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Three Stooges. . .err. . .Three Reforms

Three Stooges. . .err. . .Three Reforms

By Templars Guest Blogger Mike Malsed

 

I'm a fan of laissez faire, but with fences. Laissez faire is an economic system that is generally characterized as "let it be" - so I generally like to let business be, but with some fences to stop and punish abuses. We pretty much always have those who will abuse their position, whether it be a natural monopoly or just a group with enough money and power to push their way.

 

This said, I see a few issues in beer that really should be addressed.

 

To Tell The Truth. Take a look at a Cheerios box image above (image from http://www.cheerios.com/products/Cheerios.aspx). There is a section that says who manufactures it, under which patent, and who distributes it. It's tiny, taking up four lines of text. Look at a box or tube of Crest (which has a pretty small label) and you'll find that it is "Dist. By Procter & Gamble, Cincinnati OH 45202 USA". Look at just about any food product and you'll find the same thing. The label not only gives you the brand, but also who owns that brand.

 

According to the FDA, the "information panel labeling" must display the name and address (city, state) of the manufacturer, packer or distributor. This is Title 21, part 101.5© "Where the food is not manufactured by the person whose name appears on the label, the name shall be qualified by a phrase that reveals the connection such person has with such food; such as 'Manufactured for ___', 'Distributed by ____', or any other wording that expresses the facts." (https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=4bf49f997b04dcacdfbd637db9aa5839&ty=HTML&h=L&mc=true&n=pt21.2.101&r=PART#se21.2.101_15)

 

This even holds true for distilled spirits. On a Crown Royal bottle, you should find the line, "A product of Joseph E Seagram & Sons, Limited, Waterloo Ontario Canada" or "of The Crown Royal Distilling Company" (https://www.crownroyal.com/). Same with Jack Daniel's (https://www.jackdaniels.com/en-us/our-products), same with Jim Beam (http://www.jimbeam.com/en-us), etc.

 

We need the same thing with beer. We need transparency in labeling. The beer needs to show who owns it. Those who complaint that it would take too much room on the label need to look at a tube of toothpaste. Label who is the owner/distributor/manufacturer of that beer. If it works for food and distilled spirits, it should work for beer.

 

You Can't Handle The Truth! Even more truth is needed. I've been trying to ferret out exactly what ABI owns. We know that they own or control hop farms (https://www.pastemagazine.com/articles/2017/05/ab-inbev-just-commandeered-the-entire-south-africa.html). We know (via their website) that they own or control a significant amount of barley farms (www.smartbarley.com). We know (via their website) that they own or control several malt houses. We know, obviously, that they own or control multiple brewing and bottling sites. We know that they own or control a significant percentage of distributorships (https://www.justice.gov/atr/case-document/file/928256/download). We know that they contract with a good number of retail outlets.

 

But exactly what those hop farms, barley farms, malt houses, distributorships, etc. are? That's much harder to find. It should not be a hard thing for them to put up an link to a web page with a fairly up to date listing of all of their holdings. Other industries are required to disclose this information; why is ABI not?

 

Separation Anxiety. The last reform that I would suggest is that there be a hard separation between the various "levels" of the beer brewing industry. The agricultural portion should not be owned by the manufacturing segment which should not be owned by or own the distribution segment. As of now, the only real separation in place is between the retail segment and the distribution and manufacturing segments; and even this separation is violated on a routine basis (see https://www.brewbound.com/news/anheuser-busch-accused-inducing-massachusetts-retailers among a huge number of others).

 

Let's break the whole thing up. Supply separate from manufacturing separate from distribution separate from retail. This brings everything back to supply and demand. Suppliers can supply to whom they wish without being contractually obligated or owned by a manufacturer. Distributors can distribute what they wish without fear of reprisal from a contracted manufacturer. Retailers can get what they want from distributors. Are there details that would need to be worked out? Absolutely - this is not a detail piece, this is a concept and opinion article. Details would need to be worked out by economists and lawyers, which worries me, of course. But the concept stands.

 

Wrap this up! Honesty and transparency is something that we have little of in the overall beer industry, lately. Honesty in labeling and transparency in assets would go a long way to fixing things. Separation in the levels of industry would hopefully finish that trip. What do you think?

 * The opinions in this post are of the Blogger in the byline and is not necessarily the official standing/opinion of The Pints Templars.

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