Wednesday, October 15, 2014

Not So Quiet On the Eastern Front

It's a big, ol' love-fest in the craft beer world, right?

Well, maybe that bright and shiny "a rising tide lifts all boats" rhetoric is starting to tarnish, a bit. At least it is according to Dann Paquette of Pretty Things Ale and Beer Project. Esquire's Aaron Goldfarb broke the news of Paquette blowing the whistle on the "pay-to-play" tactics of Boston-area breweries and distributors who pay bars and restaurants to secure lines—essentially locking-out competitors. Paquette, urged others to join anti-'committed lines' cause via twitter, asking:

Big beer ethics in craft beer? Say it isn't so. That could never... happen... to craft.

By the way, good job Dann. 


  1. This is the sort of situation that can not be solved easily, and it's nothing new. As someone pointed at Beervana, there can be several reasons why a bar chooses to stick to some brand/distributor or another, and money will not necessarily play a role in it. I'm not saying it doesn't happen, but bars are businesses and we should expect the owners to do what they believe is best for their shop in the long run.

    Anyway, Dann Paquette, welcome to the real world, a world where Craft Beer is not a movement or a revolution, but an industry, one with a growing number of players in a market that isn't growing that fast, at least not everywhere.

    1. Yes and no. You're absolutely correct that beer—craft or otherwise—is a business, and with that comes all the pitfalls and competition of running a business. But this isn't just an issue of a bar doing what a bar sees as being best for it's business.

      The X-factor is the distributorships.

      99% of the beer sold in the U.S moves through a distributor—because it has to. And large distributorships can manipulate the market, simply through their size—and that includes pay to play and 'committed lines' tactics. The big distributors are the ones who have the money to do that. Smaller distributorships and or self-distributing breweries can't compete in a manipulated market. This isn't simply one beer being better than another beer, and therefore that's the beer said bar will want. This is a environment of payola. An environment that gives one group an unfair advantage in the market though bribery.

      That being said, you're right this isn't anything new. But it is new with craft, and the point of my post was that the long standing idea that craft was one big happy family where when one succeeds, they all succeed, seems to crumbling.

      It's time for 'craft' to re-examine its marketing strategy, because this one is wearing thin.

    2. It wouldn't be too different if the three-tier system didn't exist, believe me, perhaps even worse. Breweries, the larger ones, of course, would have their own bars, or they would partner with bar owners. Payola would not cease to exist, because it exists here, but all in the open (or at least most of it).

      Here, Pilsner Urquell can go to the owner of a pub, offer them $50,000, plus a lot of free stuff (including the whole dispensing system), all of it written in a contract that binds the owner of said pub to buy a certain volume of beer every month for the next, say, five years.

      Legally, PU can do nothing to prevent the owner of the pub to set up another tap for other beers that aren't from the PU portfolio, but the mandatory volume is set in a way that would make it very difficult--whether he sells the beer or not, the pub owner still has to buy it.

      Anyway, legal or not, this is still about owners doing what they believe is better for their business, and that includes taking bribes.

      The happy family thing, on the other hand, that might have been so when the market was big enough, with plenty of money around for everyone to do well, but nobody sensible expected that to last forever, did they?

  2. So the ends justify the means?

    The whole point of the three-tier system is to prevent a monopoly. "Pay to play" is a corruption of that system. Bottom line—It's illegal for distributors or breweries to pay, or offer free beer or tap systems, for dedicated lines.

    So, again, this isn't about a bar-owner doing what's best for his business. It's about bar-owners (and/or a distributors/breweries) breaking the law.

    1. I don't approve of the practice, I'm only saying that it is inevitable, every line of business has its fair share of dishonest people. Complaining won't make things change, unfortunately, in fact, it might make it worse, it might end up casting suspicion upon everyone who's working with those big distributors. If Paquette has any evidence of this, he should name names, otherwise, he's not doing anyone any favours, himself included.

    2. He did name names. He named two bars, and asked that others come forward—which also happened. The Massachusetts Alcoholic Beverages Control Commission is now investigating the claims.

  3. This give a pretty good breakdown of what went down (including a rebuttal from Gordon Wilcox who owns the two bars Dann mentioned.) This line from the article is very telling as to the atmosphere of beer selling in Boston, in regards to others coming foreword.

    “The brewers said they have been reluctant to make their gripes public, for fear of angering establishments they count on to market their beer.”

  4. I think you may be talking about two slightly different things. On the one hand, the right to exclude craft and sell what you want. On the other, the corrupt practice of the middleman controlling what is sold through various forms of anti-marketplace corruption. We have no three tier stuff in Ontario. Brewers sell direct to bars. It is not marketed by the wholesaler which is a unified co-op of the big Brewers. We apparently have lots of pay to play. We have strong laws against it which are not enforced. No one will make a complaint. We also have a vast majority of bars and drinkers happily hosting the InBevMolBat macro Gak and maybe taking a line fee, too. So it is like a cultural norm. Craft has not laid a complaint when they face a line fee. They need to if they care.

  5. I think this is Dann lodging the formal complaint on behalf of craft—publicly.