GA wholesalers object to proposed change in beer sale laws. ‘Brewers aren’t our opponents.’
An organization representing beer wholesalers in Georgia opposes a state bill that would’ve reworked the logistics of beer sales in the state.
The Georgia Beer Wholesalers Association has objections to Senate Bill 163 despite its support from small craft breweries. The bill, stalled in the state legislature currently, would allow smaller brewers to self-distribute to a limited extent without having to sell their product to wholesalers first. It also would enact several other reforms too:
- Reform beer franchise laws to allow breweries to more easily terminate agreements with wholesalers.
- Remove limit of products breweries can sell to customers each day.
- Allow direct charitable contributions of beer
Georgia’s current beer distribution involves a three-tier system: Tier One includes the brewers, Tier Two includes the distributors or wholesalers, and Tier Three includes the retailers.
Self-distribution would allow small breweries to move their products directly to retailers, cutting out wholesalers in some situations.
Starting and operating small breweries isn’t economically viable under the three-tiered system, Joseph Cortes, executive director of the Georgia Craft Brewers Guild, told the Ledger-Enquirer. And this system has already been changed in neighboring states.
The senate’s failure to advance the bill was a significant blow, Cortes wrote in a news release. But the group will continue making its case for these changes to elected officials in the hope to garner support for reform, he said.
But Martin Smith, executive director of the Georgia Beer Wholesalers Association., contends that the unintended consequences of this type of legislation would outweigh the benefits of these changes.
In 2011, there were 10 craft breweries in Georgia, he said. Today, there are over 170. Some breweries fail, Smith said, but this is true of any mature industry.
“But each time one goes out of business,” he said, “the answer cannot be to ‘fix the system’ with new legislation.”
Smith spoke out about the reforms some Georgia craft brewers are fighting for to the Ledger-Enquirer.
These answers have been edited for clarity and length.
Q: What do you think about the goal of allowing small breweries to self-distribute?
Georgia did not become a top state for brewers by accident.
It is the result of more than eight years of careful, incremental changes to Georgia’s laws designed to support the state’s craft beer industry while thoughtfully engaging all stakeholders to protect and benefit Georgia’s consumers. Georgia’s brewers can now sell 2 million bottles of beer per brewery and sell beer not brewed on site directly to consumers.
But after eight years of change it is clear that certain craft brewers won’t be satisfied until they are brewing, distributing and selling directly to consumers. And this undermines a system that has safeguards to protect our youth, provides a consistent revenue stream to state and local governments and ensures thousands of choices of good beer on store shelves, at bars and in local breweries.
Q: How would the passage of legislation like SB 163 affect current distributors?
The better question is how would the passage of legislation like this affect craft brewers? We understand and are sympathetic to craft brewers who are struggling, but the changes proposed in SB 163 would lead to significant, unintended consequences for many of the smallest brewers.
For example, SB 163’s definition of a “small brewer” as one that does not exceed 15% of a wholesaler’s total sales in the prior calendar year would allow all but Georgia’s two largest brewers—Molson Coors and Anheuser Busch — to self-distribute.
Moreover, SB 163’s provision allowing brewers to change distributors without cause would limit distributors’ incentive to invest in the smallest brewers, which would ultimately benefit large craft brewers and national brands.
Q: Have changes in demand affected the industry, and how might the industry evolve?
Like any consumer product, beer is not immune to market fluctuation or competition from similar products.
Americans are consuming less alcohol per capita now than they were just a few years ago, and brewers compete with more varieties of alcoholic beverages today than ever before.
There are also significantly more craft brewers today than there were 5 to 10 years ago. That’s a good thing and a sign of a mature industry. But that also means more competition between brewers.
As beer wholesalers, we continuously monitor and adapt to market trends. We work hand-in-hand with the brands we represent, investing hundreds of thousands of dollars to market individual craft beers and fighting for shelf space on behalf of new and established breweries, alike.
We succeed when they succeed.
In our opinion, legislation cannot be the key to ensuring success or profitability. In a crowded marketplace, the brewers who brew great beer, market well and find a niche are the ones who will thrive.
Q: How optimistic are you that there might be some compromise in the future between small brewers and wholesalers?
If you look back at beverage alcohol legislation in Georgia over the last eight years, you’ll see wholesalers coming to the table and often working side-by-side with brewers again and again.
Brewers aren’t our opponents; they’re our partners.
Our hope is that Georgia’s brewers, large and small, will continue to focus their energy on making great beer.
Q: What should Georgia residents understand about the craft beer industry in Georgia?
The reality is that Georgia is one of the nation’s best states to produce, sell and enjoy beer.
We have a highly effective production, distribution and retail system with safeguards for consumers and youth that ensures a nearly endless supply of quality, Georgia-born beers in our local stores, bars and breweries.
This story was originally published March 8, 2024 at 11:42 AM.
