Say no to the beer distribution bill
By William A. Kelley
February 11, 2014
Without a doubt, Massachusetts has solidified its role as a leader within the nation’s craft beer industry. Consumers across the Commonwealth enjoy a wide variety of the nation’s finest craft beers, thanks in part to the overwhelming growth and success that many local brewers have experienced. Much of the booming development of the craft beer industry can be attributed to one key partner — the beer distributor.
From barrel to bottle, the distributor helps fledgling craft breweries bring their brand to restaurants, bars and package stores all over the Commonwealth. In an increasingly competitive industry, craft brewers struggle to find the financial resources necessary to sell, manufacture, and market their specialty brews without a distributor on their side.
However, pending legislation on Beacon Hill threatens the economic prosperity and job growth of the craft brew industry by significantly damaging the goodwill of the brewer-distributor relationship.
The local craft beer industry is still relatively small by comparison to large national brewers. But in the past 30 years alone we’ve seen an explosion of craft beer brands, which has resulted in a market crowded with choices in available brands. It’s good for an industry when growth is often measured by the number of new brands coming onto the market.
Massachusetts exemplifies the success of the craft beer industry with more than 60 of the roughly 2,200 craft brewers in the United States originating right here in the Commonwealth. Beer distributors have built upon a healthy and mutually beneficial relationship to allow even the smallest craft brewers to compete on a much larger scale and gain valuable visibility on the shelf and on tap. As the number of breweries continues to grow, the role of the distributor becomes even more crucial.
No one can deny that distributors play a vital part in the sales and marketing process for craft brewers. Distributors serve as the go-to professionals for new and growing craft beer brands looking for industry expertise, sound marketing strategies and a talented sales force. Additionally, they facilitate relationships with retailers and offer access to strong networks that young craft brewers have not yet developed.
The fact is brewers understand making beer, while distributors understand marketing and logistics. A distributor helps a brewer develop a range of advertising items such as signage, market and sales presence, and promotions. They invest a tremendous amount of money, time, energy, and take a serious financial risk when partnering with a new craft brand. Abrand’s distributor is one of its biggest cheerleaders and wants to see that brewer succeed.
The legislation on the table aims to change the already flexible laws that are currently in place here in Massachusetts, which regulate brewer-distributor relationships. If passed, the legislation allows craft brewers to break partnerships with distributors at a moment’s notice for no specific reason at all. This instability would directly impact the ability and willingness of any distributor to make the necessary investments in new craft brands. This is unjust and unnecessary to the brewer-distributor relationship, the consumer, and ultimately the up-and-coming small brewers of Massachusetts.
The numbers show that brewers and distributors can easily solve disputes within the current system. And disputes are few and far between. There are roughly six instances over the last 20 years where a brewer wanted to end their partnership with their distributor, according to the Alcoholic Beverages Control Commission. Most disputes are easily resolved through existing legislation, or by openly negotiating a swap between distributors to find a better match with certain brands.
Distributors have worked hard to invest in the growth of craft brewers and to provide consumers access to the finest craft brands. Just like the Massachusetts small craft brewers, they’ve been a vital part of the industry’s economic progress and development within the state. It is unfortunate that giants like Sam Adams and Harpoon would push such unfair legislation and threaten the brewer-distributor relationship, as well as the craft brewing industry.
This legislation may also harm many smaller craft breweries that will not stand a chance at succeeding in this already diverse, crowded and competitive market. This unfortunate repercussion will leave consumers with limited access to new products, and hinder other small brewers who are trying to enter a wider market.
Distributors are passionate about craft beer. Distributors want to see small craft breweries succeed. We shouldn’t let unfair and unnecessary legislation suppress the craft beer entrepreneurs and the bond that has helped this industry thrive.
William A. Kelley is president of the Beer Distributors of Massachusetts.