, Salem, MA

November 21, 2013

Our view: An unfair tap on local beer brewers

The Salem News

---- — If Samuel Adams had to deal with the twisted regulatory mess that currently constitutes state oversight of beer and beer making, he might never have attempted to become a brewer.

Or maybe the Founding Father would have focused his revolutionary zeal on the Alcoholic Beverages Control Commission and the outdated state laws that threaten the growth of one of the Bay State’s oldest industries.

It is clear that for a state that prides itself on innovation and small-business growth, Massachusetts does a poor job supporting craft breweries.

The chief complaint among craft brewers testifying at a Statehouse hearing last week was the outdated law that ties small local breweries to large distributors, essentially for life.

The law, passed in 1971, was designed to protect small, family-owned wholesalers reliant on national brewers, Ipswich Ale founder Rob Martin told legislators. It served that function but now threatens to put a damper on the growth of the new wave of “mom and pop” businesses — craft brewers.

Martin, who is also the president of the Massachusetts Brewers Guild, said small brewers often have to fight their distributor for every restaurant account or every inch of package store shelf space. And if they lose that fight, there’s little chance of dissolving the partnership.

The law has Chris Tkach, founder of Idle Hands Craft Ales in Everett, hesitant about expanding his business.

“This marriage for life with our distributor is a huge risk that gives me great pause on whether I want to move forward,” Tkach testified, according to a story by Colleen Quinn of the State House News Service.

Distributors say the law doesn’t need to be changed and note that brewers can go to the Alcoholic Beverages Control Commission to change an agreement.

Looking to the ABCC for sound judgment, however, is too often a forlorn hope.

It was just a few years ago that the commission needlessly endangered the industry by requiring that craft breweries grow at least half the hops and grains they use, buy at least that amount from a Massachusetts farmer or pay tens of thousands of dollars more for a more expensive license. The rule, which was changed with no input from the state’s more than two dozen “farmer-breweries,” was wisely set aside by state Treasurer Steve Grossman. The incident does little to dispel the capriciousness of the commission’s decision-making.

The brewers are backing a bill filed by state Rep. Alice Peisch of Wellesley that would make it easier to end relationships with distributors, and there are protections built in for those businesses. Distributors, for example, would be reimbursed for much of what they spent marketing and storing a craft brewery’s product. Craft breweries that make up more than 20 percent of a distributor’s business would have to abide by the current rules.

That seems fair. Of course, we could take it a step further and question the need for the rules at all. Craft breweries need the manpower and regional reach of distributors. As the appetite for craft beer expands — the industry has grown at an annualized rate of around 10 percent over the past five years and will be a $5.9 billion-a-year business by 2018, according to a report from IBIS World — distributors need to have specialized brews in their inventory. Why not allow the two to agree to their own contracts, without state interference?

The real losers under the current arrangement, of course, are the consumers, who see access to their favorite beers limited not by taste, but by the government.

The nation’s most famous craft brewer, Jim Koch, supports revising the law, even though his Samuel Adams Brewing Co. has long moved past the “small business” stage.

“When I started brewing Sam Adams, I realized something very surprising here in Massachusetts,” Koch testified last week. “Once I sold my beer to a distributor, they held the rights to my beer forever. Not my lifetime, or my children’s lifetime, my grandchildren’s lifetime. Forever.”

One wonders what his beer’s namesake would have made of that.