Blog.

Monday, August 15, 2011

Claire Duquette

Editor

The Daily Press

122 West Third Street

Ashland, WI 54806

While the Daily Press considers a response from Tim Roby, a spokesperson for the Wisconsin Beer Distributors Association as credible, I see those comments as just another public relations firm’s obligation to a client.  The comments for some reason did not come from their President, nor from an actual distributor, it’s from a spokesperson.

First and foremost, I am directly involved in the industry. I own and operate a brewery. I am directly affected by legislation that was covertly conceived and cowardly inserted into the budget bill at the eleventh hour. So who has the proper platform on which to speak of the truth? Someone hired for PR or an actual player in the game? If this legislation was so great why did it have to get inserted into the budget? If this legislation is so good how come the WBDA did not involve the Wisconsin craft brewing industry in its drafting process? 

Mr. Roby seems very proud to list as some of their accomplishments giving piece of mind to me that we still enjoy provisions of our liquor laws just as they were prior to the budget. Am I suppose to be grateful that these items were left alone because you could have attacked those as well? Four of the five bullet points list things that were not changed. Let’s talk about the things that were changed.

The day before the budget bill was signed, I could work with other brewers and breweries to distribute OUR collective products. Now I can not. That is what is known as stifling access to the market. There were 92 wholesalers in Wisconsin in 1994. In 2007, there were 67. Today there are 42, and the number continues to drop. Perhaps by the time this prints there will be 41, as Miller Beer of the Northwoods acquires H&H Distributing in Rhinelander, WI. At the same time, the number of brands carried by these wholesalers has more than doubled. The employee to brand ratio at the wholesalers has declined to the point that adequate sales representation is of concern to myself and other WI producers. Breweries must be allowed to band together to reverse this trend. These new brewery-owned distributors will also create new jobs that Wisconsin desperately needs, instead of eliminating jobs in the name of efficiency as wholesalers do as they consolidate.

The day before the budget bill was signed I had a municipal liquor license and a wholesaler’s license. Now I do not. Today I have a permit. There is a huge difference between a license and a permit. One is a portable asset, it has tangible value, the latter comes with no assurances , and it is unclear as to whether that permit is transferable and could be an asset that may provide some return on investment upon the sale of my business. 

The day before the budget was passed contract brewers were also licensed by the state and federal government. They hired breweries, such as mine, to make their recipes. They took delivery and worked with a wholesaler to get their product to market. In order to accomplish this, the contract brewer needed a wholesaler’s license. Today, the dissolution of a brewer being able to hold a wholesaler’s license makes being a contract brewer quite different, if not impossible, unclear.

While Mr. Roby’s slight of hand to myself and the general public with a provision that raises a ceiling from 50,000 to 300,000 barrels, that should make any local, small town, “what do you know” brewer happy, he forgets to mention that the provision directly associated with that caveat was the prior need for a producer to acquire an off brewery site warehouse if production exceeded the 50,000 barrel threshold. A huge expense when the is no real reason for that requirement.

 Ask Mr. Roby to explain why a wholesaler’s license fee went from $100.00 to $2500.00. Ask Mr. Roby why it’s necessary to have 25 established accounts before one is given a wholesaler’s license. Let him speak to the fact that since 1997 we have lost half of the beer wholesaler’s in WI. Ask him to speak of the “mom-n-pop” businesses that have been displaced by consolidation. Ask him to speak to the fact that while their distribution system continues to lose jobs the craft beer market is adding. The WBDA is in survival mode and willing to pull out all stops to get protectionist legislation from willing politicians.

Every small brewer uses their wholesale license today to sell to a few customers. Many brewers sell (with their wholesale license) to special events/festivals with permission from the wholesaler that has the assigned territory from the brewer because the wholesaler does not want to haul beer out to weekend festivals etc. This proposal requires 25 or more customers, making startup of self distribution nearly impossible. It would also not be possible for small brewery to get started by selling to a small local grocery store chain with 5-6 stores. This is often the only way to get started. It’s the way South Shore Brewery got started.

Mr. Roby is by no means being truthful. Using words such as “enhance” and “preserve”. The only enhancement and preservation the WBDA wants is total control of what products get to market.  They have the lobbying dollars and granted power to do that. Perhaps that’s why the budgetary submission happened.

The legislative system is corrupted to the point that a defacto organization can draft, submit and get passed legislation without public input. That is the real truth. Can someone please tell me what makes the Wisconsin Beer Distributors Association so darn powerful?  Mr. Roby may imply that because I’m just a local brewer, I don’t know what I speak of. Or that small town businesses just need to sit back and let the people who “know” rule. He forgets, I am the “mom-n-pop” business person and work damn hard to help each retailer and distributor, which carries our brands, see better profits. That takes a respectful and open relationship with wholesalers. What Mr. Roby doesn’t understand is that I have 16 years of experience with the manipulation the WBDA, and now Miller/Coors, have wrought on the craft brewing industry of Wisconsin. Not once in those 16 years has the WBDA reached out to craft brewers. Craft brewers are finally irritating enough to the executive portions of these corporations that they are compelled to spend resources to pay for legislated security.

Finally, if Mr. Roby is concerned that Representative Bewley and myself are wasting time and energy seeking a legislative resolution, it would be awesome if the craft brewers, other distributors and non-affiliated retailers all had input. It would be quite awesome if the solution truly enhanced all aspects of the burgeoning craft beer producers of Wisconsin, the distribution network, and provided a respectful working relationship for the future. The compliant politicians need to be aware that WI craft beer producers are here to stay. We are here to grow our businesses and compete for more market share. We have proven our grassroots capabilities and need to be allowed a voice in legislative drafting that impacts our industry.

To all my friends, acquaintances, consumers and employees in the retail and distribution network, the South Shore Brewery is grateful for your hard work and support. For some reason, decisions are being made that require me to become vocal and take action. Beer is suppose to be apolitical in the Great Beer State of Wisconsin. 

Respectfully,
Bo Bélanger
Head Brewer/ Owner

Disclaimer. The craft beer industry is represented, in part, by the Wisconsin Brewer’s Guild. (An organization which readily lists their members on their website. Along with all affiliate members). This same organization represents the craft brewers who are owned and operated by real WI residents and produce, by estimates, 95% of the craft beer produced in WI.  The South Shore Brewery is a member of the WBG and I personally am a member of the Board of Directors, and chairperson of the Marketing & Fundraising Committee.