Brewers Association | BA Position Statements

The Brewers Association developed position statements on the following issues:

H.R. 1161
Independent Three-Tier Beer Distribution System
Brewery Direct to Customer Sales
Alcohol Content in Beer
Franchise Laws/Access to Market
Independent Wholesalers
Excise Taxes
Underage Drinking & Driving Under the Influence

H.R. 1161

The Brewers Association (BA) opposes H.R. 1161 and its lack of protection for the concerns of America's small brewers.

H.R. 1161 was introduced in March 2011 on behalf of beer wholesalers working through their national trade association. As currently drafted, H.R. 1161 would amount to an abandonment of Congressional authority over key areas of interstate commerce in alcohol beverages. It would undermine existing federal authority over taxation, product composition, labeling, advertising, and importation of goods from other nations. These are issues on which national uniformity of regulation is essential and has protected both the public and industry for more than 75 years. H.R. 1161 invites states to enact inconsistent laws that subtly discriminate against out-of-state businesses. Such laws needlessly raise costs and impede small brewers’ efforts to expand into new markets.

For the forgoing reasons, the Brewers Association cannot support H.R. 1161 as currently written. The Brewers Association supports the current successful system of state-based regulation and independent three-tier distribution for alcoholic beverages, but we strongly oppose enactment of state laws that foster economic discrimination. Brewers Association members work every day with beer wholesalers. The debate over H.R. 1161 has been an unfortunate setback in various efforts by small brewers to gain more equitable treatment under state laws.

HR 1161 Joint Producer Letter

Summary of what H.R. 1161 legislates:

Protects state alcohol beverage laws that permit subtle forms of discrimination against industry members from other states. The bill authorizes enactment of state laws that would otherwise violate the dormant Commerce Clause, denying small brewers rights enjoyed by all other American citizens and businesses.^‡
Repeals a portion of the Wilson Act, a late Nineteenth Century federal alcohol beverage law that federal courts have cited for the proposition that a state must regulate alcohol beverages produced in that state and alcohol beverages produced in another state in an even-handed manner.

‡ The "dormant" Commerce Clause is a legal theory used by federal courts to strike a balance between federal and state regulation. Our Constitution and our entire form of government were designed to ensure free movement of people and goods from state to state and to prevent a state from protecting its economic interests by enacting laws that discriminate against goods and services from another state. Courts have developed a theoretical framework to analyze lawsuits challenging state laws that affect interstate commerce. The dormant Commerce Clause is a part of that framework and it is a concept that limits states from unwarranted interference in interstate commerce. States still possess significant legal authority to protect the public, and the dormant Commerce Clause is a key part of most federal judicial decisions seeking to balance federal and state concerns.

H.R. 1161 would accomplish the following:

Its provisions would harm consumers and the marketplace, limit consumer choice, and allow states to enact protectionist and anticompetitive laws. If this bill became law, it would make it much harder for brewers, vintners, distillers and importers to get their products to market.
Effectively restrict the right of consumers and industry members (brewers, winemakers, distillers, importers, wholesalers, retailers, etc.) to challenge unfair state laws or regulations.
Allow political interests in each state to work with allies in state legislatures and regulatory agencies to impose taxes or regulations on out-of-state businesses that would ordinarily be illegal or unconstitutional.
Reopen old legal issues, such as onerous pricing regulation, nuisance regulation, reporting requirements, unique state labeling requirements, and other forms of state regulation that appear to apply equally, but are really calculated to make entry into a state more difficult and expensive.
Permit states to restrict advertising and other normal commercial practices that brewers utilize to build regional or national brands.

The threats to American small brewers:

States could enact new laws or amend existing laws to heighten discriminatory treatment of out-of-state brewers (and beer importers) or to limit or ban commercial activities that wholesalers do not like. Examples include:

Tax preferences that are tailored for in-state brewers but utilize complex criteria or other means to effectively prevent out-of-state brewers from obtaining the same benefits, placing their brands at a competitive disadvantage.
Pricing regulations (price posting, price affirmation, etc.) with exceptions for in-state brewers.
Discriminatory exemptions from franchise laws to eliminate opposition from in-state businesses and make it easier for state wholesaler associations to advocate unreasonable laws.
Onerous new, state-based product labeling requirements that would impose an unreasonable burden (e.g., requiring a unique UPC Code for a state) on interstate commerce.
Requirements that brewers establish physical offices in a state in order to do business in that state.

Small Brewer Statement on the Importance of an Independent Three-Tier Beer Distribution System

The Brewers Association (BA) believes the American consumer should have access to the widest range of beers made available by licensed breweries. The success or failure of a beer should depend on beer drinker demand, rather than artificial restraints to distribution. BA supports laws that respect and enhance beer drinkers’ choice in the marketplace. State laws should support an independent distribution tier that is unencumbered by undue influence, ownership or control by the largest brewers and ensures access to market for all brewers. For small brewers, the ability to be licensed as a distributor is often an essential element that serves to provide them access to market and increase consumer choice.

Brewery Direct to Customer Sales

The Brewers Association (BA) believes the American consumer should have access to the widest range of domestically produced beers made available by licensed breweries.

The BA recognizes that not all beers have adequate sales levels to find distribution on retailers' shelves or wholesalers' warehouses. In such situations, consumers may be willing to go to the brewery premises to find beers not readily available through normal distribution channels.

The success or failure of a beer should depend on consumer demand, rather than on artificial barriers to distribution.

BA supports state laws that respect and enhance consumer choice in the marketplace. BA believes that to provide the greatest ongoing choice for consumers, small brewers should have the right to sell beer directly to qualified consumers.

For Small Packaging Breweries

The ability to sell beer directly to qualified consumers from a packaging/bottling brewery's premise would enhance customer loyalty and help increase sales within the three tier distribution system. Such right is not intended to bypass the three tier distribution.

For Small Brewery-Restaurants/Brewpubs

Granting brewery-restaurants/brewpubs the right to offer closed and sealed containers of their company's on premise brewed beer for off premise consumption is an effective means of engendering brand loyalty and improving customer relations and service. Such capability is not intended to bypass the distribution of bottled, canned or prepackaged beer within the three tier distribution system.

Alcohol Content in Beer

The Brewers Association (BA) believes the American beer drinker should have access to the widest range of domestically brewed beers made available by licensed breweries. The BA advocates for and supports state laws and regulatory protocols which expand beer drinker choice in the American marketplace. The accessibility of diverse American beer styles should reflect demand for these beers from responsible beer drinkers, and should not be restricted through artificial barriers to market entry.

BA believes that to provide the greatest ongoing choice for American beer drinkers, consistent with historical brewing tradition and beer’s valued role in American food and beverage culture, brewers should have the right to offer beers of varying alcohol content and not be restricted by limits of alcohol by volume (abv) or alcohol by weight (abw). Similarly, American beer drinkers should have the right to the responsible enjoyment of different beer styles with the appropriate alcohol strength without having to pay a different tax based on the alcohol content of the beer.

Franchise Laws/Access to Market

BA believes that small brewers and wholesalers should be free to establish enforceable contracts between the parties that both parties agree are fair and equitable. Franchise laws were enacted to protect wholesalers from the undue bargaining power of their largest suppliers. Applying those laws to relations between small brewers and wholesalers is unfair and against free market principles.

Where franchise laws exist, the BA believes that any brewer contributing less than 20% of a wholesaler's volume should be exempted from those laws and free to establish a mutually beneficial contract with that wholesaler. Without the leverage inherent in being a large part of a wholesaler's business, a small brewer and wholesaler can negotiate a fair contract at arm's length.

Independent Wholesalers

The BA supports the independence of wholesalers and believes independent wholesalers are wholesalers who are contractually and economically free to allocate their efforts among the brands they sell without the undue influence of their largest suppliers. Each brand gets the attention it deserves on its own merits in the marketplace.

Excise Taxes

The Brewers Association opposes excise taxes on beer as a matter of public policy. The taxes are paid by small brewers whether or not they are profitable. They are also paid by consumers regardless of income level and are historically very regressive taxes. The total amount of excise taxes paid on beer exceeds the total amount of profit in the brewing industry. Newly proposed excise taxes earmarked to fund substance abuse programs do not recognize the positive and healthful benefits of beer consumption for the vast majority of beer drinkers. Furthermore, there have been billions of dollars of excise taxes already collected that could be used to fund such programs.

Underage Drinking & Driving Under the Influence

Responsible enjoyment of beer can be part of a healthy lifestyle. The Brewers Association strongly opposes illegal use of our products such as underage drinking and driving while under the influence. We, as brewers, are offended by those who misuse our products. We promote education on responsible enjoyment of craft beer through programs, such as the Savor the Flavor program.

BA Position Statements