May 29, 2017

New beer laws needed this saison

Rob Burns

Antiquated franchise regulations are holding the craft beer industry in Massachusetts captive.

Quick history lesson: In the 1970s, when Massachusetts franchise laws were enacted, there were about 60 mom-and-pop wholesalers who were completely dependent on just a handful of major national brewers. If a major brand decided to end the relationship, the wholesaler was out of business.

Today, the system has completely flipped. Now less than a dozen wholesalers operate in Massachusetts, and each of them carries hundreds of brands of both domestic and imported beers. The loss of any one brand will not significantly impact their business operations. By contrast, brewers are locked into their relationships with wholesalers, with virtually no way out. If the wholesaler can't or won't get a brewery's beer into stores, this will hamper the brewery's sales, growth and job creation.

Modernizing the rules for craft brewing during this year's Massachusetts legislative session will create new opportunity and continued innovation.

Craft brewers and wholesalers should be working together to grow their businesses, which rely upon each other. The legislation proposed by the Massachusetts Brewers Guild is designed to create more fairness for brewers, not by hurting the wholesalers, but by amending the process.

We propose a change that leaves the current three-tiered system in place and would leave most of the current regulations intact. It would create a 90-day binding arbitration clause to settle disputes between craft brewers and wholesalers, ensuring legal battles don't drag on for years, even as the parties are forced to continue working together. The bill would define which craft brewer/wholesaler relationships would be eligible for the binding arbitration process, and ensures that wholesalers are still compensated whenever a craft brewer moves.

It all comes down to fairness. The current system creates an atmosphere whereby brewers are expected to enter a relationship they cannot modify at all, at any time. All brewers ultimately want is the ability to choose a business partner they can work with to grow their business. If the relationship works, then keep it. If it doesn't, then change it. Simple as that.

As the president of the guild, as well as a co-founder of Night Shift Brewing, I have experienced these pressures first hand and can tell you that these laws are the single largest inhibitor to distribution growth. Our members from across the state are afraid to enter relationships with distributors for fear of losing control of their brands and ultimately, their businesses. They know their needs can change over time and the current system doesn't allow for this basic business principle.

The craft beer industry is growing despite these challenges. Can you imagine how much more growth, job creation and great beer would be created by updating the system?

-Rob Burns is president of the Massachusetts Brewers Guild and co-founder of Night Shift Brewing in Everett.


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