The Electric Commentary

Wednesday, November 09, 2005

Beer Wars, Part 3

Apparently the distributors and small brewers have reached some kind of accord that will let the distributors keep their ill-gotten monopoly in exchange for the following:

Under the compromise, a small brewer could bypass wholesalers to make direct deliveries to retailers in certain situations. That provision would apply when a wholesaler faces a business interruption, such as bankruptcy, that breaks the distribution link between breweries and retailers.

Also, brewers could make direct deliveries to festivals, as well as emergency shipments to retailers running short on beer.

Finally, the compromise would ease proposed restrictions on other direct deliveries by brewers to retailers.

Swell. For further background, see this post.

Aside from just raising beer prices for the good of a few millionaire truck drivers, tied house laws have some other perverse effects.

Let's say that you own a brewery, and you sell your beer all over State X. You want to advertise in the taverns in that state, and you've come up with several ways to do it. You plan on giving out neon signs, coasters, table tents, plastic coolers, and even pool table overhead lights, all emblazoned with your beers' logos.

"But wait!" Says the government. "We're not sure that we like that idea so much. We have these "tied house laws" to stop you from gaining too much influence with the taverns. Some of this stuff could be seen as an enticement to get the tavern to carry more of your beer at the expense of others."

You respond with an indignant "What the hell are you talking about?" Then you remember that this is the government, and add, "Sir."

And the government responds, "Well, we know you'd like to do some in-tavern advertising, but we're a little uncomfortable with that neon sign. Jeff, one of our enforcement guys, really likes neons. He collects them, and, well, he thinks that the taverns in question will look fondly on you for giving them a free neon sign. And Phil, in finance thinks that those coasters will completely replace the taverns coasters, saving them hundreds of dollars a year. That's not chump change. Can't you make your ads, I don't know, more useless?"

So I can give the bar advertising if it doesn't add any value to the bar?


But who's going to put up advertising in their establishment if it doesn't add at least a little value?

"That's your problem."

I see. Could I give them, say 500 coasters?

"Maybe. It's possible. Let us think about it."

End Scene.

This is a fairly accurate description of reality. The government keeps a close eye on any activity that involves a brewer giving anything, no matter how trivial, to a retailer, and while some states are more sensible about this, some are downright totalitarian, and no two states are quite the same. Some have limits on providing coasters. Some have two categories of merchandise, each with different limits and restrictions: utilitarian, and non-utilitarian. Some states won't tell you in advance if providing something is legal or not. Some states actually have individual regulations for every conceivable piece of bar merchandise, from stir sticks to dart boards.

They're all different, and they are all very technical.

All breweries have to deal with these regs if they want to do any "point-of-sale "advertising, and point-of-sale advertising is some of the most important advertising in any retail business. In the alcohol business, it is artificially expensive provide point-of-sale advertising, but it is also a necessity.

It's just another way that the government is making your beer more expensive, for no good reason.


  • I suspect a key component of the beer war compromise is that it sounds like it would allow producers to avoid the direct effect of strikes at distributors. Budweiser had a big problem with that this summer in St. Louis where their distributor had a strike & Budweiser had great difficulty getting beer to some big festival / event that was going on as well as to other places.

    By Anonymous Scott, at 1:28 PM  

  • as a maker of my own beer and assorted fermented beverages, these sort of regulations seem particularly sill.

    the main reasons i make the stuff is for my own/my friends' benefit and as a hobby-type activity, but every once in awhile you ask yourself, "hey, this stuff is better than anything i can get at the store and is basically dirt-cheap to produce. is there any profit potential here?"

    then you read an article like this, and remember why you're a software engineer instead of a brewmaster...

    i do wonder how long it will take for enough people to realize that making their own alcohol is a really simple, cheap process that results in superior product, in order to actually impact overall consumption... probably forever... but i can dream.

    By Blogger ahren, at 11:51 AM  

  • Wonderful and informative web site.I used information from that site its great.

    By Anonymous Anonymous, at 10:13 AM  

Post a Comment

<< Home

Amazon Logo