweries in Massachusetts.
“After decades of the same regulations, today’s marketplace has made Massachusetts state law damaging for small brewers in our state, jeopardizing both consumer choice and the hundreds of jobs in our industry,” said Rob Martin, president of the Massachusetts Brewers Guild.
The Guild appreciates that brewers and wholesalers forge essential partnerships, and one cannot survive in business without the other. So, by working through the legislative process, it hopes to reach an agreement that protects both brewer and wholesaler and enhances their common opportunities for success.
In July 2010, the legislature did not act on a proposal made by wholesalers that would impose even stricter state laws. The wholesalers refiled that same legislation this year. The Guild feels strongly that now is the time to loosen, rather than tighten restrictions imposed on small brewers to allow small brewers to continue to grow and create jobs in the Commonwealth.