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What’s the Deal?

If you follow GA beer you have heard by now the Georgia Craft Brewers Guild reluctantly agreed to a deal with the Georgia Beer Wholesalers Association. The agreement was put together and heavily pushed by certain GA legislators. There are lots of opinions and statements out there so I figured I might as well chime in. What’s the deal with the deal?

In exchange for not bringing legislation this year to allow GA breweries to SELL a limited amount of beer direct to the consumer (something that is legal in 48 states!), production breweries in GA were given the right to do the following:

  • Once again sell brewery tours at variable prices based on the kind of beer offered. (Passed in 2015, GBWA later influenced DOR to take it away. Read this to understand how.)
  • Allow special events at breweries and distilleries.
  • Let brewers, distilleries and wholesalers use social media to alert the public about where to buy their products or advertise special events.
  • Allow third parties to sell tour tickets.
  • Let breweries and distilleries sell food on site

So overall for production breweries it’s a little bit of a win. Kind of. We get to do what we were supposed to already do and a couple of other things were added in like food and actually being able to tell our customers where to find our beer. You read that right. The old system would not allow us to mention a promotional event or a location that sold our beer because it was considered to be providing free advertising for a retailer in violation of the three-tier system.

For brewpubs in GA, it gains nothing. Brewpubs have been asking for years for the rights to sell a growler to go. (Heck, under GA’s wacky system a restaurant located beside a brewpub can sell that brewpub’s beer in a growler to go while the brewpub that made it can not. What kind of sense does that make?) So brewpubs gain nothing from this agreement and I argue that it can be considered a loss because the legislators knowing a “beer compromise” was reached may be unwilling to help brewpubs during this session.

So why did the Brewers Guild take the deal? The options were to introduce a bill that had NO chance of passing and lose the opportunity to get back some rights we had last year or not introduce the bill (did it being an election year have anything to do with this?) and get the ability to do the items listed above. To be clear, many in the Guild were opposed to any type of a deal. But there was really no choice.

Here is one behind the scenes look at what went on.

What are your thoughts?

Sign the petition. Watch the video (a very handsome dude appears at the 1:03 mark). Join the mailing list. More info will be headed your way soon!

http://www.georgiacraftbrewersguild.org/government-affairs/

January 11th was the first day of Georgia’s 2016 legislative session. Kudos to KP, an Atlanta beer guru, who has put together a website to help everyone keep up with what is happening during the session. Below is an informational email KP sent earlier this week. Please follow and like this and keep up with the goings on. We will need your support soon.

Cheers, John

******************************************************************************************************

Good morning!

Today is the first day of the legislation session. In commemoration of this grand and glorious event, I’m launching a new website and social media campaign as a grassroots political movement to modernize the beer laws in Georgia.

I need your help.
Visit the website – http://GABeerLaws.com
Share the website on Facebook – use share button on home page
Like us on Facebook – https://www.facebook.com/GABeerLaws/
Follow us on Twitter – https://twitter.com/GABeerLaws
There will be calls to action during the legislative process.
Posts will go out to Facebook and Twitter when it is time to take action.
I will update the news section as stories are published and share these on Facebook.
The website still needs work. Look for updates every few days. Near the top of my list is to add the ability for public comments about the legislators and your personal experiences when interacting with them.
I am open to all ideas and suggestions for the website and this campaign in general. 
This is a community effort. We can effect real change by working together and getting our collective voices heard.
But first we have to build that community, so please spread the word!
Thanks!
kp
Political Activist

 

The one question I’m most asked when people find out I own a brewery is, “How did you get started in the beer business?” Or some such variation. Since I still get asked that question over and over even after 20 years in the craft beer industry, I figure it’s about time to try put my story down in writing.  I am going to ramble a bit so hang in there and I hope you find this somewhat interesting.

Like it does for most of us, my history with beer goes back to my teenage years. Growing up in the late 80’s, I knew I wanted to be a military pilot. This was the time period of “Top Gun” and I’m sure I’m not the only one that saw myself as Maverick flying  inverted and keeping up foreign relations.

In high school I applied for admittance to the Air Force Academy and earned an alternate nomination. Rather than wait to see if I got in, I took my name off the list and figured I could do ROTC in college instead. So in 1987 I started as a freshman at GA Tech with the intent to study AeroSpace Engineering.

While a freshman at Ma Tech and only 17 years old I joined Phi Kappa Tau Fraternity. I could tell tons of stories about my time there but some things are better left unsaid. What I can say is that Chambers and Barney in room 8 could be the reason I am where I am today. They had a beer bottle collection on the wall of their room, inherited from Bosomworth I assume, and I thought it was really cool. Impressionable youth that I was, I decided to start my own collection. Over the course of the next couple of years, I had pretty much bought out every style and size of domestic light lager it was possible to find. Like any collector does, I kept searching for items I did not have. And since I had to actually drink the beer in order to keep the bottle, I began to build an appreciation for the taste of better beers.

By the time 1989 rolled around it was obvious I was not meant to be an engineer. After all, how many students at GA Tech actually take history and political science classes to keep their GPA up? Or have an English professor tell them to consider majoring in English? (Should I mention I actually made the square root club after one particularly bad quarter and a bout of mono? Nah.) So I did what any young man would do – I switched schools to be closer to my girlfriend.

One of my finds from the early 90’s – Stone Mountain Lager

Starting at UGA I continued the tradition of looking for new beers I had never tried. By the time I was a senior I even tried home brewing once or twice. The initial results were not good but I knew I had a passion for better beer.

Upon graduating in 1993 my wife and I moved to Seattle, WA. This move sealed my fate. At the time I left GA there were no local breweries and in Seattle I had found beer paradise. I will never forget going to a local pizza place just after arriving. It must have had at least 16 taps. Back home in the GA I had just left it was unusual to find a bar that had more than six taps. And those six taps were usually all domestic beers. If you were lucky you might find Heineken or Guinness in the mix. But this Seattle pizza place not only had several taps but they were almost exclusively all local beers!

Since my degree from UGA was in Risk Management and Insurance, my first job in Seattle was of course selling insurance. Six months after I started my boss pointed out my affinity for local beers and suggested I get involved with the brewing community to help them with their insurance needs. I decided he was right. I did belong in the craft beer community. But not for the purpose of selling life insurance.

My wife and I moved back to GA in late 1994 after our year long honeymoon in Seattle. By this time there were two breweries in GA, Marthasville Brewing Company and Atlanta Brewing Company (now Red Brick Brewing). I went knocking on the doors at Marthasville first. Imagine me as a 25 year old kid confidently telling the owner how I was going to open my own brewery soon and wondering if he had any pointers for me. (This is why I always help anyone I can that comes to me asking for advice on opening a brewery – I used to be that person.)

George Lamb, one of the owners at Marthasville, told me the best thing I could do would be to work in a brewery for some time to see how things ran. Unfortunately he did not have any positions open but he would be happy to let me come in and volunteer my time for free. Made sense to me!

So I found two part time jobs at restaurants – fry cook at Applebee’s and server at Red Robin, to allow me the free time to drive 50 miles each way and work for free at the local brewery. (Thank God I had a supportive wife. I never would have been able to break into this industry without her. Here’s to you, Irina.) After 2-3 months of free labor sweeping floors and washing kegs, I was offered a job at Marthasville making $5 per hour. I was ecstatic! And I was officially on the inside of the craft beer industry.

—TO BE CONTINUED—

 

In a recent post by yours truly concerning the AB-InBev/SABMiller mega merger, I made the argument the acquisition could actually help craft beer. My reasoning was simple. Such a huge merger with all its associated press could cause more people to pay attention to where the beer they are drinking is made. Which could ultimately mean more consumers focusing on locally produced beers.

Sure, that sounds great in theory. But there is one huge way the smallest independent craft brewers can be hurt by the merger. A stronger mega-brewery can put significant pressure onto the distribution tier to focus only on the mega-brewery’s offerings.

Before diving deeper, allow me to first explain the reference to the distribution tier. Almost all beer in the US is sold through the three-tier system. This is simply a system in which a middle-man distributor buys beer from the breweries and sells it to the retailers. (Most every state allows minor exceptions to the three tier system. GA is way, way behind in that regard but that’s another post for another day.)

Why do I believe the mega-brewery will put undue influence on their distributors? Because it has happened in the past. From a CNN article Steve Hindy wrote in 2012: “In the mid-1990s, the CEO of Anheuser-Busch, August Busch III, declared that he wanted “100% share of mind” from his wholesalers. Some Red (Anheuser-Busch) distributors ejected non-Anheuser-Busch brands from their warehouses. Distributors who gave his 100% were given more favorable terms for their purchase of beer.”

We ran into this constantly in the early days of Terrapin. When looking at distributors in new territories, the Anheuser-Busch distributors were not an option for us. 100% Share of Mind was in full effect. But as craft beer became more popular and domestic beer sales continued to slip, many Anheuser-Busch distributors rebelled against the 100% share of mind policy and began to carry craft brands.

Times have changed and today many independent craft brands are distributed by AB-InBev distributors. Many of these distributors are committed to remaining independent. I have talked to more than one AB-InBev distributor who is actively trying to get as many non AB-Inbev brands into their house as possible so they can resist the 100% share of mind push when it comes around again.

An independent system of beer distributors has been key to the success of the craft beer movement to date. Unfortunately AB-InBev has a stated goal of buying their own distributors in the US when possible. There is a real concern that these company owned distributors would be pushed to sell only AB-Inbev brands. Which means that the many independent craft brewers in those houses would be dumped and left to look for other distribution options.

Don’t think it will happen? It is happening.  Read this for more details..

Without a system of independent distributors it is doubtful we would see the myriad of choices in the beer aisle we have today. Compare these two pictures. One is representative of an independent three-tier system and one is from a system that allows mega-producers to control the distribution channels. Can you guess which is which?

So to all the craft beer aficionados out there who sometimes complain about beer distributors, please remember this: Independent beer distributors are local business people who provide local jobs and support charities in their local community. And many of them support craft beer. Independent beer distributors are our friend. (As is a system that allows reasonable exceptions to allow smaller brewers easier access to market. More on that next time.)

What are your thoughts?

Government Corruption?

Government corruption. Yeah, that’s an attention grabbing headline for sure. We can debate about whether the story I’m about to share represents corruption, greed, or just how the system works. But whichever it is, it is wrong.

We have all heard stories about big corporations donating money for access to politicians. I always thought that was hyperbole and an exception to the rule. Silly innocent me. Acting as President of the GA Craft Brewers Guild last legislative session opened my eyes quite a bit. I watched as the Guild’s bill that advocated for breweries to be able to sell a limited amount of beer the to the public went through the process of becoming a law. And along the way, as everyone had their hands on it, the bill went from selling one case to giving away one 6pack for free. It was still way less than breweries in 48 other states could do but at least we made some progress.

On July 1st I proudly watched as the first few 6packs went out the front door with consumers. Even though they were technically souvenir packages and not for sale, I still thought GA was coming into the modern era. Little did I know how wrong I was.

At the beginning of October, the GA Dept. of Revenue released a bulletin that changed how the law that went into effect on July 1st would operate. Originally a brewery could charge different prices for tours that included souvenir beer. As an example Terrapin offered 3 choices: 36oz maximum on premise for $12, 72oz maximum to-go for $12, or both options for $20. But the new rules meant that we had to choose between charging everyone $12 and giving everyone the to-go beer (losing money in the process) or charging everyone $20 whether they wanted the to-go beer or not (losing customers in the process). If any brewery was cited for charging variable prices based on the beer provided, the brewery would lose its taproom license for one year! And that is just for your first offense!

Of course GA breweries were upset over that new ruling. Many of us had spent lots of money building out tasting rooms and getting ready to work within the law that we thought had passed. The DOR had given us WRITTEN assurances the variable pricing model was approved and allowed. Then out of nowhere – BAM, they changed their minds.

Here is where the corruption comment comes in. One of the most sacred principles of governmental ethics is that everyone has equal access to government officials. That’s a no-brainer. Maybe the government rules in a way that goes against your interests but at least you had the same opportunity to be heard as did the opposing side.

But not in this case. An open records request was filed with the DOR and it was shown that while they were creating rules that affected how breweries could operate their businesses, the DOR was in discussions about it with the GA Beer Wholesalers Association while at the same time refusing to tell the GA Craft Brewers Guild the potential new rules were even being considered. Let me repeat. When debating rules that affected breweries, the DOR refused to interact with the association representing the breweries that were affected by the new rules. Instead the DOR was in constant communication with the association representing the wholesalers, whom the revised rules did not affect.

Here is the link to the entire AJC article about the Open Records request and its findings.

Here is a link to your GA State Senator and Representative to give them your feedback.

What do you think. Can unequal access be equated to corruption?

 

After reading about Ballast Point being acquired for $1 BILLION, I wondered, “Does Craft beer as we know it still exist?” My second thought was, “Should anyone even care?”

My answer to whether craft beer still exists? Hell yes, craft beer still exists. But not in the way everyone thinks. Craft Beer is not defined properly. Which is why several well known brewery owners around the country have recently said the term “craft beer” is becoming meaningless. Look at the comments Saint Arnold’s Brock Wagner made last month. Similar statements are happening daily and they are spot on.

Why the confusion? Because the American beer geek considers craft to be anything that is not AB or MillerCoors. Having good beer does not seem to matter. Being truly small and local doesn’t really matter. Just don’t be associated with the largest American brewers and you are craft. Easy-peasy. But recently, as more and more craft breweries are enjoying huge successes, some are choosing to join with the larger, non-craft brewers. So breweries like Goose Island, Blue Point, Elysian, 10 Barrel, Golden Road, and St Archer were craft one day and then POOF, the next day they are not. Even though these breweries are still the same people making the same beer with the same equipment in the same location.

But wait. It gets even more complicated. There are also many international brewers that are not AB or MillerCoors. So when companies like Boulevard and Firestone-Walker sell to Duvel Moortgat, when Founders sells a portion of equity to Mahou San Miguel, when Lagunitas sells a stake to Heineken, and when Ballast Point sells to Constellation Brands, are all these brewers still craft? Even though they are not associated with Bud/Miller/Coors? Again, it is still the same people making the same beer with the same equipment in the same location.

No wonder the term “craft beer” is losing its meaning. It’s a very loose definition to begin with. So how would the gospel according to John (Cochran) define craft beer? To me it’s about volume.

The Brewers Association defines a craft brewer as being small if they produce under six million barrels per year. For perspective, six million barrels is 1.9 billion bottles of beer!  A brewery can make 7.6 million bottles of beer per day and still be called craft? Seriously?

Here is my request of the Brewers Association. Let’s quit talking about craft beer and go back to encouraging everyone to support their local microbrewery. And let’s redefine microbrewery to mean up to 50,000 barrels per year. I say if craft is defined by being small then it should refer to those who are really small. The guys and gals who are still struggling to get from 500 barrels to 5,000 barrels. Or 10,000 barrels to 25,000 barrels. The ones who are not yet getting a paycheck and have their life savings and their homes at risk if anything goes wrong. The brewers who don’t know whether they can meet payroll, pay the power bill, or even if they will be open next month. These are the true craft brewers of today. The microbrewers.

And once you grow past 50,000 barrels like Terrapin is doing this year, then what? What about DogFish Head, Bells, Sweetwater, Harpoon, Sierra Nevada etc, etc. I could list 100+ more that are no longer microbrewers. And good for us. We have the battle scars and the memories of what it’s like to be on the front line of growing a new business. We used to be those guys. And we found a way to survive. Am I saying it is easy now? No, we are still busting our asses every day. More so than we used to in lots of ways. But guess what. We are no longer in the same business as the much smaller brewers. Sure we all make beer. But we don’t have to fight to get distributor’s attention any more. Now the distributors are calling us wanting to carry our beers. The retailers are finding space to fit our beers on the shelves. We know we will be in business next year. We are succeeding.  So does it really matter whether one or the other of us is still a craft brewer?

Should we care if the term “craft beer” still exists? Maybe/maybe not. Maybe it will all become beer. But no matter what it is called, here is what matters. Everyone should like the beer they are drinking and drink the beer they like. AND everyone should support the local brewery that is contributing to worthwhile causes in their community.

Personally I don’t really care whether Constellation Brands owns Ballast Point. There is a Sculpin in my fridge now and I will still drink it because I like Sculpin. But at the same time you can be damn sure I am going to buy beer from the local guys that are producing it here in town and are helping to raise funds for the local shelter. We do good by supporting good.

Is craft beer as a term still relevant to you? Let me know what you think.

Cheers, John

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