The Great Beer Challenge (cont.)

The problem with that argument, of course, is that major brewers already control much of the beer distribution in this country. Major brewers make sure that distributors sell their products exclusively or, at the very least, dramatically limit the distribution of beer that’s made by smaller brewers. When craft-brewed beer started to gain in popularity in the mid-1990s, Anheuser-Busch demanded that distributors commit what it called “100 percent share of mind” to carry only Anheuser-Busch products. Although that’s no longer a formal policy, more than 60 percent of distributors that deliver Anheuser-Busch products do so exclusively. Most regions of the country have two beer distributors: One carries Anheuser-Busch/InBev products, and the other carries MillerCoors products and everything else. The result is that there’s precious little room on distributors’ trucks and the store shelves that they stock for craft beers.

We don’t believe that the three-tier system should be abolished, as some craft-beer advocates do. But it’s clear to us that the rules that govern beer distribution should be relaxed to allow for more self-distribution exceptions for small brewers. It’s great that 29 states allow craft brewers to sell at least some of their beer directly to stores. (See “State of Direct Sales.") But according to a database that’s maintained by Brewers Association (BA), which is the trade group for craft brewers, five other states restrict direct sales only to brewers that are from that state. And 16 states and the District of Columbia allow no direct sales from brewers to retailers at all.

“I live in Iowa, and if you look at the entire spectrum of beers, I only have access to 15 percent of it,” says Maureen Ogle, who is the author of “Ambitious Brew: The Story of American Beer.” “If beer-makers could deal directly with a retailer, there are lots and lots of alcohol specialty stores where they could ship a few cases without having to sign a contract with a distributor.”

In response to recent lawsuits (both unsuccessful and pending) in states that seek to scale back the three-tier distribution system, beer distributors have rallied behind new federal legislation that is called the Comprehensive Alcohol Regulatory Effectiveness (CARE) Act. This act would affirm state control of liquor laws and reinforce the three-tier distribution system. Not only would the legislation curtail lawsuits, but it also would strike down other federal regulations, such as uniformity of labeling, which craft brewers say would allow states to further discriminate against out-of-state brands and make it even more difficult for smaller breweries to compete. (See “Strange Brew.") Hearings on the bill, which has 152 co-sponsors in the House of Representatives, were held in September 2010. The bill could be put to a vote this year.

Of course, distributors oppose another potential retail option for beer sales that could benefit consumers—the Internet. At a time when 36 states allow direct sales of wine on the Internet, most states still prohibit direct online sales of beer. That means that most small brewers aren’t able to sell their beer beyond a small region. So, for instance, if you live in Colorado and want to buy a craft beer that is made in Florida, you have to hop on a plane or gas up for a long road trip.

Assuming that the proper age-verification safeguards could be employed to reduce the likelihood that minors could buy beer online, we believe that allowing small brewers to sell at least limited quantities of their product online would be a positive development for consumers. In some cases, shipping costs for beer could cost almost as much as the beer itself, but Internet sales could increase the options for beer drinking from dozens of brands to hundreds in a short time, Ogle and other beer-industry observers say.

CRAFT PROJECT. If there’s hope for consumers in the current distribution system, it’s that some beer distributors have begun to add craft-brewed beers to their product lists in the past 3 years.

But for now, even the distributors who’ve added craft brands still rely heavily on brands that are made or owned by major brewers. Brands that are from major brewers still account for as much as 95 percent of sales by distributors who have added craft beers. That means that many craft brewers still are scraping for store space, and consumers more often than not must take a scavenger-hunt approach to finding the craft beers that they want—even if that means driving to another state to buy it.