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NJ’s Craft Beer Battle: Not as Easy as ABC
On September 21, 2018, the ABC served a Special Ruling with revised regulations intended to “level” the playing field of the NJ Craft Beer industry. This was the first major development since sweeping changes were made in 2012; changes that contributed to the craft beer boom in the Garden State.
Here is the most recent timeline:
- The Special Ruling issued.
- Most breweries and consumers went nuts.
- An online petition reached 28,000 signatures in about a week.
- Pro-brewer legislators spoke out in opposition to the Special Ruling.
- Burlington County passed a resolution in response to the Ruling.
- Governor Murphy raised concerns about the unintended effects of the Special Ruling.
- Enforcement of the Special Ruling and its regulations were halted on 10/2/18.
I applaud Governor Murphy and all elected officials for stepping up and quickly acknowledging the bigger impact that this Special Ruling would have had on breweries and various local business that share a direct and indirect relationship with one another. Those relationships are significant and extremely important to the economic growth of NJ.
So, how did we get here? Per the ABC, they claim to have been working behind the scenes for perhaps a year with every voice of the NJ craft beer industry. More on that later.
“They’re Taking Away Our Business! They Are? Oh Yeah, I Guess They Are. Get Them!!”
Let’s think about that for a second. Craft breweries are taking away business from establishments that are authorized to sell liquor, wine and food? It’s an easy scapegoat when the numbers don’t add up at the end of the month. I’ve seen zero objective data that a particular bar or restaurant lost business as a result of a NJ craft brewery. To all the bars who want to take on this fight, kindly open your books. Tell the ABC and breweries exactly what your financials were before a neighborhood craft brewery showed up and seemingly “ruined” your business.
There are a number of questions I would ask that bar owner:
- When was the last time you did anything innovative?
- When was the last time you upgraded your menu?
- What clientele are you seeking to bring in your doors these days?
- What’s on your tap these days?
- How many NJ craft beers do you carry?
- When was the last time you renovated your bar?
- When was your liquor license paid off?
- What do you pull in on a weekend?
- Is your place more seasonal than it used to be?
- What were your yearly sales before local craft breweries opened?
- Did you ever reach out to local breweries to see how you could work with them on food delivery recommendations or tap takeover nights?
- Have consumers changed the way they eat and drink in your opinion?
- Do you market anymore?
- Should I stop asking questions now?
When the dust clears, there is likely no objective data that will show specific bars are losing business due to NJ craft breweries. However, they may be losing customers based on outdated business models. The game has changed, and so have consumers. We buy everything online, we complain online when we don’t get what we want and we have a million options for what we eat, drink, see, believe, listen to and read. Also, a bar chooses not to carry good beer, but that’s on the bar. A consumer chooses not to enter a bar with beer they don’t like. Unfortunately, we live in a world where personal accountability has become the exception and not the rule, so it’s so easy to play the blame game.
It’s very easy to see who is behind this: Big Beer wholesalers, Big Beer and everyone who gets hooked up by them. If you go back to the fantastic documentary Beer Wars, the market share of craft beer was not even close to half a percent at the time that movie came out. Now, the market share of craft beer is upwards of 12%, if not higher, and we know that the Big Boys aren’t happy. Why do you think larger companies are buying up mid-sized craft breweries to add to their portfolio? It’ a smart move to show the public that you love craft in front of everyone, but beat the hell out them with lobbyists, regulations and threats behind the curtain.
Welcome to NJ I guess.
At the end of the day, the strongest argument the Lobby advances has the weakest proof, with tons of variables in between.
“They’re Operating Like Bars! They Are? I Guess They Are. Get Them!!”
No liquor. No food. Now, no menus of local establishments. Wait, breweries can sell snacks. What a huge victory.
In an effort to be fair, I would submit that certain breweries have more events than others, and some advertise more. However, the last time I checked, consumers drive this business – not the other way around. That has been lost by the Lobby. It’s laughable that NJ ranks at the top of having the most restrictive brewery regulations in the nation, yet at the same time, NJ breweries are producing medal winners at the Great American Beer Festival. As we argue about this, NY and PA are cleaning up with their breweries.
Have bars and restaurants been prevented from having trivia nights, a paint and sip or a solo musician? Of course not. While I think there can be some limitations on certain activities, the arbitrary number of 25, or one every other week, is not it.
This is where I expect some internal strife amongst NJ breweries. Some breweries have no events. Some have 3-5 a week. Some have been in business for 6 years; others 6 months. Clearly there is no one voice for NJ breweries. After all, there are 2 trade associations, and within them there are likely disagreements over what a unified front is.
The various press releases from the ABC and the Lobby seemed to indicate that collective discussions were had with all sides of the beer table that led to the Special Ruling. That statement opens up a host of questions about what was said, when it was said, what was agreed to, what was to happen and whether any of those representatives for NJ breweries communicated back. From what I can tell online, it seems that some breweries had no idea what was going on.
52 Private Events a Year: A Fun New Way to Violate the Privacy Rights of Others
As part of the Special Ruling, NJ breweries were allowed 52 private events a year. That number is big, so that’s a huge win for breweries, right? I’m not so sure. Are people getting married and having private parties at breweries at the clip of 1 per week?
The ABC threw a nice large number as a “give back” to the uber restrictive 25 per year live event mandate. Can you say arbitrary and capricious? To make things worse, they mandated that guest lists had to be shared with the ABC.
You read that right. A person who wishes to have a private event must make its guest list public to a government agency! A brewery (would have been required) to disclose personal information about guests. This would have a chilling effect on breweries, because no matter how you swing on the political swing set, handing out your guests’ identities is not at the top of anyone’s list. It sounds a tad, well, illegal.
I wonder if a private citizen has an invasion of privacy claim against the ABC. Also, what if a brewery fails to disclose that a list must be provided to the ABC. Are they on the hook for something? Talk about “unintended consequences.” I would love to know the rationale for this portion on the Special Ruling. It’s as if someone copied and pasted the wrong paragraph in the final version.
Was the Intent of the ABC Act Even Met by the Special Ruling?
I could have started out with this one, but it’s a little dry. The Director of the ABC (or he who shall not be named) has authority to draft a Special Ruling. Got it. The ABC Act exists to regulate alcohol. Got it. We have lots of regulations and fancy statutes using colons and dashes. Got it. Lawyers make money. Got it.
When you peel this back, the ABC can make rulings and create regulations that are reasonably related to the health, safety, morals and welfare of the State. Show me where caving into the bar and restaurant lobby to choke a flourishing industry is remotely part of the Act? In my opinion, that’s where the Special Ruling wreaks of special interest more than the greater interest of growing the state’s economy and promoting small business growth. They use the term “level” to mean knock down and destroy, not even things out.
So What’s Next?
For now, there is a brief calming period where order has been restored.
In my opinion, I think that the ABC and the Lobby are sharpening their axes and planning their attack with the help of every industry trade group and legal team to put pressure on NJ craft brewers. I think that local bar owners who have contacts with local police departments may start to “bother” some folks. More than likely, the ABC and the Lobby are probably annoyed with the craft industry folks who met with them and who may have assured them that all will be well. It isn’t.
I would be more cautious if I owned a brewery, but I don’t. Focus on the beer. No distractions.
If the significant public outcry of the Special Ruling doesn’t provide enough evidence to the ABC and the Lobby that regulating craft beer under cover of night won’t work, nothing will.
The ABC, the Legislature, the Lobby and the NJ Craft Breweries all have the ability to do things the right way. They have the ability to take their time and ensure that business continues to boom in NJ, because we all benefit from it. It’s also their collective ball to drop if everyone wants to take their gloves off and engage in back handed tactics and aggressive maneuvers.
I am merely an interested observer, but I’ll be watching from the sidelines. In fact, I’ll be cooking a nice steak that was purchased at a local butcher while drinking a cold NJ craft beer that I bought at my local liquor store.
Maybe I’m the problem Mr. and Mrs. Lobby. I just don’t want to go out tonight — and there’s plenty more of me out there.