BEER FM: Budget rider will devastate small Wisconsin breweries

June 1, 2011
Andy

This just crept up out of the woodwork recently and it’s high time BeerFM sheds some light on the situation. I’ve been notified by the Wisconsin Brewers Guild as well as Anne Sprecher about this issue. I’ve pulled the following block of text from this thread on BeerAdvocate: http://beeradvocate.com/forum/read/3813001 which in turn came from Pearl Street Brewery’s Facebook page here: http://www.facebook.com/notes/pearl-street-brewery/budget-bill-to-damage-wisconsins-small-brewers/218339011518888

“Currently there is legislation being pushed through the Joint Finance Committee and secretly into the budget bill without feedback from the small brewer.

The Chapter 125 Branch Legislation would:

  • All Wisconsin Breweries and Brewpubs will be negatively affected by losing their Wholesale and retail licenses and the benefits those licenses provide.
  • Eliminates the current option of a brewer choosing to self-distribute or starting a Wholesale Distribution Company.
  • Eliminates a Brewers current right to have ownership in two restaurants.
  • Protects (Grandfather Clause) currents Wholesalers retail licenses, while eliminating that benefit for new start up Wholesalers.
  • Unfairly burdens new Wholesalers and breweries with a requirement of 25 separate independent retail customers before a Wholesale license can be granted.
  • Eliminates the ability of Brewers to sell existing retail or wholesale operations separately from the brewing operation.
  • Eliminates current Wholesale investment in privately held Wisconsin Breweries while allowing investment in out of state and foreign and publicly traded breweries.

The Story line from Wisconsin Beer Distributors Association (WBDA)/Miller-Coors: Small brewers are unaffected by these changes. Small breweries can do everything they can do today. Small brewers are “exempt” from changes.

This is simply not true.

We currently can hold two retail licenses. These licenses are issued by our local municipalities and are like all other retail licenses. They allow us to serve other breweries’ beer and promote the craft. A retail establishment owned by the brewery is a portable asset and can be sold like any other retail establishment. This proposal eliminates the ability to have a retail license and ties the retail establishment beer sales permanently to the brewery permit. It also limits beer sales to the products of the brewery only by the removal of the retail licenses.

We currently can hold a wholesalers license. It is also issued by our local municipalities. It is the same wholesale license as those held by any other wholesaler. It allows us to sell our beer as well as other breweries beer. This proposal eliminates the right to hold a retail license.

Why would the WBDA and Miller-Coors be pushing this? To eliminate competition.

It is no secret that craft beer is gaining market share while Miller-Coors market share is declining. The WBDA can eliminate future serious competition by prohibiting craft brewers from getting together to open their own wholesalers. It is a very real scenario that in the near future small breweries in Wisconsin will be forced to get together regionally to open wholesalers for their own and other craft beers. This is already happening across the country. Consider these facts: There were 92 wholesalers in Wisconsin in 1994. In 2007 there were 67. Today there are 42, and the number continues to drop. At the same time, the number of brands carried by these wholesalers has more than doubled. Distributor jobs have also been eliminated. The employee to brand ratio at the wholesalers has declined to the point that adequate sales representation no longer exists. Breweries must band together to reverse this trend. These new brewery-owned distributors will also create new jobs that Wisconsin desperately needs, instead of eliminating jobs in the name of efficiency as wholesalers do as they consolidate.

Every small brewer uses their wholesale license today to sell to a few customers. Many brewers sell (with their wholesale license) to special events/festivals with permission from the wholesaler that has the assigned territory from the brewer because the wholesaler does not want to haul beer out to weekend festivals etc. This proposal requires 25 or more customers, making start up of self-distribution nearly impossible. It would also not be possible for small brewery to get started by selling to a small local grocery store chain with 5-6 stores. This is often the only way to get started.

Small brewers often look to wholesalers as a source of capital. Many times wholesalers have funds to invest, and a local brewery can be a good place to do so. Many small breweries see this investment as a way to gain market share with the wholesaler. Today, Wisconsin wholesalers can and do invest in both in-state and out-of-state small breweries. This proposal unfairly discriminates against WI small breweries by eliminating this potential source of capital while allowing wholesalers to invest in out-of-state breweries whose brands they carry.

Small brewers can currently own two restaurants, and some small Wisconsin breweries do. This proposal eliminates the ability to own a restaurant with a liquor license.

Governor and legislative leadership say they do not want to use the budget for policy.

This legislation is being pushed through the Joint Finance Committee and secretly into the budget bill, without input from us, small brewers, whose livelihoods are being threatened. This means that it doesn’t have to go through hearings and reviews that it otherwise would. Why is this being rushed through so quickly without proper input, debate, and disclosure?

Legislators and the governor say they are against more government and bigger government.

This legislation creates more state government bureaucracy, by transferring license administration from local municipalities to a new state agency.

Sorry for the wall of text concerning this covert legislation. The craft brewing industry is one that is providing real jobs in Wisconsin. The Pearl Street Brewery started in the basement of a tavern on Pearl Street 13 years ago, selling beer to two bars, annual production was about 150 barrels. We have grown to having 8 employees, production over 2000 barrels/year. We are currently expanding and creating more jobs. As you know, we strive to buy local, buy Wisconsin and we work hard within our community and our state. This legislation is counter to all of this and if passed we would reconsider our expansion plans. Why punish an industry which is growing and vibrant?

The brewers and the Wisconsin Brewers Guild will NOT OPPOSE the joint legislation changes (Branch Legislation) provided we are TRULY Exempt.

So what do you need to do? Contact your local representatives! In La Crosse, that’s Jenifer Shilling (608)788-9854. Tell them that you OPPOSE the Chapter 125 Branch Legislation unless it is written in that all current and future breweries (under 300,000 bbls) are exempt from these changes.

Information provided by The Wisconsin Brewers Guild. Wanna help the cause? Join the Wisconsin Brewer’s Guild by becoming a WIBL”

For more information, please visit this link:

http://positivebusiness.co/news/stop-millercoors-tapping-out-local-breweries

To find your local legislator, please visit this link:

http://legis.wisconsin.gov/w3asp/waml/waml.aspx