I supported the bill in its original iteration for a few reasons:
- It was good for true craft competition - basically it would have harmed breweries like Karbach, punishing those who choose to "sell out."
- Fears of "ratcheting down the limit" I think are overblown. Sure, the distributors will probably try to do something like that eventually, given how greedy and old-dinosaurish they are, but there'd be at least two years before they could even try, thanks to the archaic legislative process, and that's all a big assumption based on "distributors are evil" which I don't think is true. I think it's more reasonable to say that they're just dumb and grasping for straws.
- I don't care about a brewery's book value as a consumer. This is the point where I disagreed with the breweries. While many breweries probably look at #1 and agree, and some likely look at #2 and agree, this is the point where my interests as a consumer and their interests as producers no longer dovetail. There are two reasons I don't care about the fact that this bill will decrease (in theory) the book value of a brewery:
- It decreases the book value because it lowers the potential value for a buyout - i.e. a new buyer would be less likely to be able to sell beer on premise, and that would lower their interest. This is great! As someone who wants fewer buyouts and less consolidation, I am happy for this side effect, not unhappy. Nor should other consumers who want less consolidation and greater choice. This is an unintended side effect.
- I strongly believe that worries of capital being harder to raise through debt and private investment opportunities due to this "decreased book value" are overblown and mostly unfounded. This also has two reasons behind it: First, right now debt capital is literally there for the taking; banks are trying so hard to lend money, I've never seen debt availability this high, it's frankly absurd. (And topic for another time, a very good indication that we're fast approaching another recession.) And second, those decreases in book valuations are based entirely on hypothetical limits that are fairly astronomical compared to where most breweries are - the largest Texas breweries are producing 60k bbls. Small breweries looking for small investment rounds are nowhere near that and won't reach 175k without incredible growth (and therefore incredible RoI) such that any investor worth the money they're investing won't see any noticeable decrease in value.
That said, now that the bill has morphed into a way for distro to claw back money from those big guys, I no longer think it's a good idea and I no longer support it. It doesn't really execute #1, reinforces the conclusion of #2 (that they're dumb and grasping), and the value
for me in #3 is not outsized enough to be worth the risks when #1 isn't happening. That is, I can see some downsides in potential decrease in book value, but find that as a consumer that's outweighed by the benefits of punishing consolidation, something that the bill in its current form no longer does. So the equation is not positive.
Sad.
[One tiny note: it's important to remember that as consumers, our interests usually but not always intersect with the interests of the producers. This means that while it's a good barometer to see how the breweries feel about something, it's by no means a perfect barometer. One simple example: I wish it were legal for out-of-state breweries to ship beer directly to consumers in Texas. The Brewers' Guild, on the other hand, (although they might not lobby against such a thing) does not support this. Why would they? It's increased competition from out of state with no investment in state...]
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