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  home - beer news - 3.2 Beer Legislation Part II  
by Mike Laur
with additional reporting by Carol White
2/23/09
(UPDATE: The Colorado House Business and Labor Affairs Committee was to consider actions on HB 09-1192 on Wednesday, February 25. However, according to Rep. MacFadyen's office, committee deliberations have been postponed, and re-scheduled for consideration on March 11. If you value selection and quality of Colorado Craft Beer, you should contact your representative and tell them that 1192 is bad news for Colorado Craft Beer. This is the second part of our story. Read Part I here.)

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The Law Giveth, and The Law Taketh Away....

Obviously with a lot on her mind, Colorado Senator Jennifer Viega talks a mile a minute about the bill she, along with Representative Buffy MacFayden, is hoping to shepherd through the state legislature.

HB 09-1192 will eliminate 3.2 beer, and will allow grocery and convenience stores to sell “full beer” instead.

Sen. Viega says that HB 09-1192 will be good for consumers, and believes the arguments about brewers and liquor stores suffering in the wake of its passage are not based on facts. “There is no evidence that passage of this bill will close stores or hurt sales.” Indeed, it is tough to predict the future, but there’s no need to wait. 1192 wants to shake up things now.

The Denver Post looked into its crystal ball a year ago in a February 2008
editorial and saw HB 1192 coming. The Post had some sage business advice for brewers and retailers, too:

“Liquor store owners, you've been warned. The fight to stock beer and wine on grocery store shelves will return — and you must rethink how you operate.” The Post liked the idea in 2008, at least as it was structured in SB 08-149. “The movement makes sense. Why should government allow a system to benefit the few (liquor store owners and craft brewers) over the desires of many (consumers)?

The Post had a lot of write-in support back then, as well as a lot of detractors who weighed in with their
opinions.

(It’s important to note that the 2008 version of the bill (SB 08-149) wanted to put beer and wine into grocery stores. The 2009 version (HB 09-1192) targets only beer, and leaves wine alone - for now.)

The Denver Post
opinion today vis-a-vis 1192 is mostly unchanged. They express a little sympathy for liquor store owners, but don’t buy all of the brewers’ claims that 1192 will hurt them: “Smaller brewers are arguing that if grocery stores compete with liquor stores it will hurt their best buyers and themselves. They reason that grocery stores won't stock the smaller labels, and that shoppers won't be interested in going to liquor stores to find or discover them.”

At the Pueblo Chieftain, there’s a different slant altogether. One liquor store owner submitted his guest editorial
here.

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People don’t ponder liquor laws very much - except to wonder just how they got so strange in the first place. Sunday liquor store sales (Here’s to You, Sen. Viega!) helped churn up the current public interest in Colorado’s unique liquor laws. Grocery stores picked up the ball, and started yelling “poor us” for losing 3.2 sales on Sunday. Their lobbyists have had plenty of practice in getting the issue up in front of the legislature, too. In 1988, when the legal age to buy 3.2 beer was raised from 18 to 21 years of age, they unsuccessfully lobbied to sell “full beer” back then.

Not coincidentally, the Colorado Petroleum Marketers Association has supported the effort to place “full beer” in their stores, too. It is ingenious, actually. What makes more sense than filling up your car with high-octane fuel and buying a case of Ten Fidy at the same time, over?

But HB 1192 indeed has unintended consequences that could spell the end of small brewer entrepreneurship in Colorado, or at least the end of many a good Colorado craft brew. Small brewers, big beer distributors, grocers, liquor store owners - there are many opinions on every side. If 1192 were a better law, it might make sense, and actually resolve a few issues instead of mucking up the market in favor of large-scale manufacturing and distribution.

Mike Bristol, owner of Bristol Brewing, summed his view up well: “I hate the idea. This won’t do anything good for the Colorado brewing scene.”

The existing system and set of regulations is responsible for the diversity of Colorado beers, and the proposed shift in gears changes the dynamic. “We are a local craft brewer. 80% of our sales are in Southern Colorado. Our model of business and distribution works now, but it won’t if the laws change.”

He says that Safeway’s buyer is in California, so only the largest breweries will benefit from their large sales volume needs. “Colorado drinkers will buy the same amount of beer, but the Colorado chunk of sales will be drastically diminished. Diversity will be dramatically reduced as well.”

Are Colorado brewers going to be victims of their own success? In an otherwise dismal state of economic gloom, the craft beer industry is one of the few bright spots. It’s growing, creating jobs, doing well when even the mightiest go looking for handouts. Brewers say the current system is effective, serves the customer well, and serves the state well.Again, Mike Bristol “It’s not that hard to get good beer anymore. People will say, ‘we want beer in grocery stores’, but they don’t know the ramifications.”

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It’s crazy, I know - deja vu all over again. We’re arguing the same things all over again, like a horrible version of Groundhog Day set in the Colorado Statehouse. If you don’t believe me, read it here for yourself: this very same argument over alcohol in grocery stores, played out exactly one year ago in the comment blogs of the
Denver Post.

I’ll quote one entry: “Liquor stores have a Monopoly - Plain and Simple. What other businesses are allowed to hold a Monopoly of this kind? California and many other States allow Grocers, Drug Stores, Convenience Stores and Big Box Retailers (Almost Everyone) to sell Wine, Full Strength Beer, and Liquor. Colorado needs to come out of the dark ages.”And one more comment:“I do agree that if/when every supermarket has the right to sell full strength wine & beer, every liquor store should have the right to sell the snacks that are associated with them.”

Alright, last one:

“We are spoiled here because we get a ton of small and obscure beer and wine brands. Many of these will go away and with it many of the small distributors. Jobs on the wholesale side will be lost. I own a liquor store and am not scared about grocery stores selling booze by me. Bring it on! I will change with the changing environment and do fine.”

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Of course, there are some craft breweries that may benefit from this bill. The larger craft breweries would more likely be picked up by the chain grocery and convenience stores, and may see their sales increase.

John Dunfee at Arctic Craft Brewery in Colorado springs has mixed feelings about this bill. He believes the proposed bill should mandate these chain stores to carry a minimum of 30% microbrews. His fear is that if the chain grocery stores are allowed to sell all the different beers, it opens the door for chain liquor stores to follow. Then, the big liquor stores swallow up the smaller ones, and we are left with a few big chains. If you are a brewer, and a chain of stores doesn't carry your beer, your distribution is severely diminished.

Bob Baile, owner of Twisted Pine Brewery has his own concerns. He has numerous relationships with small liquor stores, some owned and run by 1 person now working 7 days a week, and sees the potential loss to their business. "If supermarkets are able to sell full beer, a large percentage of craft beers won't get carried due to lack of room. These stores won't hire more people, so the net effect on the economy will be more unemployment. And perhaps most importantly, it is the support of so many independent liquor stores selling craft beer, putting up signs, pushing products, and being knowledgeable themselves to promote and suggest these beers that has helped the Craft beer industry in Colorado flourish. If we lose that level of expertise, it will most certainly affect the culture of craft beer in Colorado".

Colorado craft brewers and independent retailers in Colorado provide 67,000 jobs and inject $12 Billion annually into our economy and create beer tourism. So this is also an economic issue for the state of Colorado. When so many jobs are being lost and an economy hurting, does this bill make sense?

David Kim manages Red Rock Liquors in Colorado Springs. "Neighborhood (liquor)stores are not going to make it. We would be outsourcing money to out-of-state companies. Too many people would lose their jobs". Another point he made is about under-age drinking. "18 year olds are not even allowed in our store,unaccompanied. What would they be coming in for ? We help control underage drinking". Ultimately, he feels, it comes down to money. "This (bill) means more money for the state. When it comes down to it, it's about money, not people".

Another long-time liquor store owner, who wished not to be identified, says that the term that sticks with her is "Market Morality". "We provide a high level of education and expertise, products that are sold by adults to adults. This is necessarily not about free-market competition. This is a product heavily regulated by the state".

This sentiment is echoed by Doug Odell, owner of Odell's Brewing Company. "The alcoholic beverage industry has much regulation. It can't be wide open, everything everywhere. This is an example where it is okay to have guidelines in some areas". He agrees with the position of the Colorado Brewers Guild, of which he is a board member. "And even though a few breweries may benefit from passage of this bill, the majority of small craft breweries will not have an outlet".

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Check out info from
The Colorado Brewers Guild.

And another view from (
Guess Who?).

There is much more to come with this story. We’ll keep you posted, but the most important tasks are up to you:

1. Contact your Colorado Statehouse Representatives and tell them what a crappy law 1192 really is.

2. Buy Colorado Craft Beer, and Support Your Local Brewer.
Read Part I (History of 3.2 & How HB 1192 Might Effect Craft Beer) >>
 
 

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