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Tuesday, June 14, 2011

Battle in the Badger State

I really, really tried to avoid blogging on this. But all the articles, emails, and Facebook comments have worn me down. So, with apologies, we will now talk about an obscure issue in a distant state: my one-time home of Wisconsin. First, let's do our best to outline the issue.It is nested in proposed legislation that's part of the Governor Walker-backed budget (that be famous Governor Walker, the one who precipitated two weeks of vitriolic protests for attempting to end state unions). It would do the following:

Under current state law, a brewer of any size can also obtain wholesale licenses, which are given out by municipalities. The budget provision would change that by combining the brewer’s permit and wholesale and retail licenses into one permit under state control. This new state permit bans brewers from owning a wholesale distribution business.

Proponents of the bill, including MillerCoors, the Wisconsin Beer Distribution Association, the Tavern League of Wisconsin and the Wisconsin Grocers Association, are big players in the beer industry. [Ed note: MillerCoors is worried that newly mighty A-B might sweep in and establish a monopoly.]
The Wisconsin craft breweries, led by geek darlings New Glarus, are hopping mad. Deb Carey puts it starkly: “Everything in this bill is designed to make it harder for small craft brewers to grow. It is a slimy piece of legislation.”

Terrible, right? Not that I can see--which is why I've been keeping my head low. From the same article:
Under current law, brewers who sell 50,000 barrels of beer or less annually do not need to use a wholesale distributor to resell their products to a retailer. Because of their size, they can sell directly to retailers, if they so choose. But in an effort to satisfy concerns from members of the Wisconsin Brewers Guild, the committee voted to increase the size of craft brewers who are not required to sell through wholesalers from sales of 50,000 to 300,000 barrels a year.
Umm, oh. Furthermore, Carey believes New Glarus should be to distribute other breweries' beer through their wholesale business. (There's a pretty nice but unembeddable local news piece about the issue here.) What she seems really peeved about is losing a wholesale distribution opportunity, not anything as draconian as limits that would affect the brewery.

Now, I may be missing something, but there seems nothing out of the ordinary in this proposal, nor anything that would damage small breweries--and certainly nothing to prevent them from growing. So, let me observe provisionally that this seems like a little bit of the old bait and switch: New Glarus and some of the other small breweries seem to be ginning up outrage against an unpopular Governor so they can keep a sweet carve-out in the business code. Hey, I got no problem with that: politics ain't beanbag, and I'm all for a little of the ol bare knuckles. But I do think innocent bystanders like good beer fans should avoid being dupes in an issue that has very little to do with beer.

I would be happy to eat crow if I'm wrong. Someone more familiar with the issue, holler if I'm out of line.

A final, barely related comment. Earlier this year, Governor Walker and the newly-elected legislature decided to make an assault on the public employees in Wisconsin. This wasn't especially shocking: governors of other states have been doing it right and left. But they weren't Wisconsin, which has that rare combination of being highly pro-union and hair-triggered with their inclination toward public demonstration (and tailgate parties). Governor Walker has won the battle, but he's almost certain to lose the war The Dems are energized and stand to overturn it once they get back into office--the normal state in the normally blue state. Worse, Walker's name is now known enough that obscure battles about beer can become national news. Political scientists will be studying this for decades--and they would do well to look at the craft beer angle as another data point in how things have metastasized.


Update. It occurs to me that I should be guiding you to some commentary by bloggers on the scene. The Madison Beer Review has an exhaustive look a the bill, and Jeff Glazer concludes that it's "a terribly written motion that will likely become a terribly written piece of legislation." That gives me pause.
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PHOTO: ISABELLE DONOVAN

3 comments:

Jeff said...

Jeff, for the most I actually agree with you. This bill doesn't really impinge the rights of small brewers terribly. In fact, it allows a right that brewers here don't currently have (the right to a restaurant facility. However, the implementation isn't exactly spelled out very well.

For example, under the text of the Motion, it appears that while the brewery could have a restaurant, it couldn't serve any alcohol other than beer (no wine or liquor) and only beer from the brewery and other Wisconsin breweries at that (possible Commerce Clause violation? who knows.)

There are lots of little things like this that are largely unanswered in the Motion/Draft Legislation that makes it fairly terribly written.

The "ginned up" vitriol is largely based on the "destruction" of distribution rights (moving it from a separate license to a right inherent in the brewer's permit). Today, brewers could start up a distributorship that distributes their own beer and that of other breweries. No brewery in the state currently does this. The bill would remove the ability to distribute someone else's beer, but not your own (up to 300K bbls).

The biggest problem, as brewers here see it, is really less the content of the bill than the manner in which it has come forward - through the backdoor of the Budget Bill rather than as an independently proposed, debated, and negotiated piece of legislation.

Anyway. Thanks for promoting the issue!

Jay said...

I just did a camera test for Kingfisher Beer, I love it, but it is hard to find in Texas. This is just a fun spot I did with friends :)
http://www.youtube.com/watch?v=2xHIU1kUBkA

Would love some feedback on it: jay@f2films.com

Sud Savant said...

This is a really clear explanation of what is happening. It finally says how brewers will be effected and not how they FEAR they will be effected. Still not a good piece of legislation.

http://maciverinstitute.com/2011/06/legislature-brews-up-interference-in-free-market/

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