Wisconsin legislators wrote a provision into the state’s budget legislation barring brewers from owning wholesale distributors. The measure is allegedly intended to prevent Anheuser-Busch from purchasing distributors and expanding its presence within the state . (Wisconsin is MillerCoors territory.) But while focused on Budweiser, the restriction threatens some of the state’s craft brewers and would limit their ability to market their own beers. Perhaps that’s really the point.
(HT: zuch)
ADDENDUM: It’s interesting what different types see in this story. For the free market folks at CEI this is just another example of corporate rent seeking to the advantage of larger corporations. For the folks at Think Progress, on the other hand, this is yet the latest example of Gov. Scott Walker’s craven catering to campaign contributors — even though not a single source Think Progress cites links the governor to this proposal. To the contrary, several of the stories mention this provision was slipped in by a legislative committee, and only one of the stories even mentions Gov. Walker by name — and only then to refer generally to the governor’s budget. Gov. Walker may well support this measure — and, if so, shame on him — but I see no evidence of that — certainly nothing to justify blaming him for the “war on craft beer.”
UPDATE: In Ohio, I’m happy to report, the law may be moving in a better direction. With luck, I’ll soon be able to buy such fine brews as this at a local establishment.
Cornellian says:
How exactly does a state enforce something like that? They can’t stop out of state brewers from purchasing out of state distributors, so what are they going to do? Bar such merged entities from selling beer in Wisconsin?
June 10, 2011, 11:51 pmJay says:
Yep. That’s how the 21st Amendment works.
June 10, 2011, 11:54 pmDawnsblood says:
21st Amendment:
Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
June 11, 2011, 12:19 amNick056 says:
I think if JHA wrote headlines for every story in a given newspaper, the readers would have a heart attack before they even opened the fold.
June 11, 2011, 12:29 amIspep Teid says:
That sort of naked protectionism is deeply repulsive (and I don’t even drink beer very often).
June 11, 2011, 1:36 amClark says:
If Scott Walker has done it, it must be because it is good for small business.
June 11, 2011, 2:01 amzuch says:
Would have been polite to give credit to the people that gave you the H/T on this, Prof. Adler. :-)
Cheers,
June 11, 2011, 2:07 amElSuerte says:
Perfect example of regulatory capture.
This makes me want to move to Wisconsin and set up a ‘sham’ wholesaler.
The craftbrewers would ‘sell’ the beer to the sham wholesaler, but they would keep bailment and deliver it as normal.
The wholesaler would keep a small fee for administration, but everything would otherwise operate as normal, except for the extra bookkeeping tricks to conform to the law. You could bill it as wholesaler 2.0 with distributed inventory storage and delivery systems, lol.
This would be a good opportunity for some one to consolidate WI craftbrewers billing and bookkeeping work under one outsource company.
June 11, 2011, 4:01 amPassing By says:
It’s been several years since I’ve had clients in the beer industry, so things may have changed. But back then, the independent wholesalers were a powerful force in state politics … and keeping the brewers out of wholesaling was a big deal for them. So I suspect that drove the legislation more than any desire to suppress micro-brewers. (Don’t know about WI specifically.)
June 11, 2011, 5:08 amJonathan H. Adler says:
Happy to do so. Given that you use a pseudonym when you post, I wasn’t sure you wanted the shout out. I’ll add it. Should it be “zuch” or your other name?
Cheers
June 11, 2011, 7:44 amBill Kelly says:
Wisconsin is the state that for many years outlawed “yellow” margarine to protect the dairy farmers. The stores just inside the state line in Illinois did major business in selling margarine.
June 11, 2011, 9:26 amJoe says:
If the provision is really aimed at A-B, the fact it affects others is a concern, but I’m not sure it shows they are at “war” with them. The word is so loosely thrown around these days.
For the folks at Think Progress, on the other hand, this is yet the latest example of Gov. Scott Walker’s craven catering to campaign contributors — even though not a single source Think Progress cites links the governor to this proposal.
Why are we making this about TP? The fact it was “slipped” in doesn’t help me much — sounds like a way his friends might get a perhaps unsavory provision in there. Jefferson had friends in Congress “slip” in things from time to time too.
The TP article btw calls it “a classic bit of rent-seeking,” so the implication that they just are tossing it out as some Walker thing is wrong. The article, that does target him in the title, doesn’t focus on Walker at all until the last paragraph, which tosses in an interesting tidbit. Anyone know if Walker is against the provision?
If not, thinking the buck stops with him when the budget he signs (another issue — how much is he involved in the budget’s crafting?) is involved is not really totally off.
June 11, 2011, 9:41 amwillis says:
So Anheuser-Busch is the source of this trouble. I knew it was Bush’s fault.
June 11, 2011, 9:46 amchancellor says:
The distributors in Wisconsin wield incredible political clout, and I guarantee they are the drivers behind this bill. Not that the state legislature is a friend of local brewers, either – the previous legislature and governor (all Dem, but GOPers were involved, too) put restrictions on micro and mini-brewer production levels if they wanted to independently distribute. The original restrictions were really harsh, but modified after a bi-partisan outcry.
June 11, 2011, 10:40 amJoseph Slater says:
Regarding Ohio beers, let me add this.
June 11, 2011, 11:02 amJim says:
A lifetime ago I lived in Ontario, where for a time DIY micro-breweries in strip malls became all the rage. Part of the attraction to brewing one’s own exotic blends as an alternative to the large company pablums on the market was the lower price, since they did not attract horrific sin tax rates.
Sure enough, legislation inspired by the big breweries soon killed all these entrepreneurs. If I remember correctly, the tactic was public brewing safety despite no evidence that anyone got sick.
If you follow the money, don’t forget the state itself.
June 11, 2011, 11:06 amMichael Van Beek says:
Similar policies strangle craft brewers in Michigan as well: http://www.michigancapitolconfidential.com/15196
It’s another case of rent-seeking big business teaming up with big government to keep the little guys in their place.
June 11, 2011, 11:31 amGeorge Skakel says:
Since the 1930′s there has been a federal law that requires that all alcoholic beverage distribution must have 3 levels; manufacturer, wholesaler and retailer. From what I can tell from the Wisconsin law it is utterly meaningless since manufactures cannot buy distributors or retailers now anyway.
June 11, 2011, 11:53 amzuch says:
I was thinking more of that Soros-funded commie front, ThinkProgress.org as that was where I saw it, and that was the link I sent you.
Cheers,
June 11, 2011, 11:56 amzuch says:
BTW, anyone that wants to know my real name can click on my sig, so that’s not a real big deal….
Ciao,
June 11, 2011, 12:09 pmzuch says:
Not sure how you go that. After all, TP did link to the CEI story and quoted them. Do you think they did that to dispute such a take?
Cheers,
June 11, 2011, 12:20 pmRoddy Boyd says:
Zuch:
I’m really not sure what Think Progress’ goal was here other than to “link” Walker to some corporate stooge like behavior….without the benefits of evidence and such?
Am I missing something?
June 11, 2011, 12:31 pmBT says:
In Illinois liquor distributors hold a great deal of power as well (which is how Rocky Wirtz the guy who owns the Blackhawks made all his money). Here is an article on a recent changes for how wine can be purchased.
Illinois Wine Law
June 11, 2011, 12:40 pmMike K says:
I remember mixing coloring powder with white margarine in Chicago in the 40s as a child. Yellow margarine was illegal in Illinois at the time so the coloring powder was sold with the white margarine. I don’t remember the year that yellow margarine became legal in Illinois but Wisconsin wasn’t the only one.
June 11, 2011, 12:42 pmArthur Kirkland says:
Alcohol beverage distribution generates complex issues involving large commercial interests (brewers, wholesalers, retailers), small commercial interests (brewers, wholesalers, retailers), historical points (Prohibition, the three-tier system), and the public interest (responsible practices, taxation, licensing). It also has attracted partisan interest in a number of states recently.
Some of the issues involve fascinating legal and policy points. Courts (and others) rarely address them in a sensible manner, in part because of the counterintuitive nature of laws regulating alcohol beverages; the federal and state regulatory structures established in Prohibition’s wake are unique.
June 11, 2011, 12:58 pmMike says:
… why would you bother? I assume it tastes the same…
June 11, 2011, 1:01 pmByomtov says:
Why do we not know who put the provision in the bill? All the links say something like “it was slipped in,” and then approved by the Finance Committee.
Is this Walker, or someone else, doing contributors’ bidding? Knowing who actually did the deed would be helpful in answering that.
June 11, 2011, 1:09 pmDrP says:
I seem to recall that the beer and wine distributors were a powerful political force in Texas and prohibited brewers from selling their wares without going through a local distributor.
AB wanted to sell their own product when they bought SeaWorld, a local aquatic park in San Antonio.
So the legislature passed a special bill which would allow brewers to self-distribute as long as it was in a county which had a city of at least 750,000 people was conducted in walled park of between 260 and 265 acres.
I may be off on the exact particulars, but the intent was clear.
June 11, 2011, 1:19 pmkazinski says:
The thing that struck me about the story, is that according to the legislation the biggest beneficiaries would be current craft brewers. Since they are grandfathered in, the legislation would protect them from new competition.
But all the craft brewers oppose the legislation, because they realize the more beer the better.
June 11, 2011, 2:25 pmMatthew Carberry says:
But when you do, it’s Dos Equis. =)
June 11, 2011, 8:16 pmDave says:
Taste, yes. Flavor, no. Taste is chemical, has no more than 8 or so axes, and occurs in interactions with the taste buds on the tongue. Flavor is much more complex. It happens in the mouth and the nose, but also in the eyes and in the textural effects that occur in the lips and mouth.
Yes, if everyone closed their eyes before they ate, then eating uncolored (i.e. vaguely sickly green) margarine would be no big deal. The fact that so many entrenched interests fought to prevent coloring margarine should be enough to show you that humans are not so simple.
June 11, 2011, 9:44 pmAndrew Janssen says:
There are still remnants of that in Wisconsin. Wisconsin Statute 97.18(4) prohibits restaurants from serving colored margarine unless the customer specifically requests it; and 97.18(5) prohibits the serving of margarine to “students, patients or inmates of any state institutions” as a butter substitute except on a doctor’s orders for the health of a “specific patient or inmate”. Punishment for a first offense violation of either section is a fine of $100-$500, 3 months in jail, or both; subsequent offenses get you a $500-$1000 fine and 6-12 months in jail.
June 11, 2011, 10:34 pmDaniel Chapman says:
Matthew Carberry, I salute you.
June 12, 2011, 12:39 ambobby b says:
“why would you bother? I assume it tastes the same . . . ”
Watching your mom spread what looked to be pure lard over your toast in the morning was never a pleasant way to wake up. At least with the yellow coloring, you could pretend it was butter (or a butter by-product.)
June 12, 2011, 6:47 amBT says:
Matthew Carberry wins the thread.
June 12, 2011, 9:05 amGBS says:
Has anyone watched the documentary ‘Beer Wars’? Basically the big three (use to be Coors,Miller and Budweiser but some of them have been merged/bought out since the documentary was created) pushed for the distributorships to be ‘independent’ from the brewers. Since the majority of the beer distributed ( the distributors make their money on volume) would come from the big three, they basically controlled the distributorships through various incentives. In this way they controlled what beer was distributed and to where. This is the means by which they achieve the elimination of the competition, their ultimate ends. This proposed legislation’s only purpose is to line some politician’s pockets. Another reason that we should use politicians to eliminate the slack in any available rope.
June 12, 2011, 1:39 pmKazinski says:
Great commercials. And I can imagine that people that don’t actually like beer, and don’t drink it very often would drink Dos Equis, or buy it for others through ignorance.
But come on, no serious beer drinker drinks Dos Equis.
June 12, 2011, 4:57 pmDaniel Chapman says:
I also don’t bowl overhand. But if you’re “the Most Interesting Man In the World,” I guess you can drink crappy beer and tolerate it. Isn’t that the point of those commercials?
June 12, 2011, 5:34 pmDotar Sojat says:
As long as when I vacation in Wisconsin, I can get a Spotted Cow with my brat.
June 13, 2011, 11:20 amPliny the Elder says:
Anything that threatens craft brewing is, at best, a qualified evil.
Pliny the Elder (and I am not referring to myself or the Roman that first provided the scientific name for hops)rules!
June 13, 2011, 5:02 pmSykes Five says:
Given the modern disdain for trans fats, the anti-margarine laws seem prescient.
June 13, 2011, 5:27 pmSigivald says:
Byomtov says:
Why do we not know who put the provision in the bill? All the links say something like “it was slipped in,” and then approved by the Finance Committee.
Is this Walker, or someone else, doing contributors’ bidding? Knowing who actually did the deed would be helpful in answering that.
Well, I don’t know Wisconsin’s legislative makeup in any detail, but I’m going to assume they’re like most (all?) other states, in that the Governor can’t just insert provisions into bills.
Which means that if it’s there, someone in the legislature put it there.
Which means that the Governor, thus, did not.
It’s almost certainly someone doing the bidding of a contributor OR constituent (after all, the existing wholesalers are constituents too); I doubt it’s in response to any particular contribution.
Why? Because, for the most part, state-level contributions are peanuts.
Someone really looking for a money trail here should find the database of contributions for Wisconsin, find the wholesalers and their trade group online, and see what was donated to whom.
I bet you their donations are non-partisan, and so small as to be pocket change, all things considered.
June 13, 2011, 5:46 pmMorning Links | The Agitator says:
[...] Jonathan Adler says it isn’t clear that Gov. Scott Walker is to blame for the language in a Wisconsin law that would require craft brewers to use wholesalers. [...]
June 15, 2011, 7:10 amDistortionary effects of three-tier liquor regulation, Wisconsin edition « Knowledge Problem says:
[...] Jonathan Adler notes at the Volokh Conspiracy, the Wisconsin legislature is considering a piece of legislation that would change the regulations [...]
June 15, 2011, 10:20 am