Free small craft-beer brewers
Bars in Provincetown have asked to sell Night Shift beer, and cofounder Rob Burns would love to say yes. But it’s not economical for the Everett-based company, which distributes its own kegs instead of hiring a wholesaler to handle logistics, to ship that far. “We’re not going to drive three hours to drop off three kegs,” he said.
Indeed, anyone spending Memorial Day weekend on the Cape or in the Berkshires won’t be able to find a can of Night Shift, despite the company’s growing popularity and the runaway success of its Everett taproom. State laws governing the relationship between brewers like Night Shift and wholesalers are so rigged against brewers that the company won’t sign up with a distributor.
The biggest problem, according to brewers, is that once a company establishes a relationship with a distributor, it cannot change to a different distributor or resume self-distribution — no matter what. State law gives the distributor almost total control over whether to continue the relationship, unless it violates one of five hard-to-prove legal requirements. Signing up with a distributor means signing away control over the brand’s future.
“Right now, with how the wholesale laws are, we’re too nervous to partner with a distributor,” Burns said. “They might be a great fit today, but, if our business keeps growing, could be a terrible fit tomorrow. If a distributor decided to lose focus on our brand to the new shiny toy in their portfolio, that would have real impact on us.” Beer distributors can also “swap” their clients to other distributors at a whim. Instead of taking such risks, Night Shift has a fleet of three delivery trucks, but it’s only practical for them to serve retailers in the Boston area.
Add up all the in-state brands in Night Shift’s position, and out-of-state-brands hesitant to enter Massachusetts at all, and what it all amounts to is fewer choices for beer-drinkers across the Commonwealth. It also costs the state the economic activity that might occur if Massachusetts brewers could grow and enter into contracts with wholesalers without the fear of getting locked into a relationship that could sour at any moment.
Legislation progressing on Beacon Hill would free small craft brewers, by allowing them to switch to a different wholesaler much more easily. It would have an immediate impact on brewers and consumers, likely leading to more choices. Burns said that if the law passed, the company would probably seek distributors for the Cape and the Berkshires, since it’d no longer have to fear getting locked into a deal forever.
The wholesale restrictions date back to the benighted 1970s, when the beer industry looked much different. Small brewers competing on quality didn’t exist. A handful of national brands sold almost interchangeable varieties of mass-produced product, and lawmakers in Massachusetts and many other states passed the wholesale laws to give local distributors some protection.
With the explosion of small craft breweries, it’s now distributors who hold too much power. Recognizing the changes in the marketplace, other states have already carved out exemptions for smaller brewers. In North Carolina, for example, lawmakers in 2012 made it much easier for small brewers to switch distributors — one reason Asheville has emerged as a beer-brewing hotbed, with all the jobs and economic growth that brings.
The Massachusetts legislation would maintain protections for wholesalers against the biggest beer brands, like Budweiser and Miller. Even that seems like a questionable policy — in no other industry do distributors enjoy such safeguards — but it’s not a fight the craft brewers chose to pick. If the current legislation passes, big beer companies would still be forbidden from seeking cheaper or better distribution deals in Massachusetts.
In the long term, though, it would be better for business arrangements in the alcohol industry to be ruled by contracts, just like every other business. For now, though, the legislation is a bit step in the right direction, and deserves approval.
If the whole dispute seems a bit small beer, consider this: Night Shift has 46 employees. Giving the company the best shot at success makes a big difference for them. “When we have a hop supplier we like, and then their quality dips, we have the ability to discontinue the relationship and move on,” says Burns. “Why wouldn’t it be the same with a distributor?”