Massachusetts Retailer Pledges to Ban Beer It Deems ‘Unfit for Consumption’

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In an effort to establish itself as the country’s top beer curator, Craft Beer Cellar, a popular Massachusetts-based retail franchise, plans to alter how it purchases beer in 2017 by implementing a list of required and banned products from its stores.

In a December 1 memo sent to franchisees and obtained by Brewbound, Craft Beer Cellar founders Kate Baker and Suzanne Schalow outlined changes they say will enable store owners to be viewed as “industry leading” retail operators and not just resellers of beer.

Those changes include a list of 175 mandated SKUs (stocking keeping units) — including offerings from national and international brands such as Boston Beer, Sierra Nevada, Firestone Walker, Anchor Brewing, Ballast Point, Weihenstephan and St. Bernardus — as well as “recommended” and “vetted” offerings.

Chain mandates, of course, are commonplace in the alcohol beverage industry, and many large-scale franchises, such as 7-Eleven, have strict beer purchasing guidelines.

But in a somewhat more controversial move, individual franchisees — most of whom pay a two percent fee in exchange for the ability to use the Craft Beer Cellar logo and name as well as access to real estate, marketing, technology, educational and ordering support — will also be told which brands they are expressly disallowed from selling.

In the email to store owners, Craft Beer Cellar named specific Boston-area companies — including Hopsters, Down The Road Brewery and Bent Water Brewing — as examples of producers who made beer that was “not fit for consumption.”

Beginning in 2017, Schalow and Baker will require that certain brands be banned from all of their stores for reasons that include “lack of adherence to style, off flavors, and inconsistency in quality.”

In a conversation with Brewbound, Schalow described the “do not buy (or sell) beer list” as an attempt to place objectivity on something as subjective as taste.

“The challenge for us is that a lot of amazing beer that could be purchased, is not being purchased,” she said. “Because beer that is not amazing is taking up space in our stores.”

The Craft Beer Cellar blacklist will also extend beyond the liquid itself, Schalow said. Factors such as packaging, pricing and even ownership could impact a company’s ability to make it to Craft Beer Cellar shelves.

“This is about leading by example,” she said. “We can’t afford to have our reputation marred.”

Brands that land on the “do not buy (or sell) beer list” will not be shut out entirely however.

“The team at headquarters is always willing to revisit those beers,” the company said in a blog posted to its website.

Nevertheless, the decision to institute a “do not buy” list could have legal ramifications for Schalow and Baker.

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John Connell

John Connell, a Boston-based alcohol attorney, said Craft Beer Cellar could be at risk of violating strict Massachusetts’s laws prohibiting “inducements” (the same laws that were cited by the Massachusetts Alcoholic Beverages Control Commission when it found Craft Beer Guild LLC, a beer distributor, guilty of pay-to-play practices earlier this year).

In an email to Brewbound, he called Craft Beer Cellar’s decision to create the do not buy or sell list “stunning.”

“I believe it is illegal in Massachusetts,” he wrote. “I believe any third party licensed franchisee that accepts further services from this franchisor such as advertising and support and also bends to their influence on what brands they have to purchase or cannot purchase is a violation of 204 CMR 2.08, the same regulation that cost Craft Brewers Guild a good deal of money and grief this year.”

A spokesperson with the ABCC said it wasn’t clear as of press time whether Craft Beer Cellar would violate state laws by implementing specific beer purchasing requirements.

Connell added that he’s already been contacted by “existing brewery clients” as well as one “new brewery client,” all of whom are considering taking legal action against Craft Beer Cellar.

“By alleging certain breweries’ beer is ‘not fit for consumption’ in an email to the Craft Beer Cellar franchisees, and naming certain breweries in this regard, the franchisor published to scores of third party industry players a demonstrably false statement which obviously qualifies as Commercial Degradation and Defamation,” Connell wrote.

The intended policy changes have also been met with criticism from some individual store owners.

One Massachusetts-based franchisee that spoke to Brewbound under the condition of anonymity said a group of approximately 10 Craft Beer Cellar owners do not agree with the new policies and believe that the decision to ban certain products could negatively impact sales.

Schalow, who disagreed with the notion that Craft Beer Cellar was inducing its franchisees, said she was aware that some store owners were upset at the changes, adding Craft Beer Cellar would consider discontinuing relationships with franchisees if they “do not accept the policies.”

“We have seen some pushback, but we feel very confident moving forward,” she said. “We have the ability to implement changes to all of our stores — in buying, branding or even credit card processing if we feel that is a benefit to all of us.

“We are going to be moving forward in a very positive and efficient manner,” she added.

Craft Beer Cellar, which launched in 2010 and has grown to include 28 locations across 13 states, expects to add 12 additional franchise locations over the next year, Schalow said. The company’s long term goal is to operate stores in 30 states by 2025, she added.

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