A bill permitting big brewers to give away branded glassware to bars and restaurants is sailing through the Legislature. Currently, retailers must buy such glassware at cost. The proposed legislation, HB 853 (Rep. Tom Goodson, R-Rockledge) and SB 1040 (Sen. Frank Artiles, R-Miami) could shut Florida’s craft brewers out of your favorite pub.
The number of tap handles in a bar or restaurant is limited by the amount of space available for bulky refrigeration units and tap lines. In today’s beer market, competition for a piece of that prime real estate is fiercely competitive. The judgment about which beer gets a tap handle is currently based on factors such as consumer demand, whether or not the brand is brewed locally, the taste and quality of the beer, and cost to the retailer.
But if big brewers are allowed to give away glassware, the brands imprinted on individual glasses will dictate which beer goes on tap. This will transform the competition for tap handles into a pay to play contest. Such a scheme is anti-competitive on its face and violates free market principles espoused by so many legislators on both sides of the aisle.
Craft brewers cannot play in the giveaway sandbox because glassware is expensive. The cheapest pint glasses are about a dollar each and the fanciest cost up to five dollars. With 26,000 bars and restaurants in Florida, the big players will dominate. Florida Brewers Guild lobbyist Josh Aubuchon told the House and Senate such legislation will create an “arms race” craft brewers cannot win.
A Trojan Horse
It doesn’t take a genius to see the motivation behind the free glassware play. According to Beer Business Daily domestic premium beers are “in real trouble.” Overall, beer sales were up less than 1 percentage point in 2016 -- about 1/3 of a percentage point to be precise. That miniscule increase was driven by imports and craft. Meanwhile, domestic premiums, including the most popular light beers, lost the equivalent of approximately 6 million kegs!
One industry executive testified before Congress that anti-competitive behavior by certain large brewers could lead to “the scale and market power to dictate brand choices and beer sales.” The United States Department of Justice and two United States senators expressed similar concerns.
On the other hand, retailers support the idea of free glassware and frankly, who can blame them? Don’t we all like free stuff?
Unfortunately, craft brewers are more vulnerable to tactics such as financial inducements to retailers than one might think. Stone Brewing co-founder Greg Koch, a leader in the craft beer industry, recently told Fox News that he "would counsel someone not to get into the business today." Koch’s advice is buttressed by layoffs at respected craft breweries such as Koch’s Stone and Green Flash.
Slotting fees are legal in some industries, including cereal, soda and snack food, but Florida’s “tied-house laws” do not permit such payola in the beer industry. Instead, they stifle monopolistic behavior.
Today, America is making the best beer in the world with U.S. consumers enjoying unparalleled choice and variety. The number of breweries has grown from 82 in 1980 to a record 7,190 today. The surest way for lawmakers to halt this growth is to tilt the playing field in favor of big brewers.
In the case of alcohol, picking winners and losers may also be dangerous public policy.
Too much coziness between brewers and retailers has traditionally been discouraged as a method of preventing underage drinking, stopping the serving of intoxicated patrons, and avoiding deep discounting that encourages over-consumption and drunkenness. Studies by the federal government, University of Florida, University of North Carolina, and Harvard University, tend to demonstrate such precautionary efforts are worthwhile.
For consumers of craft beer, for our families, and for our small, local craft brewers, the Florida Legislature should not permit further erosion of our state’s alcohol beverage laws.
Eric Criss, Ph.D. is adjunct professor of advanced public policy at Florida State University and President of the Beer Industry of Florida.