A chink in Oregon's craft beer armor. The latest Beer Purchasers Index is here.
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"Something there is that doesn’t love a wall..." That’s a line from a poem by Robert Frost. It is a lovely poem but it has absolutely nothing to do with beer, per se. However, this week it seems the U.S. Constitution is the “something” and an Oregon alcohol regulation is the “wall.” Confused? Don’t be. Let’s get going.
Oregon allows out-of-state breweries the right to self-distribute
For years, people have used words like loyal and provincial to describe Oregon’s craft beer consumers. In Oregon, people drink Oregon-brewed beer with little exception. Sure, in-state loyalty probably plays a part, but so does the law. Oregon has always presented a challenge for out-of-state breweries, especially those without the financial wherewithal or desire to sign a contract with one of the state’s licensed distributors. The state’s distributor requirement created a wall around Oregon that prevented many out-of-state breweries from selling beer there.
As reported by the Washington Beer Blog, a lawsuit filed by three of Washington state’s breweries alleged that the self-distribution policy violated the “commerce clause” of the U.S. Constitution. In-state breweries were allowed to self-distribute beer to retailers while out-of-state breweries were prohibited from doing the same. The Oregon Liquor and Cannabis Commission (OLCC) just settled the lawsuit, which was formally known as Garden Path Fermentation v. Brown.
The three breweries that lead the lawsuit.
Under the terms of the settlement, the OLCC agreed to allow out-of-state breweries to self-distribute beer. This removes a huge barrier for out-of-state breweries looking to sell beer in Oregon — a state where people consume a lot of craft beer per capita. Lawmakers are currently considering legislation that would permanently codify the terms of the settlement.
“This is a big win for Oregon consumers. This settlement and the prospects of HB 2013 becoming law will bring Oregon policies in line with the United States Constitution’s provisions that prevent states from engaging in economic discrimination against out-of-state businesses.”
So why does it matter? More and more states across the nation are enacting legislation legalizing self-distribution. Other states are considering such legislation. We believe that self-distribution is an essential part of craft beer’s future as distributorships consolidate and the biggest distributors get even bigger. The situation in Oregon is another step in the right direction. If you live in a state that prohibits self-distribution, step up and support any efforts to change the laws.
It’s not just about helping breweries survive and prosper. Not allowing self-distribution limits consumer choice. And speaking of consumers, the settlement in Oregon also addressed the issue of direct-to-consumer shipping. Read more about the case and the settlement here.
The latest BPI shows the continuing struggle, but also some hope
The National Beer Wholesalers Association (NBWA) just released the Beer Purchasers' Index (BPI) for April. For the craft beer industry, the latest BPI continues to offer some shaky news. We should be used to this by now. The BPI shows wholesalers’ ordering activity for the month compared to the same month in the previous year for all segments of the beer market. A number below 50 indicates contraction; above 50 indicates expansion. Imported beer is the only segment of the beer biz not showing contraction.
“This data suggests that beer purchasers are taking a more cautious approach to ordering heading into the second quarter following continued economic uncertainty along with milder and wetter Spring weather relative to March 2022.”
Looking for a bright side? Yes, the BPI for the craft beer segment continues to show contraction, but the trend is in a generally positive direction, as the chart below shows. It still shows contraction, but less contraction than in some previous months. So there’s that.
Last month, the NBWA used the word stability. As in, the numbers may not be good, but at least things are stabilizing. Good or bad, we can take the BPI as a sign that things are changing. Time will tell what the new normal looks like. Remember, these numbers only relate to distributors’ orders.
Around the Web (every week)
Founders Brewing is facing a racial discrimination lawsuit. This is the second time in five years that the company has faced this issue. Story by Brewbound (paywalled).
JetBlue becomes the first airliner to jump into the non-alcoholic beer game. As you might guess, they’ve chosen Athletic Brewing as their NA partner. Story by Food & Wine.
So how did we do this week?
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This week’s Taster Tray was composed by Kendall Jones.