
On Wednesday, February 9th, the U.S. Department of Treasury issued a report detailing concerns regarding the competitiveness of the alcohol beverage industry.
Shortly thereafter, the Brewer's Association issued a statement applauding the report.
Among other things, the report focused on the following concerns:
Beer production is concentrated heavily with two major brewers (referred to by many as a duopoly).
Beer wholesalers continue to consolidate and expanded their geographic reach, giving rise to concerns from smaller, independent craft brewers.
Complaints of exclusionary behavior by large producers, distributors, and retailers are common.
Some of the major complaints include those about (1) discriminatory conduct by distributors, and (2) slotting, shelving, and other preferential practices, despite a ban on such practices.
Some of the laws and regulations, both state and federal, may impose a disproportionate burden on small and medium-sized producers.
Some state laws require wholesalers to set publicly and adhere to prices, stifling competition and likely increasing prices to consumers.
The report also covered state franchise contract issues, and what many breweries consider to be unfair laws that were initially designed to protect independent wholesalers, now providing an unfair advantage to the wholesale tier after years of consolidation within the tier, while at the same time the manufacturing tier is growing in the number of smaller, independent breweries.
What does this mean for the industry? The report recommends, among other items, that TTB should consider rulemaking to update its trade practice regulations. Additionally, the report specifically recommended that TTB continue to explore streamlining COLA approval to reduce barriers to entry.
From a practical perspective, it would seem that the easiest way for TTB to implement these recommendations would be to increase scrutiny and enforcement of trade practice matters. Therefore, one might expect to see an uptick in those cases soon.
Stay tuned for updates.
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