Harrisburg, PA (September 29, 2020) – The Brewers of Pennsylvania (BOP), the state’s official brewers guild, strongly supports and endorses legislation offered by Senator Dan Laughlin (Erie) to modernize the decades old distribution laws in the Commonwealth. At a time when all businesses are struggling to cope with the impacts of the pandemic, bringing fairness to the manner in which manufacturers can get their products to the marketplace is vital, and the BOP calls on the General Assembly to enact these commonsense changes before it adjourns.
“Pennsylvania has over 300 breweries and produces more craft beer than any other state in the nation, yet we remained saddled with an outdated and unfair set of distribution laws that hamper growth and market penetration. The ongoing pandemic and regulatory responses to it have greatly diminished Pennsylvania brewers’ opportunities to reach consumers and it only makes sense that the legislature act now to assist with the recovery of this vibrant industry that generates billions of dollars in revenues and employees more than 12,000 people in the Commonwealth. On behalf of our members, we thank Senator Laughlin for his leadership on this issue,” said Adam Harris, Deputy Director of the BOP.
Under the current system, a brewery interested in growing beyond its ability to self-distribute is subjected to the state’s mandated distribution system that forces never ending contracts with wholesalers in order to achieve market penetration. For brewery operators this is a no-win situation, as they are giving up rights to their brands in perpetuity on the hope that a wholesaler will be a good partner, permanently. History has demonstrated that these contracts can only be terminated through expensive and lengthy court proceedings, and 99% of breweries cannot afford to challenge the contract if the partnership was not mutually beneficial. Sen. Laughlin has recognized that statewide brewery output can be increased if these manufacturers have reasonable flexibility in managing their distribution opportunities.
Senator Laughlin’s legislation seeks to remedy this by not only eliminating future evergreen contracts, but also by allowing the brewer to buy out of an existing contract for fair market value (determined by a neutral arbitrator) provided that the brand is not more than 20% of the wholesaler’s business as wholesaler’s still need protection from the world’s largest brewers which seek to control beer distribution in our Commonwealth. Further, it provides the wholesaler with the rights to distribute lower alcohol by volume (a.b.v.) products like canned cocktails, as these products are more closely aligned with beer than with the portfolio of the state store system. Under this proposal, the brewer has recourse if the partnership is not mutually beneficial, and the wholesaler is fairly compensated for time and resources spent on the brand.
“I believe this proposal is the kind of change needed in this state if breweries are to stay strong and grow and assist the Commonwealth with its economic recovery from the pandemic. It is fair and long past due, and I hope the Legislature takes immediate action to bring assistance to this industry,” said Senator Laughlin.
#supportPAbeer#
