Reform on Tap Task Force: Distributors and Brewers Start Getting Real (3rd Meeting)

Editor’s Note: In full disclosure, I am a member of the Reform on Tap task force and not a third-party observer.

It’s been almost a month since I’ve written here and since the last Reform on Tap task force meeting took place at Monument City Brewing Company in Baltimore. It was a very emotional meeting, where you started to see some of the lingering frustrations — of both brewers and distributors — bubble to the surface.

I left that day with six pages worth of scrawled notes, somewhat stunned. But since I have a habit of running my mouth like an idiot before my ideas are fully-formed, I opted to let the experience simmer; I’m glad I did.

This series of task force meetings were bound to get uncomfortable around certain topics — although I think some were hoping for fireworks right out of the gate — I think it is very appropriate that it did during this third meeting.

I will not be able to cover everything that happened in great detail in this post — there are larger themes I want to touch upon — so I would invite you to watch the recording of the meeting itself.

Specifically, the back and forth that started around the ~1 hour, 15-minute mark, which carried through the Franchise Law discussion and picked up steam toward the close of the meeting.

So, What Happened?

The purpose of the meeting was simple — to have distributors share their stories, as well as their fiscal and economic contributions to the communities around the state of Maryland.

Now, I want to begin this by saying very clearly that I am actually a supporter of the three-tier system, as are many brewers who have repeatedly expressed to me their complete lack of desire to “get in the trucking business.” My personal opinion is that the three-tier system has a purpose, but in Maryland, brewers are often left at a distinct disadvantage that must be resolved.

In short, the scales of the three-tier system need to be brought back into balance.

With that disclaimer out of the way, let’s dive in. We had a number of speakers who shared their stories and presentations, the full list of which can be found on the agenda.

In addition to a comprehensive presentation by Lester Jones, the Chief Economist for the National Beer Wholesalers Association — which I will be coming back to in a later post — we heard a lot of stories about how distributors built up their business and are now job providers and active contributors within their communities.

Given the current state of affairs, I know many of you craft beer lovers might be tempted to roll your eyes at their stories. While I get the urge to do so, you shouldn’t.

For instance, Betty Buck‘s story of being a “Maryland girl, born and raised,” and how Buck Distributing began with her father and a single truck is an impressive success story, and one very much in-line with our Camelot-esque notion of the American Dream of building something out of nothing.

And Buck’s mantra of, “When you get your living from the community, you owe something back,” is an important one that I think many of us can rally behind.

Distributors also offer a diverse range of jobs for a skilled workforce, often providing full health care benefits — not a guarantee in today’s climate — and an average salary for employees at some places of $55,000 per year.

They sponsor little league teams, raise money for firefighters (and other causes), and put on community events. With these facts, there is no doubt in my mind that distributors are valid small businesses that are vital communities.

But an acceptance of these facts is not the issue.

Drawing False Comparisons Between Distributor and Brewery Contributions

As their various stories unfolded, here and there I began to notice a trend of some speakers — not all — making subtle comparisons between themselves and today’s Maryland craft brewers. Such as a cited average wage of $15,000 at craft breweries falls woefully short of $55,000.

This is problematic for a number of reasons.

First, I’d be curious to know what the average wages are of craft breweries that are equally established as many of the distributors present during this meeting — Flying Dog or Heavy Seas, for example — because otherwise, it is a false equivalency that devalues the current contributions and future potential of breweries.

The vast majority of Maryland craft breweries we know and love today are still only a few years old. Denizens Brewing Company (Silver Spring) celebrated their 3rd anniversary this past weekend, and both Monocacy Brewing Company (Frederick) and Union Brewing Company (Baltimore) will mark their 5th anniversaries in August.

And many more are much, much younger than that.

On the other hand, as retailers and distributors were quick to point out during the first meeting, a good number of them are family-run businesses who have been around for decades.

When Betty Buck’s dad started his business with a single truck, he probably would not have been able to offer the benefits and salaries they are capable of today. But his business was given a chance to grow; there wasn’t systematic pressure to keep him — or his particular industry — down.

That’s why, while I respect the hell out of these distributors and what they’ve built (I could never do it myself), this line in the sand they’re drawing where they’re propping up their contributions against those of brewers is dangerously misleading and, in some cases, condescending.

For example, Attaboy Beer (Frederick) is also a family-run business. Should the Ogdens not have the same chance to be as successful as the Bucks?

Photo of Carly and Brian Ogden — and their son, Tom — from the Frederick News-Post.

Maryland Brewers Are Already Making Contributions in Their Own Ways

While the vast majority of brewers are still maturing, that hasn’t stopped a lot of them from doing their part.

Denizens Brewing Company is a great example of that, where co-founders Julie Verratti and Emily Bruno have made a commitment to take care of their people, as I wrote about in my most recent column for The Capital:

“We provide health insurance to every employee who works more than 30 hours a week, regardless as to whether they’re salary or hourly,” [Verratti] said. “We also offer English language classes to our Spanish-speaking employees. Not just to help them here, but also just to help them move up in the world, in general.”

Even employees who started out running food in the taproom have had a chance to get their foot in the door with craft beer and are now members of the brewing team.

In addition to empowering others, they believe in being an active member of and contributor to their community. For instance, of the four yeast strains they manage, one comes from graduate students at the University of Maryland — giving them real world, commercial experience. (Full Article)

In terms of community impact, Flying Dog (Frederick) has done a lot in this regard, considered a “leader” when it comes to breweries giving back to communities.

Flying Dog and Oyster Recovery Partnership for Chesapeake Bay Restoration

Flying Dog Supporting Maryland Watermen and Local Seafood with True Blue

And, as luck would have it, the Patterson Park Audubon Center was hosting a weekly, family-friendly event at Monument City Brewing Company, while we were there, having our meeting.

This is just a small sampling of what breweries are doing to provide stability for their employees and give back to their communities; imagine what brewers can do collectively — in the same way that distributors do — if they are allowed to be successful.

That’s why I find it so frustrating that there is this implication that what distributors are doing must be safeguarded at all costs, no matter what other businesses or industries are kept down in the process. Their priorities and their businesses matter more.

More Questions Than Answers

To be honest, when I look through my notes, I see how many questions were left unanswered for me. Instead of trying to make sense of them, it seems much easier to just this them for you.

Please note, these are stream-of-consciousness questions that came to mind as I listened to others speak.

  • Do distributors think it is more important that they stay in business over craft brewers?
  • Should breweries be entitled to the chance to grow and see a similar level of success?
  • Do distributors believe breweries have the capacity or the potential to be community contributors at the same scale, were they given the chance to do so — or is that unique to their particular business?
  • Do wholesalers and brewers have a shared definition of positive economic impact? What about economic development?
  • Is the real concern for wholesalers and retailers that their businesses will be harmed or that relaxing limits in Maryland for brewers will yield catastrophic results for the three-tier system at large that has somehow not manifested itself in other states with fewer restrictions?
  • Distributors have up to six months to implement corrective action if a brewer has a valid complaint — this is what’s called “Franchise Law.” (Around the region, 60 to 90 days is the average, with no notice required in Washington, D.C.) But if there is something seriously wrong, what will that six month-period do to a brewery that is just getting their start, where they are dependent on their distributor to help them be successful?
  • What makes beer so different from wine or spirits, where such a franchise agreement is not required?
  • Also, what is it about Maryland that doubles or triples the amount of time distributors need to take that corrective action that you don’t see in other states, if a brewer has a valid complaint?
  • Distributors present at the meeting admit there are “bad apples” in the bunch that aren’t good partners to their brewers — and many brewers say those that are present are great partners. However, if they’re insisting that we can’t “throw the baby out with the babywater,” as was said during the meeting, by penalizing all distributors, why did they do that to brewers with House Bill 1283? If you recall, Del. Talmadge Branch initially felt moved to submit his operating hours repeal bill after visiting one brewery — the name of which he could not recall — that “felt like a bar,” and hearing unverified rumors that “some” breweries were staying open after hours.

The Distribution Discussion Continues

The fourth meeting of the task force will be taking place this afternoon at Jailbreak Brewing Company (Laurel). If you are not able to attend, it will be streamed live on the Reform on Tap Facebook page.

Given that I wasn’t the only one who left with more questions than answers — and the fact that we didn’t even get to touch upon the new brewery taproom buyback provision — we will still be talking about brewers and their relationship with distributors.

All meetings are open to the public, with a full schedule available here.

Editor’s Update: July 21, 2017

The full video of the fourth meeting that took place on July 20, 2017, is now available for viewing.

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