If you’ve watched our CEO & Co-Founder Greg Koch’s speech at the 2009 Craft Brewers Conference, you know that business ethics are hugely important to Stone. While we see business ethics as an essential part of everything we do—from environmental sustainability to charitable giving to collaboration—the business of selling beer can present especially tricky issues for craft breweries. Fortunately, this article in Crain’s Chicago Business shined a bright, revealing spotlight on the kind of backroom shenanigans that can make it harder for beer lovers to get the craft beers of their choice. Crain’s also produced an informative video that gets into detail about some of the illegal practices that keep craft beer out of the marketplace. Unfortunately, these types of activities are by no means limited to Chicago. Shady deals between breweries, distributors, and bars/restaurants happen--to some degree--almost everywhere. So why does Stone care so much about these issues? Why do we make a point of saying we never, ever participate in any illegal and unethical sales practices? To toot our own self-righteous horn? No, we’re generally content to do that about our tasty beer. We care about this because the survival and sustainability of craft beer in America depends on a level playing field. Craft beer is growing by double digits while other categories are flat or sinking. The numbers don’t lie: American’s increasingly want better beer made by people who care passionately about quality. But if beer drinkers don’t have the option to buy craft beer, this revolution will never see its full potential. For craft beer to remain exciting, dynamic, and relevant, small brewers need to be able to get their beer into the hands of craft beer lovers. But a market that is ruled by pay-to-play tactics limits the free choice of beer drinkers and squeezes out the little guys. Hell, an unlevel playing field nearly sunk Stone in the early years. Bars would demand free beer, free merchandise, or outright cash payments for space on their tap towers, yet we NEVER played along. Fortuitously, Greg and Steve made the difficult (and inordinately expensive) decision to self-distribute. After years of struggle, Stone Distributing now delivers beer from over 30 craft breweries to bars, stores, and restaurants in Southern California, and does so with integrity. But not everyone has the means or ability to do that. And we still have to rely on our distributor partners in the dozens and dozens of other markets Stone beer is available. So what can you do about it? Support the breweries, wholesalers, and retailers who take the high road. That can be a tricky thing to find out, but just asking a lot of questions can help. Bars listen to their customers, so if you want craft beer on tap, speak up. It’s important to note that Stone is not alone in practicing good business ethics. Far be it, we’re happy to say. Most brewers and wholesalers play ethically and legally. Our point here is far less about us taking the high road, and more about calling out those who engage in illegal and unethical business practices that limit your choices! So that’s our rant for today. Stay strong, craft beer fans, and remember to always take the high road.
Comments
Submitted by CraftBeerLover on November 23, 2010 - 5:25pm
Look, it's all beautiful and stuff to do the right thing, but at the end of the day, when my local liquor store has beers that are legally unavailable in California because of the same legality BS, there is no doubt I'll support that store given that the owner is going the extra mile to please its customers. The whole distribution thing is completely flawed, and it needs reform.
Submitted by JeffD on November 23, 2010 - 9:33pm
"Bars listen to their customers, so if you want craft beer on tap, speak up."
Could not agree more... proprietors will put on tap what customers voice their desire for, so tell them to tap craft beers alongside the fizzy yellow crap! They'll do it if you (and others) will drink it!
Submitted by Carter on November 24, 2010 - 12:02am
Psh, easy to talk about ethical business practice when you're talented brewers with a product that people want! We corporate brewers of crap don't have it so easy: It's hard to make a beer taste better by marketing alone, and that's all they we learned in business school!
Submitted by Randy Clemens on November 24, 2010 - 8:51am
It is alive and well here in Los Angeles, too. And it extends beyond bars. I worked retail for several years and had a pretty badass beer selection, if I may say so myself. About 325 selections at any given time... not bad for a supermarket. One of my first orders of business was completely overhauling the "schematic" that the big guys had developed for the store. I mean, it was awfully nice of them to draw up what they wanted us to carry (and in the hustle and bustle of opening up a retail store, you'd be surprised how willing and trusting store management is to follow their recommendations -- either out of ease, lack of knowledge of the craft segment, a flawed belief that the distributor actually has the customer's best interests in mind for flavor and variety (not JUST profit and margins), or some sort of combination.
So, I'm sorry, but I got rid of just about every fizzy yellow beer. I kept a few, simply because they sold, and if that's what people really wanted, I needed to carry it. It just blew my mind every time someone would walk in, see this amazing selection of craft beer that we'd curated, see this smiling face there, ready/practically begging to answer questions and get you to try something new, and they'd grab a 6-pack of shit, as if they were pre-programmed to do so. But I digress. So, the big guys weren't sure what the problem was. I wasn't reordering nearly as much from them.
I was restocking one day shortly after this transitional period, and I came back to my beautiful beer wall to find the big brand rep there, with like two of his superiors, looking over the set, and they were really curious why at least half of their products they'd recommended were now gone. They'd lost their advantage, and they were willing to buy it back. I was offered all sorts of deals for free beer, and even personal incentives like Lakers tickets. Pretty tempting, but no thanks.
We also had a little beer/wine/tapas lounge in the store (also badass), but the sales figures there were a little lackluster for whatever reason. We were looking for all sorts of events to do, and any reasons we could give customers to come in were welcomed. One of the brand reps from one of the big guys was always wanting to do an event there, and offered a "Keep the Glass Night." Now, she told me she couldn't *provide* the glassware, per se, but she that we would be charged for it, and then she would run her card for the same amount the night of the event for some other product that never really existed. It was a ghost transaction to get around the system.
I bit. I didn't know better. It really just sounded like the way things were done in the business, and who was I to change that? Plus, I wasn't chasing personal gain -- this was so customers could come in, have a good time, leave with a cool glass, and tell all their friends what a great time they had at this supermarket ("Dude, they've got a friggin bar in there! You can drink while you shop!"), and come back and boost our sales. Everyone's happy? Nevermind that 3 of my 4 taps were now bought with unfair gains, and not the best beers on earth. I was young and new to the industry, and I'm sorry.
Then a few weeks later, she gave me a call to thank me for finally giving in to her unrelenting requests. She was hoping to do another event sometime in the future. The event had gone fairly well actually, and I said we'd figure something out. Then, seemingly unrelated, she called me back to let me know she had these 4 tickets to a Kings game that she wasn't going to be able to use -- did I want them? Hell yeah! I'd never been to a hockey game before and I've got some friends who I know would be down to go! They're good seats, too! Yeah, send em my way! Thanks so much!
I sold my soul that day. I was young and new, and I'm sorry. Now I know better, but I can only imagine how rampant it is in the rest of the field, with small convenience store owners and little mom-and-pops that have NO knowledge of the craft beer world. Those who willingly take the free product, the new cooler, or the Dodgers tickets, foolishly believing them to be good for business or as a measure of cementing a business relationship, as I once thought.
It's an ugly situation, and it's corrupt to high hell. I'm sad to say I took a small piece of the proverbial pie, but please take this as my repentance. I was young. I was new. I was stupid. And I'm sorry.
Submitted by John Smith on November 23, 2010 - 3:03pm
"Unfortunately, these types of activities are by no means limited to Chicago. Shady deals between breweries, distributors, and bars/restaurants happen–to some degree–almost everywhere."
"Most brewers and wholesalers play ethically and legally."
I appreciate the link to the article yesterday and now the blog post...but, Jacob, which one is it. If it happens everywhere then it does not follow that most wholesalers are playing by the rules (although I believe nearly all brewers, save two, absolutely are). It kind of sounds like you are hedging there so as not to ruffle any feathers.
It seems like beer distributors are parasites who exist only because the laws in most states require there be an independent middle man between the brewer and the retailer. And as a result these leeches don't care about anything but the bottom line.
They certainly don't care about craft beer quality because 95% of them, just as the nation as a whole, drink fizzy yellow. And we, the craft beer lovers, suffer because we pay the higher price for better beer only to learn there is no product rotation and the product is stored in hot, brightly lit warehouses.
If I am talking out of school here or just plain wrong then I apologize but it is certainly how it seems. And we know what the man said about perception.