Flying Dog and the 1st Amendment

Flying Dog recently made public their decision to no longer retain membership in the Brewer’s Association of America as of June 1, 2017. What was behind this decision? The 1st Amendment of the Constitution of the United States of America states,

“Congress shall make no law… abridging the freedom of speech…”

Terrific! I love America and the right to free speech, even when I don’t particularly care for the words that are sometimes spoken! That is how the 1st Amendment works. As citizens, we are all entitled to freedom of speech, agree or disagree. What does that have to do with craft beer? In a nutshell-marketing and labels. The Brewer’s Association of America in April, 2017 informed craft brewery members they were instituting a new Marketing and Advertising Code. On the surface, the code appears merely as a reminder that breweries need to advertise responsibly and follow the traditional path of making sure they DO NOT PROMOTE in their advertising:

• excess drinking
• underage drinking
• drinking and driving
• illegal activity and drinking
• bad or irresponsible behavior and drinking
• claims that beer can solve all of your problems (social, mental, professional, or otherwise)

If we stopped here, this code seems innocuous enough mostly backing up federal law, and something all craft breweries would like to get on board with- acting responsibly towards the consumers that support them. The code does not stop there however and goes on to prevent breweries from advertising which:

• contains sexually explicit, lewd, or demeaning brand names, language, text, graphics, photos, video, or other images that reasonable adult consumers would find inappropriate for consumer products offered to the public;
• contains derogatory or demeaning text or images.

This is where it starts to get a little murky when taking the 1st Amendment into consideration. There is an assumption here regarding reasonable adult individuals finding advertising appropriate or not. Don’t get me wrong- I understand that there is a section of every magazine rack that is required to shield young eyes from the cover and contents because they are not legally old enough to view those rags; much like the rating system for movies- like NC 17. This is fine as the law has been established to guide us (where children are concerned) as to what is appropriate. This doesn’t hold water when it comes to craft beer, an adult product.

It is easy to gather a group of ‘reasonable’ adult consumers together to determine what they find appropriate (or not) with regard to beer advertising/labels. Statistically they would probably be divided on many of the labels level of ‘appropriate’. That is because ‘reasonable’ and ‘appropriate’ can be extremely subjective in advertising. We have all heard the marketing mantra sex sells. Well according to the BA, sex, among other things would not be allowed as a sales tool any longer, if reasonable adults found it inappropriate.

This is where Caruso doesn’t budge, and views the new code as a form of as censorship, and critically a Constitutional violation. It has the potential to limit speech, freedom of expression, and advertising based on ideas and requirements that are entirely subjective. The supposed creation of objectivity in this code appears in the Advertising Complaint Review Panel. This three member panel would interject themselves if the brewery did not respond in a ‘satisfactory’ way to an advertising complaint. I am not completely clear on this eradicating subjectivity. How are they defining satisfactory?

A free market economy allows consumers to decide what they will and will not purchase/consume. The quality of the beer should be the determining factor. To get consumers in the door to sample quality beer, breweries advertise. In a crowded craft beer market, a unique or even controversial marketing campaign may set a brewery apart, luring or deterring potential customers. If a consumer doesn’t care for a marketing campaign, like the Swedish Bikini Team for example, they can choose to go elsewhere to spend hard earned dollars. Shouldn’t that be the determining factor? Caruso thinks so, and the 1st Amendment backs him up.

The counterpoint to this is that the Brewer’s Association is trying to hold their members to a higher standard than the ‘Swedish Bikini Team’, or mudslinging among competing breweries (another part of the ‘code’ prohibits defamation toward competing breweries). For that they should be lauded. These standards however (some of them) might be better off self-imposed as opposed to dictated when they violate the foundational documents of our nation. Why? Once you begin to make exceptions to the 1st Amendment, it will become easier to chip away at those core rights granted to us by our founding fathers; rights many died for, and continue to sacrifice for today.

In the end it may be much ado about nothing, and perhaps an overreaction. All breweries may in fact continue to operate as they have, with no actual infringement upon their rights to advertise as they see fit. Time will tell. Jim Caruso and Flying Dog won’t take that chance.
Cin Cin!

Independent Craft Breweries vs Macro: It has all been done before…

Today it’s time to take up the macro vs independent craft brewery conversation. Much has been made for quite some time about AB InBev buying up many of the craft breweries and now buying Miller Coors (without a peep from the government despite its likely violation of the anti-trust laws). For years I have heard from the old Anhauser Busch, Miller, Coors, and Heineken salesmen that the macro breweries will always reign supreme and the craft beer market will not see much in the way of growth (I also heard from those same men there was no place for women in the beer industry- but that is a tale for another day.) Let’s begin by noting how much market share craft beer (despite the most recent slip in numbers) has gained, while macro breweries like AB InBev have started to lose. As of March, 2017 there are 5,301 independent craft breweries in America that have seized 12.3% of the volume share (up from a mere 5.7% in 2011.) That is a major gain, while the macro breweries may look at 7 % and thinking that isn’t much, but it is certainly not what they anticipated and cuts into their profits. Craft retail dollar share is up to almost 22 % – a 10% increase in only a year and that is noticeable. Big beer is fighting back.

Now many people will look at the numbers and ask why bother caring because the macro breweries don’t care about what craft beer is doing since the percentages are so small. I will argue they do. If AB InBev didn’t care about the growth of craft breweries cutting into the market why try so vigorously to purchase the successful craft breweries? Why spend millions of advertising dollars on campaigns proclaiming AB InBev to be one and the same as craft? Why purchase a stake in Ratebeer where many go to seek reliable ratings on craft beers? And most recently why bother to spend time and money downplaying the Brewer’s Association of America’s latest move to signify ‘certified independent’ craft breweries with a special label? What does the label mean? More than 25% of a certified independent craft brewery cannot be owned by any other entity, and it must produce less than 6,000,000 (million) barrels per annum.

Much has been made lately of the new label and how “divisive” it is. Really? Technically that is the appropriate term as it divides the beer into separate classification from macro to independent craft. I however prefer to think of it as a line of demarcation for those of us that care whether or not or beer is locally produced, sourced, employed, and crafted. Some beer drinkers (yes even craft beer drinkers) will not care. I do, as do many that prefer to know where their (nourishment) beer is coming from. It foments economic growth within communities at every end of the spectrum from agriculture to community gardens, to increased retail and food sales in neighborhoods where breweries are located. Is the ‘certified independent’ label really that different from a terroir designation on a bottle of Pinot Noir? Or an ‘organic’ label on your produce? Well many have taken pen to paper (or keyboard to internet) to argue the needless futility of the designation, and just as many have hit back challenging that those that prefer to do away with the ‘divisive’ label are predominantly macro brewery stakeholders. Jacqeuline Dheere was just one in a long line of beer writers to point this out. The battle lingers on with no signs of abating.

Curiously, all of this has happened once before, a little over a century ago. Just before the turn of the 20th century a war raged between macro breweries and independent local craft brewers. It started with a British brewing consortium buying up the top breweries in each city as an attempt to recoup financial losses from the former colonies and their now thriving breweries. Next it was a local trust- the Maryland Brewing Company that purchased the top breweries in the beer capital of Maryland- Baltimore in 1899. That failed and was replaced by yet another monopoly (with better management) G.B.S. Locals were deeply concerned by this and lacked any understanding of why their favorite breweries would sell out. Well the answer then as today was a great payoff for all their hard work! That is the American dream isn’t it? The rise of the monopolies also created at times, a vitriolic and divisive atmosphere for both the consumers and the breweries. Many breweries added ‘independent’ to their names just to make it easier to identify that they were not sell outs, and could be relied upon to continue producing that same favorite regional beer. Among brewing families, a sort of dystopian nightmare ensued where family members that wanted to remain independent disowned those that sold out, some even engaged in legal battles over the sales and the family fortunes.

So how did it all shake out? Prohibition shut them all down in 1920. Today I have no inkling that America would ever attempt to recreate that failed experiment, although I have been wrong before. I honestly don’t know what will happen. What I do know is that people will act based upon what is important to them. Perhaps they will look beyond the tasty malted beverages on their lips, and see talented local craftspeople investing their own neighborhoods, bringing jobs, building trust and fomenting communities. Beer for thought.
Cheers!