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Wisconsin Proposal Hurts Craft Beer, Protects Big Brewers

In the battle between international brewing giants SABMiller and ABInBev, Wisconsin craft brewers could bear the heaviest burden. On May 31, the state legislature’s Joint Finance Committee approved a measure to be added to the state’s budget proposal which would prevent brewers from owning distributorships and retail licenses in Wisconsin. This means that if you’re a brewer, you can’t also sell alcoholic beverages to customers or retail shops.

The biggest backer of the bill is SABMiller, or as it is known in the US, MillerCoors. They have been pushing the measure, they say, in order to protect the vitality of Wisconsin beer in the face of a hostile invasion from their main national competitor, AB InBev, aka Anheuser-Busch. InBev has reportedly begun a nationwide campaign to purchase distributors in many states, something that MillerCoors says threatens all other brewers’ ability to get their beers in bars and on shelves. That’s the line that MillerCoors is peddling, but craft brewers in Wisconsin say they, and their ever increasing presence in the beer market, is the true target of the proposal.

While the text of the measure has not been made available to the public yet, the proposal would reportedly remove brewers’ current right to own wholesaler and retail licenses. Brewers of less than 300,000 barrels annually will still be able to self-distribute, but current brewers and new wholesalers would be required to have 25 independent retail customers prior to being granted the right to distribute. According to a MillerCoors spokesperson, these new rules would also prevent small brewers from banding together to form their own distributorship. In addition to all of that, the measure would prevent brewers from owning retail licenses, meaning that they could have a brewpub, but they would only be allowed to sell their own product. Breweries that already own retailing outlets would be allowed to retain one.

Craft brewers say that MillerCoors is pulling a fast-one on the states legislature by selling this as a bill that would protect small beer from the brewing behemoth InBev’s plan to monopolize the Wisconsin wholesale market. Craft brewers say that this is clearly not InBev’s intent, as they have passed up opportunities to purchase wholesalers in the state no less than 16 times since 2008. They say the real competition that MillerCoors is trying to protect itself against is the growing craft beer market. The restrictions the measure places on any wholesaler wishing to start-up in Wisconsin seem to support the craft brewers’ claims.

If this measure passes, life will become much more difficult for small brewers getting started in the state and will likely stifle current brewers’ plans to expand. While brewers who already hold retail licenses will be allowed to keep one, new brewers will not be able to acquire the retail license required to own a bar or restaurant. For some, this is the only way their breweries could survive.

Wisconsin brewer Don Zamzow of Bull Falls Brewery said that they would have struggled to get started without their retail license. Zamzow said that in the beginning almost all of its money came from the taps at its Wassau-based bar until they found other places willing to stock Bull Falls beer. The brewery still makes 80 percent of its sales at that bar.

This is a job- and business-killing measure. If MillerCoors is truly worried about InBev monopolizing the market, then they ought to be supporting legislation that makes it easier to form distribution channels, not more difficult.

Monopolies are rarely sustained in a market without regulatory restrictions to protect them from competition. This is exactly what the MillerCoors-backed measure would do: it would protect the established MillerCoors distribution channels already in place in Wisconsin and make it impossible for new wholesalers to come into the market. A voluntary three-tier system where any brewer could become a distributor would ensure that no beer maker could ever be "locked out" of the market by Miller, Busch, or any other large company because, as a last resort, they could always distribute on their own.

If Wisconsin lawmakers want more businesses, more jobs, and more beer, they ought to create a system that makes it easier, not tougher, for brewers to become distributors and retailers.