Wisconsin's pending legislation affects breweries

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bniesen

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Taken from dpwigley:

Currently there is legislation being pushed through the Joint Finance Committee and SECRETLY into the budget bill without feedback from the small brewer!
The Chapter 125 Branch Legislation would:
All Wisconsin Breweries and Brewpubs will be negatively affected by losing their Wholesale and retail licenses and the benefits those licenses provide. With out this O’so wouldn’t have survived over the last ten months after our split with our local distributor! We certainly wouldn’t have hired two new guys, as we did, and wouldn’t of grown enough to be planning on the future!
Eliminates the current option of a brewer choosing to self-distribute or starting a Wholesale Distribution Company. For New brewers coming up, this is really bad because they will never have the chance to begin on their own keeping more of “their” money before choosing to go with distribution.
Eliminates a Brewers current right to have ownership in two restaurants. For all of you who eat/drink at the Great Dane, what will happen there???
Protects (Grandfather Clause) currents Wholesalers retail licenses, while eliminating that benefit for new start up Wholesalers.
Unfairly burdens new Wholesalers and breweries with a requirement of 25 separate independent retail customers before a Wholesale license can be granted.
Eliminates the ability of Brewers to sell existing retail or wholesale operations separately from the brewing operation. If you grow large enough to move a portion of your production to a industrial park, you would not be able to sell out of that location at all, if you chose to keep your retail/pint sales out of your “store front.”
Eliminates current Wholesale investment in privately held Wisconsin Breweries while allowing investment in out of state and foreign and publicly traded breweries.

The Story line from Wisconsin Beer Distributors Association (WBDA)/Miller-Coors: Small brewers are unaffected by these changes. Small breweries can do everything they can do today. Small brewers are “exempt” from changes.
This is simply not true.
We currently can hold two retail licenses. These licenses are issued by our local municipalities and are like all other retail licenses. They allow us to serve other breweries’ beer and promote the craft beer industry. A retail establishment owned by the brewery is a portable asset and can be sold like any other retail establishment. This proposal eliminates the ability to have a retail licenses and ties the retail establishment beer sales permanently to the brewery permit. It also limits beer sales to the products of the brewery only by the removal of the retail licenses.
We currently can hold a wholesalers license. It is also issued by our local municipalities. It is the same wholesale license as those held by any other wholesaler. It allows us to sell our beer, as well as other breweries beer. This proposal eliminates the right to hold a retail license. American Craft Beer Week was last week and in honor of it, many local breweriestraded beer to be on guest taps at each other’s locations, this would NOT be allowed next year if WBDA & Miller/Coors gets this threw legislation!
Why is WBDA and Miller-Coors be pushing this? Simple they are losing market share of sales. May the better beers win!!!
It is no secret that craft beer is gaining market share while the Miller-Coors and Inbev market share continues to decline. The WBDA can eliminate future serious competition by prohibiting craft brewers from getting together to open their own wholesalers. It is a very real scenario that in the near future small breweries in Wisconsin will be forced to get together regionally, and open wholesalers for their own and other craft beers. This is already happening across the country. Consider these facts: There were 92 wholesalers in Wisconsin in 1994. In 2007 there were 67. Today there are 42, and the number continues to drop. At the same time, the number of brands carried by these wholesalers has more than doubled. Distributor jobs have also been eliminated. The employee to brand ratio at the wholesalers has declined to the point that adequate sales representation no longer exists. Breweries are trying to band together to reverse this trend. These new brewery-owned distributors will also create new jobs that Wisconsin desperately needs, instead of eliminating jobs in the name of efficiency as wholesalers do as they consolidate.
Every small brewer uses their wholesale license today to sell to a few customers. Many brewers sell (with their wholesale license) to special events/festivals with permission from the wholesaler that has the assigned territory from the brewer because the wholesaler does not want to haul the beer, or man the booths, out to weekend festivals. These festivals have helped O’so grow quickly over the last three years. The first two years we were somewhere in the statebuilding our own brand! We shouldn’t have to do this without any sort of compensation. Most of us use this as our marketing! This proposal requires 25 or more customers, making start up of self-distribution nearly impossible. It would also not be possible for small brewery to get started by selling to a small local grocery store chain with 5-6 stores where the beer obviously would be well advertised and seen. This is often the only way to get started without giving up as much as 28% off the top in sales to a distributor in which you get lost at the bottom of their portfolio because as a small brewer you don’t have the money to give a way free things like New Belgium, Miller, Etc. We keep our money within the buildings to improve efficiency’s and create more jobs by being able to produce more product. If you build it they will come! We produce the product, why should the distributors have all the rights! It is our product, we should be able to choose if we want to do business with any distributor, not be forced to do business with them because they have more money to pad the representatives from Wisconsin’s pockets. A good distributor wouldn’t feel threatened, but learn to adapt to change and build a craft division!
Small brewers often look to wholesalers as a source of capital. Many times wholesalers have funds to invest, and a local brewery can be a good place to do so. Many small breweries see this investment as a way to gain market share with the wholesaler. Today, Wisconsin wholesalers can and do invest in both in-state and out-of-state small breweries. This proposal unfairly discriminates against WI small breweries by eliminating this potential source of capital while allowing wholesalers to invest in out-of-state breweries whose brands they carry. NOT that we would ever want to do this type of capital building.
Small brewers can currently own two restaurants, and some small Wisconsin breweries do. This proposal eliminates the ability to own a restaurant with a liquor license.
Governor and legislative leadership say they do not want to use the budget for policy.
This legislation is being pushed through the Joint Finance Committee and secretly into the budget bill, without input from us, small brewers, whose livelihoods are being threatened. This means that it doesn’t have to go through hearings and reviews that it otherwise would. Why is this being rushed through so quickly without proper input, debate, and disclosure?
Legislators and the governor say they are against more government and bigger government.
This legislation creates more state government bureaucracy, by transferring license administration from local municipalities to astate level agency, eliminating local jobs.
Sorry for the length of this note, but this is so important to share with all of you who drink our beers to know about and help us fight. The craft brewing industry is one that is providing real jobs in Wisconsin. O’so Brewing Company started in a strip mall in 2007 and is about to embark on a ¾ million dollar expansion, creating 7 full-time jobs over the next three years. We are part of a growing community of breweries that continue to have a recognizable impact on Wisconsin's economy. We started out very small and our only lifeline was the fact that we were allowed to self distribute. In fact, we had a split with our local distributor last August and the only recourse was to only sell our product out of the front of our brewing supply store because we could not use our license from the brewery because of contractual language. These sales kept us growing and kept our current 5 full-time employees with jobs. Some of these employees positions had already been eliminated by larger companies down sizing. Had the laws been different about licensing, I am not sure the outcome would have been the same for our survival, nor our employment of any of these employees.
The brewers and the Wisconsin Brewers Guild will NOT OPPOSE the joint legislation changes (Branch Legislation) provided we are TRULY Exempt.
• Current 50,000 barrel level of annual production for brewers to hold a Wholesale License would move to 300,000.
• Brewers under 300,000 barrels are completely exempt from all remaining changes proposed with “Branch Legislation” (meaning that any licenses that we are able to hold today, we would still be able to hold after The proposed changes go into effect)
So what do you need to do? Contact your local representatives! Tell them that you OPPOSE the Chapter 125 Branch Legislation unless it is written in that all current and future breweries (under 300,000 bbls) are exempt from these changes.
Information provided by The Wisconsin Brewers Guild. Do you want to help the WBG in having the money to fight this type of cause? Join the Wisconsin Brewer's Guild by becoming a WIBL member today.
 

bh10

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Ugh, did you read the thing at all? Im mean really, b/c this doesnt effect any micro, just macro breweries.

This is a MillerCoors vs. A.B. more than anything.

By the way there's another thread on here about this.
 

bh10

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Also, how does the governor have anything to do with this? I didnt know the governor was a part of the Joint Finance Committee.
 

bh10

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Here's a better understanding of the legislation, even the liberal Milwaukee Journal isnt mentioning Walker. :rolleyes:
Pending legislation that would prohibit brewers from buying wholesale beer distributors in Wisconsin is raising concerns among the state's smaller craft brewers.

The legislation is designed to prevent Anheuser-Busch InBev, the world's biggest brewer, from buying wholesale distributors.

Most of the nation's beer is sold by brewers to independent wholesalers, who then earn a profit by reselling the beer to supermarkets, taverns and other retailers. That so-called three-tier system has operated since Prohibition's repeal, and was designed to prevent brewers from operating monopolies making, distributing and selling beer.

But last year Anheuser-Busch won a court challenge to an Illinois law that barred out-of-state brewers from owning beer wholesalers, while exempting small Illinois-based craft brewers. Anheuser-Busch successfully argued that the law was unfair because it only applied to out-of-state brewers.

To avoid a similar court challenge in Wisconsin, the Wisconsin Beer Distributors Association and MillerCoors LLC, Anheuser-Busch's chief rival, are lobbying for a bill that would change a state law that regulates how brewers do wholesale distribution, said Tim Roby, association spokesman.

Under current state law, a brewer that wants to sell beer directly to retailers without using wholesale distributors must obtain a wholesale license. The proposed legislation would create just one permit for brewing and selling beer, which would streamline the licensing process, Roby said.

The proposal also would prohibit brewers from buying wholesale distributorships, while allowing brewers to do their own wholesale distribution of up to 300,000 barrels annually, said Roby and Pete Marino, a spokesman for Chicago-based MillerCoors. The current law allows brewers to self-distribute up to 50,000 barrels annually, Marino said.

Some Wisconsin craft brewers do their own wholesale distribution. Others sell their beer primarily through wholesalers, while also doing limited self-distribution by selling beer at festivals or filling emergency orders from taverns and other retailers. The state's largest independent craft brewer, New Glarus Brewing Co., sold about 92,000 barrels in 2010.

MillerCoors supports the proposal because it shares the concerns that wholesale distributors have about the possibility of Anheuser-Busch aggressively buying beer wholesalers throughout the country, Marino said. MillerCoors, created by the 2008 merger of Miller Brewing Co. and Coors Brewing Co., owns one wholesaler, and has no plans of buying additional distributorships, he said.

But craft brewers are concerned that the proposed legislation could include provisions that impose new restrictions on how they sell beer at the wholesale level, said Carl Nolen, president of Middleton-based Capital Brewery Co.

Part of the problem is that no legislation has yet been formally introduced, said Nolen, past-president of the Wisconsin Brewers Guild, a trade group for the state's craft brewers.

As a result, the bill has only been made available, in draft form, to a limited number of legislators and lobbyists. It doesn't yet have co-sponsors in the Assembly and Senate, and a copy of it cannot be found at the Legislature's Web site.

By avoiding that normal process of introducing legislation, the bill is being kept under wraps - bypassing a public hearing and extensive debate, Nolen said. He said the bill's supporters plan to attach it to the state budget bill now pending before the Legislature's Joint Finance Committee.

Roby said the bill will likely come before the Joint Finance Committee some time within the next few days. He said the legislation is being introduced that way to get it quickly passed before Anheuser-Busch can proceed with possible plans to buy beer wholesalers in Wisconsin. An Anheuser-Busch spokesman couldn't be reached on whether the company plans to buy any Wisconsin wholesalers.

The beer wholesalers association and other groups supporting the legislation have consulted with craft brewers about the proposal, Roby said.

Nolen, however, said the bill has been created in a "cloaked manner."
http://www.jsonline.com/business/122698854.html
 
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bniesen

bniesen

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How would it be possible for a small microbrewery to distribute their own product themselves under this? I would have to be picked up by a distributor to sell my beer to a local bar or grocer. How is this helping the little man who wants to get his brewery off the ground (small business in general)? Why do we need the middle-man?
Don't you think it looks pretty sleazy to cram this through in the last minute of the meeting about the State Budget? What does this have to do with WI State Budget?
It also doesn't look good when Miller/Coors wants this passed AND was also a campaign contributor to Walker. New Glarus and Capital Brewery both came out and said that this would hurt small breweries.
 

bh10

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All a small brewery has to do it get a license and bam, they can distribute their own beer. Again this is to stop, A/B from making a monoply on distribution.

A three-tier system sucks, we have one where I was from (Ga) and people wont open breweries b/c of it.

As for New Glarus, while I love their beer, they're so liberal, they'll say anything to make the right side look bad.

I still fail to see how Walker is involved.
 

Sandy

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bh10...this is VERY bad for small breweries in WI. MillerCoors is doing everything they can to convince people that this is good, and it's just inBev that they are trying to hurt. Do you really believe that...when has miller ever fought for the little guy? There is a reason they are trying to sneak this into the budget bill at the eleventh hour in the first place.

Here's a link that briefly outlines what small breweries and start-ups would lose with this:

http://positivebusiness.co/news/stop-millercoors-tapping-out-local-breweries
 

bh10

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bh10...this is VERY bad for small breweries in WI. MillerCoors is doing everything they can to convince people that this is good, and it's just inBev that they are trying to hurt. Do you really believe that...when has miller ever fought for the little guy? There is a reason they are trying to sneak this into the budget bill at the eleventh hour in the first place.

Here's a link that briefly outlines what small breweries and start-ups would lose with this:

http://positivebusiness.co/news/stop-millercoors-tapping-out-local-breweries
Thats old material, its been re-written since then. Look I dont have a dog in this fight, I dont like Miller at all, but while they might have a secondary motive with small brewers they're going after A/B, which is porbably the reason for the eleventh hour deal, A/B's lawyers (excellent ones at that) would have been all over this.

Like I said its been rewritten, since then so it wont negatively impact micro's.
 

Sandy

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Thats old material, its been re-written since then. Look I dont have a dog in this fight, I dont like Miller at all, but while they might have a secondary motive with small brewers they're going after A/B, which is porbably the reason for the eleventh hour deal, A/B's lawyers (excellent ones at that) would have been all over this.

Like I said its been rewritten, since then so it wont negatively impact micro's.
If you really read into it, the a/b thing is a smoke screen....they are after the growing market share of the craft breweries. You're right, the link i posted is a few days old, but it is still accurate...it has not been rewritten so as not to impact micro's. I won't argue that A/B is one of their targets, but they are certainly not their only target.

Maybe the most disgusting part of this that it protects current wholesaler’s retail licenses (except in the case of small breweries and brewpubs who will lose their wholesale and retail licenses), while at the same time eliminating that benefit for new start up wholesalers. Not only is this bill designed to thwart Miller/Coors current competition, it saves their sorry ass from the possibility of competition in the future. I personally know several small brewers in this state that would not have even been able to get started if they were required to have 25 separate retail accounts b4 being granted their wholesale license.

(FWIW...i agree with the fact that this has NOTHING to do with the governor)
 

Cpt_Kirks

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I am guessing, just a guess mind you, that the OP is a Union member. Possibly even, a public union member.

;)
 

JJL

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All a small brewery has to do it get a license and bam, they can distribute their own beer. Again this is to stop, A/B from making a monoply on distribution.

A three-tier system sucks, we have one where I was from (Ga) and people wont open breweries b/c of it.

As for New Glarus, while I love their beer, they're so liberal, they'll say anything to make the right side look bad.

I still fail to see how Walker is involved.
I have to disagree with the "liberal left wing agenda" crap. New Glarus is a successful multi-million dollar business. A successful business uses politics to protect their interests...period. Those who get involved in politics for the sake of politics don't last very long. Without fail, politics for politics sake alienates some portion of your customer base. It's just bad business.

But, I do agree the whole issue of Walker's involvement is kind of irrelevant. The main issue from a political perspective is that it's another bill that is being haphazardly written and forced through the legislature as a rider on an unrelated bill.
 

bh10

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I have to disagree with the "liberal left wing agenda" crap. New Glarus is a successful multi-million dollar business. A successful business uses politics to protect their interests...period. Those who get involved in politics for the sake of politics don't last very long. Without fail, politics for politics sake alienates some portion of your customer base. It's just bad business.

But, I do agree the whole issue of Walker's involvement is kind of irrelevant. The main issue from a political perspective is that it's another bill that is being haphazardly written and forced through the legislature as a rider on an unrelated bill.

Thats fine about using politics to protect there interest. But thats what Millers doing. ;)

As for NG, I have no problem a company using politics to help themselves, but being their National Health Care statement on their website and the crap they post on their FB page, they have a liberal agenda and a glaring one. Personally Id be happy, if politics were left out of my beer. :mug:
 

wheels4

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I dont know about this but I do know guys that have a successful Brewery. I also know AB paid them millions to get the distribution rights. Is this what they are trying to prevent? I have to say that selling the distribution to AB has helped them greatly. You can now buy their beer up and down the east coast.
 

marx102

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For the record the "liberal" Milwaukee Journal endorsed Scott Walker for Governor.
 

mrgoodcheese

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The small breweries (and future new small breweries) want to maintain their current rights to self distribute, which allows them to start up and grow. MillerCoors simply want to kill their competition (which equals a whole 3%).

Our nutcase governor, and those in our legislature trying to jam this through, will pass anything that benefits their wallets and agendas (until we get them recalled this summer and next year). Brewing shouldn't be political, but the wackos in our state have made it so with this crap.
 
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bniesen

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Scotty is going along with it. It just disgusts me that this was put in the State Budget Bill late in the night and at the last moment when it has NOTHING to do with the state's budget.
 

Yooper

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Let's keep the political chat out of it. It's an important issue- but if we talk about politics, it means that the thread will be deleted because it's against forum rules. I'm changing the thread title, also, as it's inflammatory.
 

cheezydemon3

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Moves things from 50000 or under to 300000 or under........600% higher = GOOD for the small breweries.:drunk:
 

jacksonbrown

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First things first, this legislation is now in the Governor's hands as it's part of the state budget. He is considering which parts of the budget to veto and there has been bipartisan support from legilatures to have him veto this. He'll be signing the vetoed budget on Sunday, June 26th, but has indicated he will not veto this.
Second, this would affect small breweries in that they would no longer be able to self distribute. Under current WI law they can bypass the distributors up to a certain amount. Taking away their right to distribute would mean more money out of pocket for smaller breweries and start ups. Also it would mean breweries that have a bar on sight (Ale Asylum, Tyranena, Lake Front) would have to go through a distributor to sell their own beer on their own premises. That part is particularly idiotic!
Brewpubs such as the Great Dane and Vintage are unaffected but are standing in solidarity by banning MillerCoors products from their bars.
Hope this helps.

CORRECTION

Turns out my second point is not correct. I got that info from one of our reporters and took it at face. I have since spoken to Jeff Hamilton, president of the Wisconsin Brewers Guild, and asked about that point. He flatly told me that it is not true. I did not follow up with a question about how bars in breweries would be affectred, if at all. He did clearify some things for me though.
Breweries that produce fewer than 300K barrels a year (which is all WI craft breweries) will still be allowed to self distribute. They will not be allowed to conolidate their efforts with other breweries. For instance New Glarus, and Capital might share a truck to distribute their beer to the same vendors. Under this provision they will not be able to do that. They will have to get their own truck and distribte on their own. Or, as proponents of the bill would like, hire a middle-man.
Similarly, contract breweries, such as Furthermore, who do not have a facility of their own will have to get a facility in order to distribute since the companies they contract with will no longer be able to distribute for them.
Basically it's a huge pain and tremendous expense for breweries. And a complete overhaul in how some do business. Hopefuly the Governor will veto it, but rumor is he won't. We'll have to wait and see.
Sorry about the earlier mistake.
 

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First things first, this legislation is now in the Governor's hands as it's part of the state budget. He is considering which parts of the budget to veto and there has been bipartisan support from legilatures to have him veto this. He'll be signing the vetoed budget on Sunday, June 26th, but has indicated he will not veto this.
Second, this would affect small breweries in that they would no longer be able to self distribute. Under current WI law they can bypass the distributors up to a certain amount. Taking away their right to distribute would mean more money out of pocket for smaller breweries and start ups. Also it would mean breweries that have a bar on sight (Ale Asylum, Tyranena, Lake Front) would have to go through a distributor to sell their own beer on their own premises. That part is particularly idiotic!
Brewpubs such as the Great Dane and Vintage are unaffected but are standing in solidarity by banning MillerCoors products from their bars.
Hope this helps.
That's a good syopsis. The part that bothers me is the inability to self distribute even to their own patrons!

For example, Lakefront Brewery would have to sell their beer to a distributor. And then buy it from the distributor to serve it in their taproom.
 

mrgoodcheese

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Walker didn't introduce this bill. Alberta Darling did.
And she is in the same line for corporate handouts as Walker. She's being recalled and will be removed because her constituents don't like what she's done, this included.

First things first, this legislation is now in the Governor's hands as it's part of the state budget. He is considering which parts of the budget to veto and there has been bipartisan support from legilatures to have him veto this. He'll be signing the vetoed budget on Sunday, June 26th, but has indicated he will not veto this.
Second, this would affect small breweries in that they would no longer be able to self distribute. Under current WI law they can bypass the distributors up to a certain amount. Taking away their right to distribute would mean more money out of pocket for smaller breweries and start ups. Also it would mean breweries that have a bar on sight (Ale Asylum, Tyranena, Lake Front) would have to go through a distributor to sell their own beer on their own premises. That part is particularly idiotic!
Brewpubs such as the Great Dane and Vintage are unaffected but are standing in solidarity by banning MillerCoors products from their bars.
Hope this helps.
Well put.
 

rexbanner

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Let's keep the political chat out of it. It's an important issue- but if we talk about politics, it means that the thread will be deleted because it's against forum rules. I'm changing the thread title, also, as it's inflammatory.
But this is pretty relevant. It wouldn't matter who is sitting in the governor's office, the fact is that Miller-Coors donated 22k to Walker's campaign, which doesn't seem like a lot, but it's probably close to the maximum allowed under the soon-to-be-gone campaign finance laws. Yes, M-C probably hands money out to scores of politicians, but honestly, I think this demonstrates just how full of **** most politicians are who go on and on about "helping small businesses." Small businesses are in many cases enemies of big businesses. This is just one little example among thousands.
 

logan3825

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I thought the rumor is this was one of the things Walker was considering for veto.
 

motobrewer

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i thought this was the main issue:

What the motion fails to explain is that in order to self-distribute into a previously assigned territory,
breweries with current contracts are required to purchase distribution rights for their brands back from
the existing wholesaler, generally at a cost of 3 to 5 times the previous year’s gross sales. Most small
brewers do not have that sort of capital available to them, which leaves them essentially “stuck” with a
wholesaler, even if that wholesaler’s performance is questionable. Similarly, if a brewery wishes to
change from one wholesaler to another (assuming that there IS another wholesaler in that territory), the
same sort of compensation for brands is required. It’s quite a costly transaction…
from
http://www.tyranena.com/BadNewsMotion414.pdf
 

jacksonbrown

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From Furthermore:
What is Furthermore Beer?
As a brewer by trade, I have always consider my business to be a brewing company even though we started out lean and mean without an actual brewing facility--we use Sand Creek Brewing Company's equipment to get the job done. As it happens, the Federal Government says that if a business does not own stainless steel, then it cannot be a brewer. Instead, it must sell its product as a wholesaler. So, Furthermore Beer holds a wholesalers permit that allows us to buy our beer from our contracted producer, and then resell it to retailers or distributors as we see fit. We began doing so by self distributing our product until such a time that it was clear that more capable, established distributors could do a far better job at hauling beer around the state. Unfortunately, one aspect of Motion 414 will force the DOR to penalize Furthermore Beer to the tune of $10,000 anually if we do not have 25 or more retail customers. Well, recognizing the strength of the established second tier, we gave up all of our retail accounts and now only have 5 distributors in WI to whom we sell beer. One option we do have is to sever ties with one or more retailers and take back the retail accounts. Aside from this running counter to the spirit of the motion--to help wholesalers maintain their place in the flow of product, we would have to buy back the territorial rights at a cost greater than the DOR fine.

Furthermore has been very grateful for the relationships it has established with its distributors, from helping us see the market through their eyes to offering their backs to actually move the beer. They have allowed us to grow in sales, and to crash on their couches. My concern with Motion 414 is not the degree to which it strengthens their position in the market, but the degree to which it could push me out.
 
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