Cigar City's tasting room in 2010. (Staff photo / Alan Shaw)
(See updates below)
The members-only Craft Business Daily has published a story today on how the Beer Industry of Florida, a coalition of some of the state's beer distributors, wants the Legislature to address what its president, Eric Criss, describes as small breweries in "unfair competition with retailers."
According to CBD's story, retailers are upset that some small breweries are selling beers from other breweries (i.e. guest taps) in their tasting rooms and selling beer to go. The retailers are calling this unfair.
CBD quotes Criss: "Retailers in Florida have created business plans and made significant investments in their stores, which includes shelf space for craft beer. Why should retailers be happy to put a craft beer supplier on their store shelves or on tap in their restaurant if that craft beer supplier is now the competition?"
Criss says this is damaging the three-tier system in which an alcohol manufacturer must sell to a distributor, who then sells to a retailer, who then sells to the consumer.
The story continues:
"Eric doesn't think this is good for small brewers. 'What our distributors are hearing is, if Brewer X opens one more brewpub, don't bring his beer in my restaurant. Or if Brewer X continues to sell out the door, he's not going to get on my store shelves. Retailers are fed up. So we feel like this needs to be fixed.'"
I understand why retailers and distributors are complaining about tasting rooms selling their packaged beer right to consumers, because the brewery has cut out the distributor and retailer in that transaction. It's kind of like how you can't buy a car right from the manufacturer: you have to go through a dealer. That's why dealers are so mad as Tesla Motors, which is selling its cars right to customers.
The CBD story also notes that the Beer Industry of Florida is continuing its support of the legalization of 64-ounce growlers.
UPDATE:
I've received some more insight into the situation.
From the distributors' point of view, under the three-tier system brewers are supposed to compete with brewers, not with retailers. Selling their own beer from a tasting room is OK, the argument goes, because the brewery is promoting its own product. But by offering guest taps, they are now competing against retailers.
It should come as no surprise that Josh Aubuchon, executive director of the Florida Brewers Guild, sees things differently. He said the issue is a red herring.
"I don't think they are being 100 percent factually accurate," Aubuchon said of the distributors. He said the small breweries are buying their guest taps from a distributor, just like a bar or store does. He also said the amount of packaged beer the breweries sell directly to consumers is small -- a fraction of their total business -- and no threat to a retailer.
On the issue of competition, Aubuchon said there are about 80 breweries in the state, compared with 40,000 retailers.
"They're telling us that 80 breweries are going to have an impact on 40,000 vendors?" Aubuchon asked.
UPDATE 2:
Two retailers do not feel breweries are unfairly competing with their businesses.
Jimmy Defrank, general manager at Leukens Liquors, wrote the following comment on a Facebook discussion about this story:
"I'm pretty competitive with my beer section at luekens. I do what I can to have the best selection and sell as much as possible. Never for one second did I think that growler or bottle sales from any brewery was taking any money out of my pocket or costing me sales."
A bar owner has the same opinion.
Ty Mathis, owner of The Stein & Vine in Brandon, wrote this comment on the same Facebook thread:
"And as a bar owner I find this whole argument a joke. I believe that brewery sales only enhances the opportunity for potential customers to try and experiment with different styles/ types of beer, therefore expanding their palate from the norm."
Any retailers feel differently? Please comment below or contact me (my info's above and to the right).
