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Alabama Goes From Craft Beer Wasteland to Model of Progress

In June of 2007, the Free the Hops bill to raise the alcohol-by-volume limit on beer from 6% to 13.9% was given the “Shroud Award” in the Alabama House of Representatives. That’s a humorous award presented to the sponsor of the bill considered the “deadest” of the session. You can read the lengthy, pun-filled resolution here: http://www.freethehops.org/blog/2007/06/gourmet-beer-bill-wins-the-shroud-award/

Hundreds of other bills were equally dead that year, not having been passed into law. But the Free the Hops bill received the Shroud Award because of the intensity of opposition it faced. The floor debates featured angry diatribes from devout, religiously-conservative legislators about the terrible ills of alcohol and the dangers it posed to families.

Furthermore, though the religious opposition to the bill was the most vocal and public, the truly influential forces holding the bill back worked behind closed doors — the beer wholesalers. Ten years ago, many in the wholesale industry had serious concerns about negative impacts on their businesses if Alabama’s beer laws were changed to allow for the sale of a greater variety of craft beers. Their opposition helped prevent the Free the Hops bill from passing in 2007 and again in 2008.

The bill finally became law in 2009. It passed the House with a vote of 49 in favor to 37 against, and the Senate with a vote of 19 in favor to 9 against. But it went down to the wire that year with all of us terrified senator Hank Erwin would filibuster the bill and prevent final passage. Once it finally passed the Senate we refocused our terror on the very real possibility that governor Riley would not sign it, which would have prevented it from becoming law. We launched a massive campaign of phone calls, emails, and faxes to his office asking for his signature, and he came through.

Fast forward to 2016. In the last seven years Alabama has gone from being home to two breweries to having, I don’t even know… twenty-something? At the time of this writing there are twenty-nine brewing members of the Alabama Brewers Guild but several of them are not open yet. These breweries have been a critical component in the economic revitalization of several areas around the state. For one example, the highly popular Avondale area in Birmingham is now home to about a dozen bars, restaurants, and music venues that didn’t exist before Avondale Brewing Co. became the anchor in the area. Which would not have happened without reforms to the state’s beer laws. All of the breweries have created jobs and contributed a tremendous amount to the state’s economy.

And remarkably, the legislature understands that and is behaving accordingly. This year the Brewers Guild lobbied for a bill to give new freedoms to Alabama breweries. And it passed. By huge margins. Without any weeping or gnashing of teeth from legislators. It passed the House by a margin of 68 to 17 and the Senate by a margin of 23 to 4. With never a fear of filibusters.

The bill will allow breweries to sell a limited amount of their beer directly to consumers to take home. It could be a few six packs or a couple growlers of specialty items filled at the tap room. It will also remove several asinine restrictions on where brewpubs can be located, making them a more viable business model. Restrictions that were once put in place at the behest of beer wholesalers, who feared brewpubs were an existential threat to the three tier system.

All of this is happening because everyone came to their senses. Religious opposition to the liberalization of alcohol laws is still a thing, but it has withered so much it’s incapable of halting progress. The wholesalers recognize the growth of craft beer is helpful to their businesses, not harmful. And the lawmakers have witnessed the tremendous benefits from the explosion of new small businesses made possible by said liberalization of alcohol laws.

In nine years Alabama has progressed from calling a pro-craft beer bill the deadest bill of the legislative session to passing a new pro-craft beer bill by landslide margins with no drama whatsoever.

Obviously, our state still has many problems, and our legislature is often dysfunctional on some of the most important duties it has, like passing budgets in a timely manner. But progress is possible. The history on this issue is proof.

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Hey, Craft Brewer Looking at Distributors

PUBLIC SERVICE ANNOUNCEMENT

If you have an ownership stake in a craft brewery or are friends with someone who does, or you are planning to start a craft brewery or are friends with someone who is, or you think you might someday want to start a craft brewery or are friends with someone matching that description, this post is for you.

I have worked in the wholesale tier of the beer business as a Craft Beer Manager for five and a half years now. That doesn’t make me the be-all, end-all expert for the ages, but I promise you I understand the beer wholesale business better than anyone who has never worked in this part of the industry, which is most brewers, retailers, consumers, and the general public.

At this point I could fill an entire book with advice for craft brewers, but if someone cornered me and asked, “If you could only give one piece of advice to a craft brewer, what would it be?” I would say this: “Never, ever, ever sign a distribution territory agreement without having at least one conversation with every single wholesaler working the market where you want to sell your beer.” I don’t care where in the country your brewery is, or where it is you are looking to sell your beer, this is the cardinal rule of choosing a wholesaler.

to-sign-a-contract-3-1221952-mAt this point this seems self evident to me, but clearly it’s not, because I keep seeing examples of brewers not doing this, and all I can do is shake my head.

Even if you were approached by some really cool, super friendly dude from wholesaler X, and y’all totally hit it off and he obviously loves craft beer and totally gets what you’re doing, and his company has a top notch portfolio, and even if you heard some shit about wholesaler Y and/or you have concerns about some other brand or brands in wholesaler Y’s portfolio, and you’re sure you would never want to sign with them, have a conversation with wholesaler Y. Even if it’s only one. It is conceivable what you heard about them was actually a completely bullshit rumor. It is conceivable your concerns about the other brand(s) in their portfolio are unfounded. And, without having the conversation, you’ll never know if wholesaler Y also has some really cool, super friendly dude who totally hits it off with you and who also obviously loves craft beer and totally gets what you’re doing. And oh yeah, maybe wholesaler Y has a few dozen more sales reps and works a few hundred more accounts.

What’s that? Not every wholesaler works every account in a market? Correct. Some wholesalers have a bigger footprint than others in the same market. Some have better relationships with key accounts in a market. Some clean draft lines more frequently (or at all). Some have more cold storage. Some do a better job rotating stock. Some put more money into growing brands. Some don’t pay their bills on time.

And maybe you don’t want or need the bigger footprint, or the deeper pockets, or the larger square footage of cold storage. Maybe your strategy requires more focused hand-selling to a smaller number of accounts. Cool. You might very well still end up signing with wholesaler X and that may very well be the best thing for your business. But choosing a wholesaler without exploring all your options is like deciding your favorite kind of pizza is plain cheese without ever trying pepperoni or sausage or mushroom or bell pepper. You simply don’t know what you’re missing.

By the way, if that dude from wholesaler X who you totally hit it off with and who totally gets what you’re doing doesn’t offer you this same advice, if he doesn’t tell you to talk to all the wholesalers in the market, and visit their warehouses, then that should be a huge red flag. If the powers that be at a beverage wholesaler are confident in how they go to market and confident in how their operations stack up against the competition, then they will happily encourage you to talk to everyone. If they don’t, maybe they have something to hide.

In the United States, franchise laws make it nearly impossible for a brewer to terminate their relationship with a wholesaler without the latter’s consent, so picking your wholesalers is among the most important decisions you’ll ever make. Why would you ever take a shortcut on that?