Friday, July 09, 2010

Wednesday Weekly: "Contract," my ass.

I'm late with this.


Here’s a helpful suggestion for those of you tending bar, or working in an establishment that sells beer – especially draft beer.

Don’t say the “C” word. I’ve heard it twice in recent weeks, and it makes me want to find a mouthpiece and go to court.

For the uninitiated, and in its full, most distasteful usage, the “C” word is “Contract.”

Whether or not the three-tier distribution system for alcoholic beverages survives in its present form is a matter for politicians, lawyers and judges to decide. Until it changes, it is plainly illegal for an entity – your bar, a sporting venue, a concert hall – to sign a “contract” with a beer wholesaler. I’m speaking here in the sense of a contract to sell only that wholesaler’s beers, and no others.

Pay-to-play is not something enshrined with dual signatures and posted on the Internet. Yes, there may well be understandings, nods, glances, winks, back-scratching, oral sex, or any number of other unofficial, non-contractual agreements that blatantly violate the spirit of the law but leave no paper trail for people like me to make copies and post on Smoking Gun.

However, there cannot be such contracts, and because of this, if you say aloud something on the order of, “We can’t do business with you because we have a contract with SABMillerMolsonCoorsABInbev,” it is a faux pas that conceivably might lead to heightened interest from state regulatory authorities. None of us wants that, even me. As angry as it makes me, I’m too concerned with good karma to turn you in. Unlike the majority of monopolistic corporate behemoths, I have ethical standards, although you’re going to get a soapbox lecture, right here, right now.

The reason why your boss, owner or manager wants you to think there is a contract precluding a swapping of taps or further action in the direction of diversity is that it removes the painful necessity of thinking about product options. It sidesteps the annoying imperative of actually acting on changing consumer needs in a beer marketplace infinitely more diverse than the narrow lighter-shade-of-gold preferred by the business-as-usual, good old boy crowd of movers, shakers and bribe-takers.

Furthermore, at least in Southern Indiana, please don’t say you have “no choice” except to buy beer from a wholesaler like Monarch, because your employer cites the imperative of buying locally and insists that he or she is doing so because Monarch is local.

Emphatically, and even though I don’t have a dog in this race ... Monarch is not “locally” owned, unless you’re living in Indianapolis (or Andorra, as far as I know).

In fact, not only is Monarch not “locally” owned insofar as residents of the Falls Cities are concerned, it hardly has anything to do with local anything. Monarch is one of the largest, if not absolutely the largest, mass market beer wholesalers in the Midwest. True, a decade ago it bought out two former Jeffersonville businesses that actually were owned locally, Clark County Beverage and Nachand Beverage. By doing so, it removed local businesses. It did not become one.

Sorry kids, but buying beer from Ted Throckmorton or the late Ed Schueler back in 1991 no longer qualifies the monolith that purchased them as “local” apart from exercises in nostalgia and selective memory – and let me add that Ed was one of the finest persons I’ve known at any level of the beer business, period. From the perspective of “local,” those two were local. Monarch is not.

Make no mistake: When I ask the question, “Would you consider a locally brewed craft beer to sell at your establishment,” it is your undisputed right to say “no,” just as it is my responsibility to try to explain the reasons why you should do so, and without my appealing to “buy local” as a mantra intended to obscure the issue.

But: It is purely nonsensical to use excuses like “contracts,” “locally” owned wholesalers more than a hundred miles away, or “we have no choice.” You have numerous choices, few of which even remotely compromise the day-in, day-out hegemony of the beer world’s biggest selling names.

Rather, having NABC on tap alongside Lite and the Silver Bullet achieves providential goal of making your customers happy by recognizing that not all of them are satisfied with the status quo and will pay for an honest beer with flavor, brewed locally.

What the hell is wrong with that, other than it scares the monopolists?


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Jim Schembre said...

“Contract my Ass”

Roger read your blog the other day and as is usual when I see something with your name on it I will automatically know that it will be passionate and that you believe it to the hilt! But you know sometimes your information is misguided and in this case you do have some discrepancies I would like to discuss. First you are right that it is Illegal for a wholesaler to have an exclusive contract to pour only their beers at any retail establishment and neither World Class nor Monarch or any other wholesaler that we know of has any written contract with anybody for exclusity. Believe me you will not find one because we do have one, never had one, and will not have one. I have been doing this for over 30 years and have not seen one yet. But one thing we do have is relationships and service. So give us some credit for that. Maybe the bartender or owner was just quietly trying to dissuade you because they did not believe your product would sell. Maybe they think you are there competitor as you do have a retail establishment down there or maybe they have had or heard of problems getting your beer and do not want the headache or just maybe they do not like you. Is that possible? Those are things you can be thinking about before you throw us under the bus.
And as it relates to local. We are a “Local” 100% Indiana owned beer distributor for over fifty years. The French family our owners all have been born and raised in Indiana. We currently have in the New Albany area 36 people that actually live there, work there, and live their lives every day and very seldom come to Indy. Our payroll with benefits for just those 36 runs close to $1.7 mill a year and we spend on our normal day to day business cost over $400,000 now what ecomic impact does that have? What other craft distributor can say that? This is just the New Albany area.
In your assumption you assume that everybody wants your beer and that retailers have consumers walking out because they don’t carry it. The reality is that is not true. As we both have discussed the consumer is king and no retailer can survive if they do not give consumers what they want. Even imagine Lucas Oil Stadium if everybody would quit paying $7 for Miller Lite and demand New Albania beer would they put it in? Yes. But the consumer says nothing and keeps buying Miller Lite so they do not change. So that is what our job is both you and I and that is education. So just because somebody tells you that they have the “C” word I am sure it there are other reasons and they do not want to nor do they have to explain why. Period. It does happen.
That is what we run into everyday as distributors. And it then challenges us to think what are doing wrong and what do we need to do better. I know we sometimes as craft passionate people believe everybody would drink craft beer if they could. But reality is that only 1 person in 100 in Indiana do. So I would not blame the wholesaler or even the retailer I would think you would have to look back at what you are doing to see how you change the consumer. That is your job. That is our job. We as wholesalers only want to sell more beer and we want to get more consumers in the category and we can win. When consumers believe in your product and they start asking for it then you will get the business regardless of your wholesaler.
As always I enjoy your opinion and have for a long time now. And I will know that the day I do not see your passion in your writing will be a sad day for the industry.
Jim Schembre World Class Beverages