Small brewers seek exemption in beer wholesalers' rights bill
By Jon Chesto
The Patriot Ledger
Posted Jul 14, 2010 @ 05:00 AM
Last update Jul 14, 2010 @ 09:33 AM
A bill aimed at protecting local beer wholesalers’ rights is brewing controversy among local craft beer companies.
The bill, which advanced in the State House earlier this month, would require a beer wholesaler to be reimbursed for the value of a lost contract if a beer brand is sold and the new owner switches wholesalers.
The legislation is supposed to protect the state’s distributors from being trampled by beer giants such as MillerCoors and Anheuser-Busch InBev as the beer industry consolidates.
Current state law makes it easy for brewers to sever relationships with Massachusetts wholesalers if a change in ownership occurs, according to the Beer Distributors of Massachusetts. Many distributors get the bulk of their revenue from one beer manufacturer, and their future would be jeopardized if they were dropped.
However, Massachusetts craft brewers argue that they’ll be unfairly penalized if the Legislature passes the bill. They have been asking lawmakers to support an exemption for small brewers.
John Stasiowski, president of the Beer Distributors of Massachusetts, said the craft brewers’ language needs more time to be vetted at the State House. He said his group is willing to address the craft brewers’ concerns in a separate bill. But he worries that the exemption, if added, could flatten this bill’s chances – with the Legislature scheduled to adjourn from formal sessions on July 31.
Stasiowski said small brewers can terminate contracts with wholesalers if they show good cause that the wholesaler isn’t living up to terms in the contract. “They don’t want to go through the time and effort that’s available to them,” Stasiowski said.
But Rob Martin, owner of Mercury Brewing Co. in Ipswich, said getting out of a bad distribution contract isn’t easy for a small brewer.
“If you find that the wholesaler isn’t in fact doing a good job, in order to get out of it, typically it goes to litigation that we can’t afford,” Martin said.
Martin said the wholesalers’ bill could hurt the value of his company if he eventually retires and wants to sell it. He said it could force the new owner to honor contracts with any distributors that aren’t performing.
Drew Brosseau, founder of Mayflower Brewing Co. in Plymouth, said the system could eventually limit the availability of some craft beer brands – if lawmakers don’t approve a “carve-out” for small brewers.
The House on July 1 took a procedural step that sets up the beer distributors’ legislation for a possible floor debate.
Rep. Theodore Speliotis, the House chairman of the consumer protection committee, said his committee didn’t add the small brewers exemption to the bill out of concern that it could be viewed by a judge as an improper restraint of interstate commerce.
Lawmakers are particularly sensitive to antitrust concerns after a state wine-shipping law that included an exemption for small wineries was successfully challenged in court.
Speliotis said the craft brewers’ concerns merit more discussions. He said he’s not sure there’s enough time to address those concerns before the formal sessions end for the year.
Jon Chesto may be reached at email@example.com.