Ah, so that is how it is done in NY state:
When the brewery tried to terminate its contract, the wholesaler sued under New York's alcoholic beverage control law—which binds brewers to one distributor within a marketing region once an agreement is in place—Brooklyn Brewery shelled out more than $200,000 in legal fees and had to pay the wholesaler an undisclosed sum to get the divorce it wanted... Many of New York's signature beer makers allege that wholesalers, protected by the obscure statute, often get away with failing to actively support or sell products. This, the brewers say, is an unfair practice and hampers their ability to grow their businesses. They are lobbying to change the law.
Being a fairly active beer shopper in upstate New York, I hadn't appreciated how the wholesaler control worked. I knew that each county seemed to have its own levels of access to craft beers and I had twigged to that each zone seemed to be under the control of one distributor... but I hadn't realized that there was a statute backing the contract. See, if you and I have a contract, that is a deal between us. If the state passes a law, that is a set of rules for everyone. But to pass a statute to enforce contracts is a bit of double dipping leading, as you can imagine, to more than a few unconscionable results. Interestingly, the article says the law has only existed since 1996 and was an effort to break the control the big brewers had on the marketplace.
Most interesting, of course, is an intelligent discussion of the role of the law and the beer market by the legislators and lobbyists quoted. Fat chance of seeing that in Ontario. No hint of a morality argument in all of it, just how to cut the pie.
Comments
Craig - May 2, 2011 12:05 AM
You would think that this wouldn't be common knowledge to someone not involved with the inter-workings of beer buying in New York, such as myself. Surprisingly enough, this is a pretty common topic of conversation on the barstool. To the consumer, the whole thing isn't apparent at the grocery store or even at beer stores. Where you see it is at pubs and bars, especially those that cater to beer. There is always a contentious relationship between the bar owners and the wholesalers. Pubs that specialize in craft beer want to have a wide selection to offer, and the breweries are more than happy to supply that, however, the wholesalers are really only interested in what sells. That's nothing out of the ordinary, right? It's simple supply and demand. Here's where it gets insidious. Not only do the wholesalers push their big sellers... they also push styles. If hop bombs and high ABV is where the selling trend is moving, then that's what is offered. To the detriment of the brewery and the bar owner. The wholesaler will offer what styles they want to sell. The brewery can't argue, at that point they have no control over what is offered to and the bar owner is legally bound to purchased any specific brewery's beer from it's designated wholesaler. My local pub has, maybe, twenty taps. Of those twenty, a few weeks ago, three were barley wines. How do you turn over 15% of your draught beer as barley wines? I have a number of friends who buy for their respective pubs, they're constantly lamenting, not only the distributors, but the system in general. The stories I've heard would astound you. It's like a mob movie. Only in New York would the lawmakers try and bust up a monopoly by creating another monopoly.
Craig - May 2, 2011 12:07 AM
Holy cow! Two non-sarcastic replies in a row! I gotta cut back on the Vitamin B.
dave - May 2, 2011 12:58 PM
Same type of legal situation is in effect in MA. People are trying to get that changed however: http://beernews.org/2011/02/massachusetts-brewers-guild-pushes-legislation-to-modernize-liquor-law/
DanSmallbeer - May 2, 2011 11:42 PM
Friend of mine looked into distribution for his Ontario brewery. The way he understood it, his distribution deal in the NY area would have been a "for life" contract. That completely scared him off.
Charlie - August 25, 2011 10:56 PM
You just can't blame people on these situations. The economy is hitting all of us hard.