October 21, 2020

Beer Law

Craft beer brewers go head to head with beer distributors

| 1/2/2014

Aubuchon also envisions changes in the franchise laws that would make it easier for small brewers to terminate contracts with wholesalers if the relationship is not working out. While the franchise laws were developed to protect wholesalers from arbitrary termination by big beer suppliers, today it’s generally the wholesalers who have the advantage over small manufacturers.

Limited self-distribution, says Aubuchon, is “going to be contentious. It’s going to be a big fight, but it’s something that we’d love to see.”

Joey Redner, founder and owner of Cigar City Brewing in Tampa, says Florida’s small brewers would also like the state to allow for beer to be sampled at retail outlets. Under current law, retailers like Publix can offer customers taste samples of wine and liquor. Beer, however, is offlimits unless an establishment has a license to serve. That puts smaller beer manufacturers at a disadvantage, Redner says, particularly because the public isn’t as familiar with the kind of beer he produces.

“For me to be able to say, ‘Here, try a sample of it and see if you like it and if you do, then you can make your purchase’… that goes a long way and it’s something that we currently can’t do.” For their part, some distributors see the push for 64-ounce growlers and other changes as a potential threat to the threetier system that’s regulated alcohol distribution since the end of Prohibition.

“Some accommodations have to be made, but you still can’t lose sight of the history, because one thing that hasn’t changed is human nature or the competitive spirit for brewers to dominate retail and for consumers to want all their alcohol at the absolute lowest price,” says Rubin.

Alcohol, like cigarettes, Rubin says, should not be available at the absolute, lowest rock-bottom price. “It’s an intoxicating beverage, and there are public policies that treat it differently. That’s why the tax rates are so high, and that’s why there’s a mandatory three-tier system along with age requirements and all kinds of other laws regulating the product.”

Aubuchon says the laws that govern alcohol sales today were meant to keep the production, distribution and sales of alcohol as three distinct business sectors. After Prohibition ended, he explains, the government wanted to keep big breweries from becoming distributors and then buying local bars — monopolizing the entire industry.

Today, says Aubuchon, those worries are unfounded, and the laws only serve to stifle competition from the craft brewers. “The mandatory three-tier system itself is antiquated and the purposes for which it was enacted after Prohibition are no longer necessary. If you’ve got a brewery with a tasting room, it’s basically one bar. Is that going to put anybody out of business? No.”

Micro-Distillers Toast a New Law

The change allows liquor makers to sell some of what they make.

Since he began distilling his own rum in 2007, Troy Roberts has welcomed the public to tour his Sarasota facility and learn how he makes his Siesta Key rum. Until recently, however, the law allowed visitors only to see, smell and sample the freshly distilled rum. “It was frustrating because we’d have a lot of people come out and everyone would just assume they could buy the rum. But we couldn’t sell it to them, so there was some missed revenue there,” Roberts says.

In July, a new law took effect allowing Roberts and other microdistillers — those that produce 75,000 gallons a year or less — to sell no more than two bottles a year to each customer directly.

Roberts — who launched his rummaking enterprise after selling off several sports car enthusiast websites he co-founded in 1999 — welcomes the walk-in sales, but says the new law is more important in terms of marketing than the $20 he gets from each bottle he sells.

“The retailers should be happy because now they’re going to have people going in looking for Siesta Key rum in their shops. It gives people the opportunity to try it and hopefully turns them into buyers.” Jason Unger and Richard Blau, lawyers and lobbyists with GrayRobinson who represented the Florida Craft Distillers Guild in amending the Prohibition-era laws, say the change will foster growth in Florida’s nascent craft distilling industry. The number of craft distillers has grown from about 12 in 2012, when they first began working on the issue, to more than 20 today, ranging from the Palm Ridge Reserve Distillery in Umatilla, which has been producing whiskey since 2009, to Alchemist Distillery in Miami, Wicked Dolphin Rum in Cape Coral and the St. Augustine Distillery, which plans to produce rum, whiskey, gin and vodka when it opens this month.

Tags: Politics & Law, Lifestyle, Manufacturing/Distribution

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