Beer makers want control over distributors

BOSTON – Small craft brewers in the Bay State want greater control over the hiring n or more specifically the firing n of wholesale distributors of their product, and are backing new legislation toward that end.Rob Martin, owner of Ipswich Ale Brewery and president of the Massachusetts Brewers Guild, said a law enacted in 1971 makes it difficult, short of costly litigation, for brewers to switch distributors. At the time, he said, there were 100 craft brewers in the country and only one in Massachusetts n Carling Black Label out of Natick n while there were more than 50 small wholesale distributors.?The law was intended to protect the mom-and-pop distributors from the big brewers,” Martin said. Since then, the industry landscape has shifted dramatically, he said, with 1,400 brewers in the United States and 43 in Massachusetts, while wholesale distributors in Massachusetts have consolidated to about 10.Today, Martin said, its small craft brewers who need the protection from the wholesalers.?The way the relationship works now is the small brewer signs up wholesalers they believe is best for their brand, and if it turns out we?re not happy with the wholesaler, there?s no recourse ? I can?t just tell the wholesaler, ?Hey, you know what, I want to take my product to another distributor,?” said Martin, whose popular Ipswich Ale brand is available in Massachusetts, New Hampshire, Connecticut, Rhode Island, New York, New Jersey and Florida, and lesser known Stone Cat brand is available in Massachusetts, New Hampshire and Rhode Island.?We should be able to move our brands when (a distributor) is not performing,” he said.Martin described the relationship today between microbrewers and wholesale distributors in Massachusetts as “an indentured servitude.” Using a baseball analogy, he said, “What we?re looking for is what (Red Sox pitcher) Jonathan Papelbon has next year, unlimited free agency.”Under the current law, breweries must show “good cause” to switch wholesale distributors, reasons that could include disparagement of a brand by wholesalers or proof that the distributor failed to put its best efforts into promoting a specific brand.Should a wholesaler decide to fight a brewer?s request to take their brand to a competitor, expensive legal challenges can make it difficult for craft brewers to prevail, Martin said.?(Litigation) is costly and time consuming,” he said, and not something small brewers like Ipswich Ale can afford.Martin and other Massachusetts small brewers including Mayflower and Boston Beer Co. – maker if Sam Adams beers – are supporting a bill filed by state Rep. Alice Peisch, a Wellesley Democrat, and co-sponsored by 60 House lawmakers including Rep. Joyce Spiliotis, D-Peabody.The bill would create a carve-out for small brewers – defined as those producing fewer than 6 million barrels of beer a year, and who account for less than 20 percent of their wholesalers? business – to allow them to move their brands to another wholesaler without showing cause as long as the wholesaler is compensated fair-market value for the loss of business. The new law would provide for a 90-day binding arbitration process if both sides fail to reach agreement on a fair-market price.Peisch?s bill, H01897, was referred by the House on Friday to the Joint Committee on Consumer Protection and Professional Licensure.Meanwhile, a competing bill re-filed by a Rep. John Binienda, D-Worcester, would strengthen the power of wholesalers and further restrict brewers in the marketing of their brands.That bill, which brewers successfully fought last year, seeks to further protect wholesalers by preventing breweries that undergo a change in ownership from arbitrarily switching wholesalers without justification or compensation. The goal is to stop brewing giants like MillerCoors and Anheuser-Busch InBev, from moving their brands around after consolidation.Binienda admits his bill is targeted primarily at protecting the wholesalers from the major brewers an