The “beer wars” that erupted when a Franklin Circuit judge ordered the Kentucky Department of Alcoholic Beverage Control to issue a wholesale beer distributor’s license to Anheuser-Busch InBev back in October just added a new combatant: House Speaker Greg Stumbo. Late last Friday, Stumbo filed House Bill 168, which would block the license.
In other words, local craft beer lovers who’ve been wondering if their favorite beer might disappear from shelves can rest assured they won’t be going down without a fight.
Essentially, the bill seeks to reaffirm the traditional three-tier system for alcohol distribution – supplier, distributor, retailer – by preventing any entity with one specific license to be granted another. So, in this case, A-B InBev’s out-of-state supplier license would prevent it from also procuring a license to distribute, which would have been necessary to complete the planned purchase of a distributorship in Owensboro.
The purchase and judge’s order set off a firestorm among critics, while others saw the development as simply a transaction between two willing parties. A group called Kentuckians for Entrepreneurs and Growth (KEG), made up largely of Kentucky craft brewers, retailers and smaller beer distributors, fear it sets a bad precedent and threatens jobs and sales going forward.
In addition, representatives of KEG point out that in seven other states, since 2010, legislation like HB 168 has become law, indicating this concern isn’t limited to just Kentucky.
Elizabeth Post of BOXCAR Public Relations, which represents KEG, said the vote in these states, which include neighboring Illinois and Ohio, has been a collective vote of 695-81 in favor. She also said Tennessee is considering such legislation in order to prevent larger, out-of-state corporations such as A-B InBev from attempting to buy in-state distributorships in the future.
HB 168 would be an amendment to current policy and states in part that “each kind of license listed in KRS 243.030 shall be incompatible with every other kind listed in that section and no person or entity holding a license of any of those kinds shall apply for or hold a license of another kind … .”
Post believes, based on the results in other states, the amendment will happen if/when it comes to a vote. A statement from KEG also points out that Kentucky law already prohibits any supplier of distilled spirits and wine from owning any ownership interest in a distributor’s license.
“We’re confident,” Post said in a phone interview.
KEG estimates the precedent set by the A-B InBev purchase could theoretically cost more than 1,500 jobs in Kentucky. There is also the concern that Anheuser-Busch and InBev, which only sell their own products, could push out local brewers of craft beer in addition to out-of-state beers popular in Kentucky.
For Louisvillians who love their craft beer, that could mean no more buying that local brand in a liquor store.
“This bill would certainly help ensure their beer is available as opposed to doing nothing,” Post said.
A-B opposed such notions in a prepared statement on Monday.
Damon Williams, director of sales and marketing for Anheuser-Busch of Louisville, said in the statement that the bill “represents unnecessary government intervention in the free market and places restrictions on competition in the distribution tier.”
The statement continues, “Kentucky’s beer distribution system has worked well for decades and doesn’t need fixing. It provides balance between all stakeholders – brewers, distributors and retailers – and allows brewers to have a reasonable say in how their brands get to market. It’s unfortunate that a small number of special interests are seeking to manipulate the political system to alter this long-standing balance and obtain competitive advantages at the expense of others.”
John King, executive director of the Kentucky Guild of Brewers, said the war is probably just beginning, noting that A-B InBev has plenty of lobbyists at its disposal in Kentucky. He noted, however, that even if HB 168 doesn’t go through, a changed policy that allows multiple licenses could open doors for small breweries to have increased barrel limits and possible distribution opportunities of their own.
Post said legislators are now in recess until early February, which is when the “beer wars” will likely resume in earnest.