The unofficial theme of the National Beer Wholesalers Association’s (NBWA) Legislative Conference in Washington, D.C., Tuesday was celebrating the collective force of the beer category across all three tiers, A notion that is increasingly important as the category faces ongoing competition from spirits, and the anticipation of harsher regulations and federal scrutiny in the near future.
Nearly 600 industry members were in attendance, ready to advocate for beer with members of Congress. Members’ focus areas with legislators this week include the importance of independent beer and beverage distribution, workforce recruitment and retention and differentiation between bev-alc products.
“I think we all can agree that the political and industry environment in which we’re operating right now requires us to be here more than ever,” NBWA president and CEO Craig Purser said in his opening remarks. “Being here in person is absolutely essential, as the industry faces a wide variety of policy, regulatory and marketplace challenges.
“We must do this in a way that respects the wide variety of views by these elected representatives,” he added.
While Purser did not call out any specific companies, it is possible the emphasis on a “wide variety of views” was made in reference to the backlash incurred this month against Anheuser-Busch InBev. Conservative figures continue to advocate for a boycott of the beer giant after its Bud Light influencer partnership with Dylan Mulvaney, who documents her life as a transgender woman. (Read previous reporting here).
“You all know firsthand how divisive things can be in your markets,” Purser said. “Continuing to emphasize the beer distributors’ work over time to meet the needs of all of their customers has never been more important.”
Industry Group Leaders Join Forces Against Spirits
Beer’s re-energized collective force was on display during the morning’s panel discussion with Beer Institute (BI) president and CEO Brian Crawford, Brewers Association (BA) president and CEO Bob Pease and American Beverage Licensees executive director John Bodnovich, moderated by Purser.
A core issue discussed during the panel was the work of spirits advocacy groups such as the Distilled Spirits Council of the United States (DISCUS) to reduce state excise taxes for spirits-based, ready-to-drink canned cocktails (RTDs) and expand where those products can be sold.
Crawford credited the spirits industry for being “disciplined” and “executing a 20-year strategic plan to gain market share,” while the beer industry hasn’t been as collaborative. He encouraged attendees to have “eyes wide open” to the motives behind spirits’ priorities and to “educate” legislators on those motives.
“Let’s not kid ourselves on what this is about: This is about industry recruitment,” Crawford said. “This isn’t about taxes, this isn’t about anything other than recruiting beer drinkers to their high end products.”
Complicating the BI and the BA’s pushback against lower excise tax rates is some of the groups’ own members making RTDs themselves. Pease said the BA is working on educating members that while these products “might be a short-term gain in your pocket, it’s really going to be a longer-term negative” in terms of access to market and space in retailer cold boxes.
“The lines are blurring quickly,” Crawford added. “It is important for all of us to wrap our arms around beer and protect beer as a category,”
Trade groups are also working as a collective to address workforce shortages, which are affecting producers, distributors and retailers alike. Bodnovich said finding and retaining employees is the issue he hears most often from both on- and off-premise retailers.
“They’re talking about labor and workforce issues and how they can be competitive with the newly opened fast-food restaurant down the street that’s offering $20 an hour and partial benefits,” Bodnovich said. “That’s a challenge and it’s not like it’s going away.”
Purser added that he’s “never seen a dynamic like this” in which the workforce has fallen “so short” of industry needs.
NBWA Warns Increased Competition Could Lead to More Regulatory Scrutiny
One of the core issues for the NBWA over the past year has been the entrance of traditionally non-alcoholic beverage companies entering bev-alc. The trade group has raised concerns that products like Hard MTN Dew and Sunny D Vodka Seltzer cause consumer confusion and attract consumers below legal drinking age.
The NBWA has also suggested that soft drink companies entering bev-alc may be using existing relationships with retailers to skirt pay-to-play prohibitions to gain shelf space, and are going against the three-tier system by creating their own distribution arms (ala PepsiCo with the creation of Blue Cloud Distribution). Some state regulators seem to agree, most recently in Florida, with the state’s Department of Business and Professional Regulation (DBPR) filing complaints against Blue Cloud for allegedly violating statute in its license applications.
“I do not want to give the impression that the sky is falling; this industry is strong, it is competitive, it is thriving,” Purser said. “It is doing so well that all of these beverage companies want in. But these are good reminders that this industry that we worked so hard to maintain and to strengthen is delicate, and it is not immune to increased scrutiny or action by regulators.
Purser also noted that competition is no longer reserved to beverage brands, pointing to a 2021 Amazon memo, leaked in March, which suggested the e-commerce giant wanted to increase its own alcohol sales by lobbying to change liquor laws. While Purser said the NBWA wasn’t surprised by the ideas shared in the memo, the report “should serve as a wake up call to everyone in the industry” of the ambitions of Amazon and other tech companies.
“And as we look at 2023 through the prism of an even more expanding industry, we must be mindful of more changing dynamics,” Purser continued. “We need to remain vigilant in our business system as we watch the ambitions of some who seek to disrupt the competitive, safe and efficient, yet delicate balance of the three tier system.”