Massachusetts is the cradle of the craft brewing movement, and under the right circumstances the local beer industry could become a significant source of new jobs and innovation in the Commonwealth. But small brewers are hemmed in by rules that restrict one key aspect of their business: whom they choose to distribute their beer. Under state law, if craft brewers want to switch to a new distributor over the objections of their current one, they need the state’s permission — which isn’t easily secured. The existing law is too rigid, and the Legislature should approve House Bill 267, which would relax it.
Under current law, the state Alcoholic Beverages Control Commission can force a brewer to stick with its existing distributor. The law dates back to the 1970s, when the US beer business was all but synonymous with mass-market brands like Budweiser and Miller. Lawmakers saw local distributors as mom-and-pop businesses that needed protection from the whims of mega-brewers; distributors were afraid of investing in warehouse facilities for a brand, only to have executives in St. Louis or Milwaukee abruptly take their business elsewhere.
But the beer business has changed. In the intervening years, the success of the Boston Beer Company, makers of Samuel Adams, has inspired dozens of other small brewers to set up shop in Massachusetts. Many of them self-distribute their beer to bars and restaurants. But there are only so many hours in the day, and when these brewers join up with a distributor, they gain access to more retail channels and greater marketing expertise.
On the downside, small brewers who sign on with a large distributor may not get as much attention as they might want, and then find themselves yoked to a bad deal. At a hearing last fall, the brewmaster at Southampton-based Opa Opa testified about getting into a dispute with a western Massachusetts distributor — and then being unable even to buy his way out of the soured relationship. Inevitably, business suffered. House Bill 267 would guarantee small brewers the right to switch, as long as their current distributor is compensated.
In testimony at the State House late last year, the Beer Distributors of Massachusetts opposed the bill. President William Kelley argued that distributors would be subject to suppliers’ “arbitrary and capricious” decisions and raises the specter that “the unregulated profit motive would lead to increased sales after hours and to under-age customers.” This latter idea is a red herring; responsibility for selling beer to people over 21 during legal hours lies with individual bars and stores.
As for the former concern, brewers aren’t likely to switch distributors lightly — and not just because of the cost. There simply aren’t that many distributors to choose from, and brewers would be foolish to antagonize any of them needlessly.
In truth, distributors may be less concerned about breweries like Opa Opa than those that straddle the line between niche and mass-market status. While the Massachusetts Brewers Guild includes dozens of small breweries, its most powerful member is the Boston Beer Company, which makes Samuel Adams and is now among the largest US-owned beer makers. Of still greater concern to distributors are the world’s beer conglomerates, most notably Anheuser-Bush InBev and MillerCoors; in his Beacon Hill testimony, Kelley hinted that if small breweries get more freedom to bolt from their current distributors, bigger ones would inevitably seek to do the same.
But the state’s craft brewers shouldn’t have to pay the price for the consolidation elsewhere in the beer industry. The proposed law applies only to breweries that make up less than 20 percent of a distributor’s business. To encourage the growth of an industry that Massachusetts essentially invented, lawmakers should be willing to cut these small-scale breweries a break.