After Capitol Hill-born Elysian Brewing announced its sale to Anheuser-Busch last year, co-founder Joe Bisacca told CHS that if customers didn’t know about the sale, “there would be no difference.”
Granted, Seattle faces more serious injustices, but many craft beer enthusiasts say that is a major problem as corporate beer’s increasing small brand acquisitions make it harder to tell where your money is going.
By taking over regional distributors that only offer their own“craft” labels, AB and MillerCoors, the two largest beer companies in the U.S., have tried to take back some of the ground lost in the indie beer boom. And with a greater selection of beers to offer, some say the duo are increasingly flexing their muscle with bar and venue owners to be exclusive suppliers, a practice which is illegal under state law.
Seattle Weekly reported how AB was recently fined $150,000 for exerting “undue influence” to gain a beer monopoly at Showbox, Showbox SoDo, and Marymoor Park. The complaint does not name Wolfgang Puck Catering, but AEG Live decided to change up its third-party vendor after the incident to a company co-owned Capitol Hill nightlife owner Dave Meinert.
Bar and venue owners are well within their right to do business with just one distributor or one brewery. What distributors are prohibited from doing is offering cash, sponsorships, or free products in exchange for having a monopoly on beer.
Are big distributors pushing similar exclusive deals on Capitol Hill? It depends who you ask. Craft brewers that spoke with CHS said they suspect such deals are happening in the neighborhood while bar owners say dealing with one or two big distributors simply comes down to logistics.
At 12th Ave nano-brewery Outer Planet, owner Renato Martins said there have been two instances where he suspected Capitol Hill bar owners were working under exclusive deals with distributors, but he never looked into it further. Capitol Hill’s other craft brewer, Optimism Brewing, does not distribute outside its Broadway location.
One Seattle brewer, who asked that her company remain anonymous, said she became concerned about distributors exerting “undue influence” on Capitol Hill when she tried to get her locally-made beers into Capitol Hill bars during Seattle Pride. She said two Pike/Pine owners told her they were concerned about losing sponsorships for Pride events.
“It’s a very common practice for large distributors to pressure bars and restaurants by offering perks in exchange for handles,” the brewer told CHS.
The Wildrose bar typically works with one distributor for its popular Pride beer garden, owner Shelley Brothers said. It has nothing to do with sponsorships or exclusive deals. “Distributors can ask you to be the only one out there, but we do it for our own convenience,” Brothers said.
There are many reasons why bars may stick with AB or Columbia Distributing, a major distributor of MillerCoors brands. Owners build up relationships with reps, there is less paperwork to manage, fewer checks to cut, and space limitations, especially for bars like Wildrose where liquor outperforms beer. “We just can’t bring in every single craft beer there is,” Brothers said.
Brothers told CHS the state liquor board contacted her once about an anonymous complaint over monopolistic practices by a distributor, but no enforcement action was taken. She suspected the complaint was filed by the a rival major distributor not represented in her bar at the time.
As director of the Washington Brewers Guild, Heather McClung said she has seen an uptick in complaints over the past 18 months about big distributors trying to block out smaller brewers. On Capitol Hill, McClung said suspicions tend to rise around sponsors for major events like Capitol Hill Block Party or Pride, but action is rarely taken.
“It’s one thing to notice it, its another thing to prove it,” said McClung, who is also the owner of Schooner Exact Brewing.
Three months after AB’s buyout of Elysian and its E Pike brewery, co-founder and crafter brewing pioneer Dick Cantwell left the company in part because of how AB and others lockout smaller brewers. The co-founder’s exit came just shy of Elysian’s 20th anniversary, which it will be celebrating on Saturday at Seattle Center with bands and 40+ beers.
“Bar and venue owners are well within their right to do business with just one distributor or one brewery.”
Perhaps but it all stinks of sleazy business practices, by that I mean monopolistic and predatory business practices. It seems the distributors are simply acting as arms of the conglomerates, middlemen whose purpose is what exactly, if a distributor only offers the products of one conglomerate? Obfuscation, it appears. The conglomerates are treading in murky legal waters. I wouldn’t be at all surprised if they are eventually slapped with billion dollar class action lawsuits and fines imposed by the government, if not broken up as Ma’ Bell was and as MSFT was threatened with.
I had a friend who recently was involved with ABInBev, and none of what he told me about his experience differs from anything written in this article. Because of the ambiguity of the liquor laws in the state of WA, and with the conglomerate’s control of distribution channels, gaming the system is going to end up being common place. These laws weren’t written with the idea that big brew would control how and what beers are packaged and sold to certain bars, nor was it assumed that you would only have a couple distributors serving the entire region, all with enough beers under their umbrella to have signficant leverage. A lot of these situations are only exacerbated by “sponsorship” of high-profile events like Pride and CHBP, where interest for smaller brewers is there, but a company like ABInBev is set up to truly meet all the demand and keep the smaller guys out
Truth is distributors give craft brewers access to the market. Capitol Hill is served by four major distributors, each one of which distributes beer brewed locally in Seattle. Don’t just trust my word, here is a quote from the head of the Brewers Association, the national group advocating for craft brewers:
“It is vital for the continued success of small brewers that we have access to market with an independent and competitive middle distribution tier.”-Bob Pease, USA Today, 3/4/2016.
-Scott Hazlegrove, WA Beer & Wine Distributors Association
Here is a question Scott. If I opened a brewery could I sell direct to local taverns or must I use a distributor. If the latter why? If I wanted to start a distributing business, could I do so with ease or what regulatory barriers would be in place to compete with the local ones if any? I am not in the business and have no desire to be so. But am curious as a fan of local breweries.
State law allows breweries to distribute their own beer to retailers. There is no mandate in state law that a brewer has to use a distributor. However, breweries use distributors because many breweries want to focus on brewing beer, not warehousing and delivering that beer. Breweries also turn to distributors to help them market beer in areas not as familiar with the brewery (for example Manny’s on tap in Spokane).
New distributors get licensed regularly, often to distribute craft beer. Almost anyone is eligible for a license, but if someone is licensed to sell alcohol at retail (like a bar), or to produce alcohol (like a craft brewer), that person cannot actively control the decisions of the distributor. This system which separates the decisions of the bar, the distributor, and the brewer (known as the three tier system) is designed to create independence and make sure one big entity can’t lock out other retailers or brewers from the market.
-Scott Hazlegrove, WA Beer & Wine Distributors Association
Isn’t the real power here with customer demand? If not, are we supposed to just drink whatever the bar owner tells us we HAVE to drink? Um, no. If you don’t have the beers I like, I’ll go somewhere else. Yes, it may be for the bar owner’s convenience to work with one distributor. That’s fine, but it assumes the distributor has a decent number of choices to keep customers happy. If they don’t, and the selection is deficient, we’re free to go elsewhere. I don’t have to drink what anybody TELLS me I have to drink.
What is perverse are the archaic laws that apparently require distributors. In what others business are there laws that create required channel, other than perhaps similarly protective car dealerships. When a distributor is owned or unduly influenced by big beer, the small breweries are at a disadvantage. I urge patrons to boycott any bar or tavern that has a preponderance of global breweries on tap and few if any of the locally owned options. As well as those who succumb to bribery and enticements to only work with one distributor.
And don’t let the folksy labels on some beers fool you. Just use your smart phone and google ‘who owns BEER NAME’ and will find as often as not that one of the multibillion dollar conglomerates is the true owner.