Task Force to Study Maryland Alcohol Regulation: Round #1

The first meeting of the new State Alcohol Regulation Task Force (created by the passage of HB 1316) was held in the Economic Matters Committee Hearing Room on September 12, 2018. I realize it has taken me a week to weigh in. In part I wanted to digest what transpired, but I also wanted to conduct a little more research. This provided some clarity as well as a bit more confusion with regard to the direction this task force is headed. It also forced me to speculate about an underlying, hidden agenda.

I was relieved to see members of all three tiers represented on the task force. The standard protocols were followed beginning with an historical jaunt through Maryland’s 3 tier system, followed by a breakdown of exactly how alcohol is regulated and by whom. A brief comparison of Maryland’s regulatory system with other states was also done and this was when things began to get interesting. Challenges to the methodology of the comparison came quickly from one panelist- David Jernigan PhD.
A little background research on Jernigan is quite revealing.

Jernigan is best known for his action-research approach to the issue of alcohol advertising, marketing, and promotion and its influence on young people…He testifies regularly at city, state, and national levels around alcohol availability and taxation. He trains advocates around the world using the best evidence.1

A quick glance at his list of publications and one quickly fathoms the purpose of his research- restructuring alcohol regulation with a goal to limit access through complete state control and high taxation. Yes this is called Temperance. He veers away from Prohibition…but not really. Jernigan was the architect of the increased alcohol tax in Maryland a few years back, and he is back now trying to go further. His acolytes are widespread including Raimee Eck, current President of the Maryland Public Health Association, who also testified and even chose to use the word ‘temperance’ in her slide presentation.

Eck also wrote an Op-Ed in the Baltimore Sun November 29, 2017 challenging Reform on Tap, while completely misconstruing its point…”Comptroller Franchot’s focus on increasing alcohol production, sales, and consumption without a review of the health consequences and costs is misguided.” Clearly she did not grasp the point of HB 518- which was not to increase consumption but replace the purchase of out of state beer with Maryland manufactured beer.

Some important points:

1) Is alcohol consumption increasing or decreasing? It depends upon who you ask. Jernigan says it’s up, while most other data sets suggest it’s down.

2) Jernigan chose not to weigh vital statistics from Maryland, but instead chose CDC statistics which enabled him to count far more deaths as ‘attributable’ to alcohol. Jernigan was challenged by Webster Ye of Maryland Department of Health and Mental Hygiene. Ye noted that alcohol related deaths had not increased, but held steady. Ye also noted the decrease in deaths overall, whereas Jernigan said death rates were on the rise in Maryland.

3) Senator Conway also weighed in with questions on causation, particularly when Jernigan stated that the vast number of homicides in Baltimore City were attributable to alcohol. Jernigan stated it was difficult to disentangle gangs and illicit drugs from alcohol in homicides rates. Jernigan stated that 80% of homicides are committed while drinking. Conway recognized along with most of us that homicides have other causal factors that could be addressed- entirely unrelated to alcohol. It begins with job training and educational opportunities in economically disadvantaged areas to provide options other than gangs and criminal activity for people to not only survive but build a future. That discussion is for another day however. People commit crimes for a host of reasons and ignoring those other causal factors in deference to alcohol will not solve those problems.

4) Jernigan and Eck could not truly differentiate craft beer from other beer, spirits or wine. When he was asked by Shelby Watson of Robin Hill Winery what was the alcohol 12-20 years olds were drinking and where they were getting it, Jernigan answered that ‘cheap’ was what they targeted in straw purchases, while the younger ones were stealing only the ‘good stuff’ from home. Wine however wasn’t really a factor in this age group. ‘Cheap’ and craft beer are not synonymous and what Jernigan did not chose to point out was that the cheap beer is in large majority supplied by the monopolistic mega brewers- you know who I am referring to. They also made the obvious mistake of stating that craft beers are 7-9%, and consumers don’t seem to comprehend they are drinking higher ABV. All of this completely disregards a large segment of the craft beer market that produces session beers, and the exceptional labelling (as required by the TTB) of the ABV, coupled with the work craft breweries in educating the populace on the ABV. The paucity of authentic craft beer specific statistics and documentation was deeply concerning.

5) Jernigan also stated that the recent proliferation in retail outlets has been ignored and is responsible for a 4% increase in violent crime. President Mullikin asked if he had the statistical carve out for the breweries. He did not, and reverted to the stat that off-premise sales are responsible for twice the number of violent crimes as on-premise sales.

To quote Mark Twain, “Lies, damn lies and statistics…”

6) Jernigan’s testimony nearly word for word, could be taken from an article in The Lancet, titled “Alcohol use and burden for 195 countries and territories, 1990-2016: a systematic analysis of the Global Burden of Disease Study 2016”. This article
a. Lays alcohol at the feet the most of society’s ills;
b. Completely disregards any health benefits of alcohol as negated by the harm;
c. And adds the best method to eradicate it:

“The most effective and cost-effective means to reduce alcohol-related harms are to reduce affordability through taxation or price regulation, including setting a minimum price per unit (MUP), closely followed by marketing regulation, and restrictions on the physical availability of alcohol.”

As a point of note, I too believe we should work constructively to educate young and old alike on the dangers of binge drinking, drinking and driving, and health and societal related complications of alcohol. I am also neither an epidemiologist, nor a statistician. I do however recognize cherry picking data to persuade an audience.

Jernigan and Eck certainly had a rapt audience in Miller and Kramer who both seemed to have pre-planned some of their questions and commentary. Kramer’s reference to the Governing article he read was one that Jernigan himself was a contributor to. Miller was eager for “simple fixes at the regulatory level” to stop the alcohol related deaths, which alluded to higher alcohol taxes and state control of production, distribution, and sales. Miller also commented, almost verbatim to Jernigan that he was extremely concerned with the whittling away of the alcohol regulatory framework each legislative session.

dry

Folks, we have been down this road before. Nearly two centuries ago a Temperance movement began with a belief it would cure all of the ills of society. It took decades, but when it finally found support it quickly moved from Temperance to Prohibition. I don’t have to tell you how that turned out but I will remind you of a few key takeaways from the failed experiment. Prohibition did not solve society’s ills. Try as you might you cannot regulate morality. It has been tried- repeatedly and failed. You can legislate and make things illegal, but people will still act in the manner they choose. During Prohibition alcohol was still produced, distributed, and consumed- most of it at much greater potency than anything being consumed before the Volstead Act. The loss of state, local and federal revenues was catastrophic to the economies, coupled with incredible job loss. Closing the breweries, wineries, and distilleries put a fair percentage of people out of work but it also severely harmed the 200 affiliated industries that relied upon their business from glass manufacturers to painters, leaving many more without wages. This was supported in 1926 when the federal government completed its inquest into the causes of unemployment. It was directly attributable to Prohibition, not automation as the dry party proclaimed. If you think crime and unemployment are problematic now- enact Prohibition.

I am not suggesting this task force will currently push for Prohibition, but they are well on their way based upon week 1. For now I expect higher alcohol taxes and a move toward complete state control- only one of these will likely gain traction in the next few sessions. We will need to wait to see what happens next month.

Beer for thought…

 

Governing Article
http://www.governing.com/topics/health-human-services/gov-alcohol-abuse.html
Lancet Article
https://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(18)31310-2.pdf
Task Force Testimony
http://mgahouse.maryland.gov/mga/play/5c144f0e-acc1-42f7-ba99-e13563125da4/?catalog/03e481c7-8a42-4438-a7da-93ff74bdaa4c

1. David H. Jernigan, PhD. Professor, Health Law, Policy & Management , “Biography”. accessed September 19, 2018 via Boston University School of Public Health https://www.bu.edu/sph/profile/david-jernigan/

The Brewery Worker on Labor Day

September 3rd, 2018

Today is Labor Day, a day in which we honor the achievements of American workers. In 1884 Congress passed an act marking the first Monday in September Labor Day. Since then we have witnessed various incarnations of how exactly to celebrate this national holiday. Parades, once grand affairs for a multitude of eager spectators, have waned in recent decades while BBQs and beach trips seem to supplant large-scale organized festivities for most. It is the last hurrah of summer before children return to school and fall sets in.

The exact origins of Labor Day are a bit controversial, as two different labor organizers (both named McGuire- one a machinist, the other a carpenter) are named as founders. What is significant is that the origins of Labor Day, regardless of who is responsible arose from the 19th century unions organized to protect and defend workers from harsh conditions, little pay, and unfair practices. Breweries were also participants in the formation of unions, although it was a bit more complicated than it was with many other labor unions.

The National Union of Brewers was founded right here in Baltimore in 1886. The Brewery Worker was published for its members on a regular basis. The name was eventually changed to reflect all brewery laborers, not just the brewers. Despite this, not all of the members felt their interests were well served and they chose to split off and form their own separate unions. Coopers were one of the highest paid trades of the time, and they often felt at odds with the goals and practices of the brewery worker’s union. Where brewers invited new technologies- coopers often shunned such advances as compromising their tradecraft. This in large part was the impetus for the separation, and they were quickly joined by coopers from the distilling and wine industries all operating with a common goal.

What were conditions like for brewery workers when Labor Day became a national holiday? That answer truly depends on location, and ownership. Many of the breweries in the 19th century were owned by immigrants that came to America to flee persecution, compulsory military service, and famine. Many of these immigrants were German, some Irish, with a smattering of others in between. Many brewery owners paid for the passage of their workers from Bremen to Baltimore, and housed them in their homes with their families. They worked on average 12 hours a day (sometimes more) with Sunday hours extremely limited for worship, rest, and fun. Conditions were typical of the time- manual labor in often sweltering or frigid temperatures depending upon the season. The upside of this was a regular supply of beer and meals, and a roof over their heads. Beyond that the working environment was quite dependent upon the individual brewery owner.
There are many stories of Baltimore brewery owners engaged in equal opportunity employment practices long before there was an EEOC. There is also documentation of Maryland brewery owners paying for medical care for workers that were ill, or injured on the job. In some cases if workers could not be healed, owners offered a type of supplemental stipend for a period of time until that worker or his family could find other gainful employment. Make no mistake- not all brewery owners were this considerate of the best interests of their employees. There are many tales of vicious proprietors taking whips to their staff, or other such deviant practices to intimidate laborers into greater productivity, thus spawning the need for the rise of unions.

What has changed since the 19th century? There is no longer a Brewery Workers Union as it folded into the Teamsters Union in the 1960s. In fact those working in most of the local craft breweries we visit today are not affiliated with a union at all. In the modern world, conditions still vary by brewery and yes it is still sweltering in summer, and freezing in winter as is the nature of the industry. Fortunately we are seeing greater diversity in plants across the country with far better working conditions- despite the often extreme temperatures.

One thing has not changed however and that is the incredible effort that brewery workers put into making this luscious nectar of the Gods that we call beer. The pride, the craftsmanship, and the end result are a testament to those that Labor for us, for themselves, and all those that came before them in this historic industry.

Whatever you may be doing today take a moment and raise your glass to the American Brewery Worker past and present on this Labor Day.

Sláinte!

Pay to Play

Since the repeal of Prohibition, federal and state guidelines governing the alcohol industry have been very strict. The most stringent surround ‘Tied-House’ laws. In a nutshell before Prohibition breweries in all states would offer up fully functioning taverns/bars/etc. to willing tavern keepers. The catch was that once they received the fully functional bar but all they were allowed to sell was the beer from the brewery that owned it. That was anti-competitive, particularly when you add in the aggressive price fixing, and additional inducements to lure patrons away from other bars (and hence other brewery’s offerings). The general consensus was that this needed to be banned once Prohibition was lifted in the spirit of fair competition and limiting the corruption involved in the alcohol industry. It clearly gave undue advantage to the big breweries with the exceedingly deep pockets like Budweiser, et al to literally control the beer market.

Ownership in bars and taverns is not the only game in town however when it comes to inducements to leverage the market in favor of a particular brewery as there are myriad methods. In Massachusetts AB-InBev was investigated for giving away over $1 million in enticements to retail establishments in the form of coolers and draught lines for prime shelf placement and committed draft lines. Although the MA Alcohol Control Board determined there was insufficient evidence to charge them, which was not the outcome in California where they did face consequences for their actions. AB-InBev was forced to pay a $400,000 fine for violation of pay-to-play laws when their reps furnished refrigeration systems, televisions, and draught lines for 34 retailers. AB stated that they were just ‘leasing’ the equipment and it wasn’t an inducement to prioritize sales of their beers. They promised re-training of all sales representatives to avoid such confusion in the future. Hmm….confusion is it?

AB-InBev also got into trouble in Washington State in 2016 when they engaged in Tied-House violations when they paid for concert venues in which AB products were exclusively sold. It does not stop there however, in 2016 AB-InBev agreed to pay $6 million to the US Securities and Exchange Commission for anti-trust violations involving- you guessed it, pay-to-play practices, this time in India. The issue here is that a $400,000 or $1.6 million fine is a drop in the bucket for the mega-monopoly that is AB-InBev and it is not a deterrent against these pervasive pay-to-play practices.

53972291_552241_pay-to-play

Other high profile breweries engaged in these illicit practices and were also fined. This month (May, 2018) Warsteiner Importers Agency, Inc. agreed to pay $900,000 for Tied-House, Commercial Bribery and Exclusive Outlet violations that placed, or potentially placed the retailer’s independence at risk. Warsteiner paid for draught lines, and sponsored events where Warsteiner beers were exclusively carried.2

This is not however strictly a macro-brewery violation. Recently Craft Beer Guild LLC, a wholesaler who distributes more than 200 craft brands throughout Massachusetts and the Northeast paid bars $120,000 over a two year period (2013-2014) for tap handle placement. The Guild admitted to paying kickbacks up to $2000 per tap handle and up to $20,000 for committed lines. They were already forced to pay the TTB (Alcohol Tobacco Tax and Trade Bureau) $750,000 in fines for another, separate violation.

Southern Glazer’s, a Miami based wine and spirits distributor demonstrated that pay-to-play was not in any way restricted to the brewing industry. They were fined $3.5 million by the New York State Liquor Authority last year for schemes involving cash, gifts, and credit card swipes (large expenses paid through Southern Glazer’s expense account), among a host of other preferential placement schemes.

This problem is also not limited to manufacturers and wholesalers. There are many stories of bar owners with their hands out for that flat screen television, or a new draught system and they are more than happy to prioritize tap lines in kind. For others it isn’t the flat screen or direct cash, but instead they receive a reduction in the total beer bill in exchange for tap placement- and in many states this is legal. It is something called an accumulation credit. The translation is: if a bar buys a certain number of kegs of a certain brand, they distributor will credit them back the cost of a fair percentage of those kegs.1

What is perhaps more shocking is that not everyone sees this as a problem. A recent article in FoodDrink International argued in favor of the erosion of Tied-House statutes enabling for example manufacturers of alcoholic beverages in some states to hold ownership of retail licenses to operate retail outlets on production premises. I would argue this is more of a carve-out specifically for taprooms which serves as a brand building necessity for small breweries to gain an audience. A more intriguing analysis of the ‘evils’ of the Tied-House laws comes from the Midwest- Wisconsin to be precise. The Tied-House law is so restrictive that a restaurateur Justin Aprahamian had to open his craft brewery in Illinois because the laws in Wisconsin prevented him from holding any ownership in both a retail establishment and a production facility. Logic dictates that a brewer would like to sell his hand crafted beer in his own restaurant but Wisconsin law firmly stands against such an act as an unacceptable integration of the three-tier-system.

There is yet one more aspect to delve into and perhaps it is more significant in many ways when applied to craft alcoholic beverage producers- advertising. There are numerous federal and state restrictions linked to alcohol advertising. Beers cannot be advertised in a way that confuses brands, promises health benefits, disparages another brand, targets children, or makes promises it cannot deliver. These seem like pretty common sense rules. Many states go a step further- like Missouri where alcoholic beverages cannot be advertised for a discounted price outside of the retail premises, cannot be advertised below the retailer’s actual cost, and requires manufacturers to exclude retail pricing in all advertisements while including multiple unrelated retailers in the ad. Most states are like California and prohibit manufacturers from giving rebates or kickbacks to retailers, or paying a retailer for advertising. Again this all seems to be under the guise of common sense.

Old-German-premium-Lager-Cone-Top-Queen

As a comparative tool let us briefly delve into Maryland history and take a gander at Queen City Brewing Company. Post-Prohibition, Queen City and Cumberland were THE major breweries and employers in Cumberland. Their brews were a staple of bars and package stores across western Maryland, into southwestern Pennsylvania, and West Virginia. The brewery salespeople and the retail establishments knew each other well. By the 1950s every package store in the region was suddenly flush with massive advertising displays of Budweiser. To top it off the displays were prominently placed where Queen City and Cumberland products once sat. There were plenty of giveaways along with the six packs of Budweiser that were far cheaper. As a regional brewery with limited tchotchkes, and a far smaller advertising budget- there was no wat to compete. It didn’t matter that the six packs of bud were in 10 ounce or 12 ounce cans instead of pints, consumers were enjoying the bells and whistles- as were the bars that began to carry more macro brewed beer than regional beer. When was the last time you drank an Old German or an Old Export? Chances are you either weren’t alive when it was still on the market, or you were too young to drink it. Although the Queen City and Cumberland merged, they still could not survive the macro brewery advertising and closed down in the 1970’s. This is a reminder that many of the laws that are so bothersome today were put in place to protect regional breweries and level the playing field- advertising was just one facet of that.

There is no question that advertising has changed over the past few decades particularly with the advent of social media. Should we adapt to this- yes. Does that mean we throw out the rule book completely and start over? Not necessarily. There is absolutely no doubt that pay-to-play is happening in almost every state of the union whether it is dedicated tap lines, prime retail shelf space, sponsorship of certain events, or outright bribery as already outlined. Granted it is also not something happening only at the macro level. Must craft breweries- or their distributors pay-to-play to garner shelf space and sales? Ideally no- particularly when we think about the role of social media when it comes to advertising craft beer.

Ponder this for a moment, the whittling away of the Tied-House and pay-to play prohibitions may serve smaller craft alcohol manufacturers in the interim, but it is setting up a terrible precedent for the future that monopolistic breweries and wholesalers will take advantage of, and I wager that they already are. I will quote Craft Beer Professor Daniel Croxall,

Without these laws, the market would turn into a free-for-all for those with the deepest pockets. Of course international monoliths would take every advantage to squeeze out pesky independent brewers who keep taking market share—dare I say even pay bribes to retailers? And as I have pointed out before, many state three-tier systems and accompanying Tied-House regulations are under attack through sophisticated lobbying efforts, legal challenges, and even through circumventing the laws in questionable/illegal ways. Are there problems with the three-tier system? You bet. Do the benefits outweigh the problems? That depends on if you favor consumer choice, an even playing field, and good old independently brewed beer in all its glorious iterations.”

So where do we go from here? Each state is witnessing a battle brewing against restrictive Prohibition-era legislation that inherently favors monopolistic breweries over local craft. Some laws -like the franchise law imposed upon small breweries deserve to be challenged and overturned. This will help with the levelling of the playing field and engender a greater ability for craft breweries to compete in the market. State by state many of these statutes and regulations can be revised, removed, or renegotiated to give craft brewers a fighting chance, while leaving certain protections in place for all three tiers. Other laws however, deserve a much greater level of scrutiny and attention to the long term implications and should be examined without opening a Pandora ’s Box that would certainly incite a bloodbath with the removal of Tied-House laws en masse thus spelling an end to our independent craft brewers.
Beer for Thought
Cheers!

TTB Craft beer advertising guidelines: https://www.ecfr.gov/cgi-bin/text-idx?SID=29140e6cab911aaf20a26fd46e304766&mc=true&node=pt27.1.7&rgn=div5#sp27.1.7.f

Autumnal Splendor and Things that Inspire

As the weather turns cooler, and the leaves crunch beneath your feet thoughts often stray to hearty stews, cozy fires, and good company sharing a delightful libation. Fall often evinces thoughts like this, inspired no doubt by the splendor of the season, and the crisp breeze carrying the scent of autumn through the air. I find that I become more selective with regard to the beverages chosen to mark the season, and those moments that take on a greater significance. Many people intentionally pair their beer with the evening’s planned victuals, and often do so with painstaking precision. I am perhaps not that particular, but I do enjoy the process of merging flavors in a way that elicits the best qualities of both the food and accompanying brew. What I have more recently taken note of is the story behind both, and how much that factors into my decision.

Cooking heals, and the process has an almost meditative power. Selecting a recipe is more than meeting a list of dietary restrictions, and flavor preferences; it also involves the history of the dish. How, why, and for whom was it created? Granted there are not always answers to these questions, but it certainly is intriguing to embark on the voyage to uncover them. The national dish of Cuba, Ropa Vieja is a perfect example of this. Legend has it that a peasant had no meat to feed his family, so he decided to take his old clothes and put them in the stew pot. While it cooked, he thought about how much he loved his family. When he uncovered the stew, the threadbare garments magically transformed into the delicious shredded beef stew (resembling tattered clothing.) Miracles, inspired by love, created this dish. Fanciful? Perhaps. Delicious? Definitely!

This wee tale leads me back to the accompanying beverage. What inspired a brewer to make a particular beer? Was it love? Was it history? Was it something more? Not all brewers share the muse behind the conception of a brew, but when they do I find myself intrigued and more inclined to give it a go. Make no mistake, a well told story behind a creation will not make up for lack of quality, or cleanliness in the process. Will consumers select beers with no significant story? Absolutely- if they are well crafted. Often however, one can tell when a brew was uninspired, as it shows on the palate. Similarly, a thirsty connoisseur of malted beverages can taste the inspiration behind it. Brewer’s Alley Wedding Alt is an example of an extremely well-crafted alt beer with an equally inspired story. Brewer Tom Flores created this very personal beer to mark the most auspicious occasion of his very own wedding. It was brilliant, and so well received that it became an (annual) seasonal offering, much in demand.

Other breweries in Maryland have also created beers motivated by personal stories, or historical events; just take a gander at Union Craft Brewing’s Duckpin Pale Ale. Duckpin bowling was invented in Baltimore, and neared the point of extinction (if you can use that terminology for a dying sport) when Union Craft released their homage to the Baltimore institution. The sport was invented around 1900 by a couple of Baltimore Orioles Hall of Famers while drinking beer in a billiards hall (although the specifics of this are open to historical debate.) Union wanted to get in touch with what made Baltimore great, and its rich history of craft brewing was a perfect analogy to the once thriving sport of Duckpin bowling. The sport and the beer have both surged in the past five years, and it would be impossible to separate the revival of one from the success of the other!

To have a muse behind the crafting of a fantastic beer may not be a significant factor to some consumers, but for many it will most assuridly lure them to open their wallets and give it a try!

Beer for thought!

The fine art of Coopers

For over 2,000 years barrels have been crafted to hold liquid gold of varying types. The science behind the construction is fascinating, but the craftsmanship is exceptional and has evolved since Rome ruled the western world. The Romans adopted the method of storing and transporting beer in wooden containers instead of amphorae from the Celts. The process has changed little over the course of two millennia, but the nuances have become more refined, adjusted not only for technological advancements but the expertise and preference of the master coopers constructing them.

Coopers are artists, and each one operates on known, standard practices, but that is where the similarities end. Some coopers prefer uniform size staves for example, while others prefer alternating widths. Like many of the arts, it comes down to the preferences of the master craftsmen, and their own specialized techniques. The starting point is always same- the selection of the wood, traditionally oak. The wood will be weathered (aged) in preparation, and then both steamed to enable bending of the staves for construction (mise en rose), and fired (toasted) to specifications determined by the brewery, winery, or distillery. The characteristics of the wood comes through the process and into the brew, making it the most crucial decision before the first cut is ever made, or the first stave planed. It ultimately constructs the flavor profile of the liquid in the barrel to varying degrees based upon toasting, and length of ageing in the barrel. Master coopers always choose wisely, as that is part of their craft.

An intriguing aspect is the natural water tight seal achieved in the process, without seals, adhesives or other artificial methods. Dowels are used, notably for the head, along with metal hoops to secure the staves, but really nothing else. It all boils down to the craft. This harkens back to the ancient technology of boat building. Ancient shipbuilders also followed a similar process in achieving near water tight construction, but unlike coopers they chose to slather bitumen (pitch, or what is commonly known as tar today) on the finished vessel to procure (and perhaps guarantee) a completely water tight seal. Even when the Romans instituted the Celtic invention of barrel making to store beer and wine, they did not adapt this new ‘bitumen less’ technology toward their seafaring vessels.

Many of the Maryland breweries prior to Prohibition had coopers on site crafting barrels for their touted brews from John Frederick Wiessner to National Brewing. 10,000,000 barrels were in service in United States breweries prior to Prohibition. The invention of steel kegs coincided with Repeal, and threatened coopers traditional role in American breweries. Fortunately it would be another few decades before metal would completely supplant wood. When breweries did decide to turn away from wooden barrels, coopers remained the premier option of wineries and distilleries. All was not lost for coopers and breweries however, as they have seen a much welcomed resurgence in recent decades, not as the primary container for transport, but instead as the vessel to age and enhance golden, malted libations. Although it seems unlikely that barrels would unseat modern metal kegs as the choice for delivery, they have been lauded for their craft, their history, and their contribution to the renaissance of cask ales in America.

All hail the return of coopers to the brewing industry, like Free State Cooperage of Maryland, demonstrating a tradition thousands of years strong, and only getting better and more in demand.
Sláinte!

 

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!