Yes, this is a blog about farming. But on occasion something comes to my attention that fits in with enough of the disparate themes of this blog to merit inclusion, even if it’s not directly about farming.
So please bear with me as we delve into…Beer.
Since this is the internet and you likely don’t know me, I might need to mention that in addition to being a farming enthusiast, I am also a beer-brewing enthusiast.
Like all homebrewers I have had my momentary flirtations with the idea of starting a brewery. Like 99% of homebrewers, I promptly abandoned those flirtations in the face of the most burdensome and labyrinthine of regulations known to small business.
In many ways, small breweries face many of the predicaments that small farms do. They compete against mega-conglomerates that can out-price them into oblivion. Yet they can pay more attention to their product and their customers, and wind up creating a vastly superior product.
So knowing all of this, it became so very hard to read the last 3 paragraphs of this article.
You see, the mega-conglomerate breweries have been losing ground at an alarming rate to the small start-up breweries. But instead of improving their products, they instead are focusing on leveraging their regulatory (political) muscle to push the little guys out of business.
Most states have laws that mandate that breweries cannot directly sell their products to consumers. They are required by law to go through middlemen called distributors. The distributor’s job is to buy from breweries and sell to liquor stores, bars, and the like. The big breweries love this arrangement. They fight to keep it going every chance they get. This is because the big breweries have the muscle to force distributors to do what they want. Essentially, they say “Do what we want or we won’t let you sell our beer.” This is a big deal to the distributors, even if the big breweries market share is slipping, they still make up 50% of the distributors sales. Add to that the fact that the little breweries would rather not have distributors at all, and you quickly realize who’s side the distributors are usually on.
The whole rotten system is held up by the facade that the big breweries and the distributors are two very separate entities with very different interests, neither of which holds sway over the other. This whole facade is blown to smithereens in the closing paragraphs of the WSJ article.
“The company warned that wholesalers who aren’t tightly “aligned” with Anheuser might be prevented from acquiring other wholesalers through equity agreements.”
InBev, the biggest of big breweries, is telling their distributors in no uncertain terms, that they better start towing the InBev line by shutting out smaller breweries. InBev is essentially making a public admission of anti-competitive practices.
“Mr. Edmond isn’t making any apologies, saying wholesalers will have to decide which brewer they want to partner with most closely.“
Clearly the big breweries aren’t embarrassed in the least to show us all that they are willing and ready to throw their weight around to shut out their competition, even if it means that you, the consumer, will suffer in the end.
