Brewbound Podcast: Get to Know the Worldwide Brewing Alliance

[00:00:00] Jessica Infante: Over the last 20 years, beer has lost more than 12% of its share of total ethanol to spirits. Why should you care? We'll talk about it next on the Brewbound Podcast. Hello and welcome to the Brewbound Podcast. My name is Justin Kendall and I am the editor of Brewbound and I am joined by Jessica Infante, the managing editor of Brewbound. How you doing, Jess? Pretty good. Pretty good. And also joining us is Zoe Licata. How you doing, Zoe?

[00:00:38] Justin Kissinger: I'm good.

[00:00:39] Jessica Infante: So we are recording this episode a little bit early due to the Memorial Day holiday, which I'm sure Zoe will have multiple Darties over that period. Maybe even Jess, if not a beach day, right?

[00:00:52] Worldwide Brewing: I mean, what is a beach day if not a Dartie? It's true. That's not true. I go to the beach by myself and I don't bring anything to drink because I got to drive myself there. Wow, that sounds so lame. I promise I have friends. Do you want to come to the beach with me? I have a crane beach parking pass. It sounds lovely. It doesn't sound lame. It sounds like a great time. I mean, the beach in New Jersey is a whole other proposition, but the beach in Massachusetts, I am lonely. Not lonely, solitary, enjoying my own company. I'm going to stop now. Okay.

[00:01:23] Jessica Infante: We're going to get you some books.

[00:01:26] Worldwide Brewing: I have many.

[00:01:27] Jessica Infante: That's the problem.

[00:01:28] Worldwide Brewing: Yeah.

[00:01:29] SPEAKER_??: Yeah.

[00:01:30] Jessica Infante: Well, this week we've got a couple of guests. We are going to be joined by Justin Kissinger from The Worldwide Brewing Alliance, as well as Dan Kopman, who you all probably know from his time as one of the founders of Schlafly Brewing in St. Louis. And also he served as CEO for Heavy Seas in Maryland for several years. So we're going to be joined by them.

[00:01:53] Worldwide Brewing: It's a podcast with two Justin K's. I kept thinking that the whole time. It is.

[00:01:58] Jessica Infante: Yes. So just a heads up, there are a lot of references to Justin and it's not me that we're talking about. I guess we should just hop in because we're recording this in the past for the future. Yeah. So let's do it. Let's get to our featured interview. We discuss the ongoings of the various trade groups often, whether that's the Brewers Association, the Beer Institute, or the National Beer Wholesalers Association. But we haven't spent a lot of time with The Worldwide Brewing Alliance, which represents more than 80% of The Worldwide's beer production. So joining us today is Justin Kissinger, the president and CEO of the WBA, as well as Dan Kopman, who has served as an advisor for the WBA. He's also one of the founders of Schlafly Brewing in St. Louis. So let's get going. Justin, for starters, for those unfamiliar with the WBA, tell us about the organization's mission and share a little bit about your past work in the beer business, because you used to lead Heineken's global public policy and responsible consumption agenda.

[00:03:04] Dan Kopman: Yeah, so the WBA is a community of brewers and brewing associations from around The Worldwide. So our brewing members are Anheuser-Busch InBev, Carlsberg, Heineken, and Molson Coors. We have a number of brewing trade associations that we count among our memberships. In the U.S., it's the Beer Institute, Beer Canada, where we represent Brazil. We have members in Europe through the Brewers of Europe, so most of the European Union by that organization. Southeast Asia through brewers of Japan, brewers of Korea, brewers of Australia, and brewers of New Zealand. So it's a really global representation of our industry. These groups come together to champion the category. And our focus is on talking with global stakeholders. So think of groups like The Worldwide Health Organization or the International Monetary Fund, The Worldwide Bank, the United Nations system, all of the groups that make policies that affect our industry all around The Worldwide. Me, I've been with the group since we launched in September. The organization's been around for a while, and I've come on to make it a little bit more robust and intentional with the work that we were doing. As you mentioned, I came from Heineken. I led their global public policy for the last four years, and that deals with the responsible consumption agenda, so beer and society, the interaction with our sector on policy with governments around The Worldwide and sort of organizing the business's policies on responsible consumption in the different markets where we operated. I came out of the U.S. I led government affairs for their subsidiary in the U.S., Heineken USA, for a number of years. And before that, I was from, came out of the United States Congress where I worked for a couple of different members of Congress during my career there. Our agenda is all around differentiating beer and making sure that we're bringing the distinctive characteristics of the product into conversations with people that are making policies that affect us. So this was a large part of what I did when I was at Heineken in terms of reacting to those policies when they came out and helping the business. engage with those stakeholders. And what you realize is that it really requires an industry level dialogue and that there's a lot of interest in what our sector can bring into communities all over The Worldwide. But we didn't have an organized way of telling that story. And so what we've really been trying to do is focus on highlighting the areas where beer is distinct among different types of alcohol and making sure that we're bringing that conversation to these folks. So talking about the economic impact of beer, the way that it's made, the huge value chain that supports it, the role that we can play in hospitality, certainly during the pandemic and now coming out of the pandemic, the role that brewers play in particular in the recovery of the hospitality sector and in agriculture have been hot topics for us. And in Geneva, we're looking at the end of a process of two years where the WHO has been looking at alcohol policy. And we've been coordinating participation in the dialogue with the WHO on behalf of brewers. So it's an active space. There's a lot of interest in what we do and how we do it. And it's really been about collecting that story and trying to be a bit more intentional with it.

[00:06:18] Justin Kissinger: Dan, can you give us a little insight into how you are working to all of this and what it's like as an advisor to the WBA?

[00:06:26] Schlafly Brewing: So my first exposure to the WBA was when I was the craft brewer group member of the Beer Institute. And the Beer Institute at the time was the chair of the WBA. And during the pandemic, the WHO consulted a period in which they wanted to speak to industry members. Justin asked if I would speak on behalf of small brewers. and describe to the WHO staff what was going on with small brewers and the impact of the pandemic on small brewers. So that was my first exposure to it. And then knowing Justin from the back in the working on the Craft Beverage Monetization Tax Act. So Justin and I worked together when I was on the Brewers Association Board on putting the compromise together. So I've worked with Justin in the past in areas where brewers come together and find common purpose and move forward on a common agenda. And when I was leaving at the end of last year, when I was stepping away from my full-time CEO role of Heavy Seas Beer, I got into a conversation with Justin about helping the WBA connect to smaller brewers around the globe. And also to suppliers and to folks like yourselves, because it's going to be an all hands on deck kind of effort. Beer needs to come together to understand what has happened over the past 20 years in terms of the share loss. And then work together in the policy space to try to make sure that the differentiation message is out there and that brewers understand why it matters to them and suppliers understand why it matters to them. And that's really going to be my role. It's pretty flexible at this point, which Justin and I both like. It's not an overly formal role. We talk quite a bit. And as we go forward, we'll figure out strategies to connect more and more brewers around The Worldwide to the organization, to the message.

[00:08:35] Dan Kopman: It turns out that a lot of the folks that we're talking about at this international level. Right. They don't have a lot of exposure to the industry. And most of the industry happens in the country on the ground. Right. I mentioned earlier we did this global study with Oxford Economics. Looking at the global economic footprint of beer and you know at the macro level you see five hundred and twenty two billion dollars in global value add you see twenty three million jobs. What exists below the surface is this industry where like 90 percent of the activity happens within the country. It's a business that is centered inside the country. And so this international story we get we've never really had a vector for telling it at scale and to connect the people that are making the beer and making that industry so interesting and compelling to this discussion that's happening among these institutions. And so Dan has been really instrumental in helping us connect the dots and really understand the craft beer story, the way that suppliers view these issues, the needs for how we can connect them and bring them into the work that we're doing and the conversations that we're having, and really feature this whole complex value chain that we have in these discussions.

[00:09:47] Worldwide Brewing: So zeroing in on the U.S. for a little bit, Dan, you mentioned, you know, team effort, all hands on deck. I think something that certainly fits that bill right now is the U.S.-based beer organizations fight against spirits producers and their trade groups' efforts to equalize taxes from beer and liquor. Something we certainly talk a lot about on the podcast. We cover stories about this all the time. You and I have talked about this in person. So where does the WBA fit into that equation since that's a huge issue at home right now?

[00:10:18] Dan Kopman: So in the large sense, I mean, our focus is on differentiating beer from other types of alcohol and to make sure that our members understand the value of protecting the beer category. We're in this situation where in much of The Worldwide, you know, there's an established regulatory framework that favors beer in a lot of different respects. because of its economic impact, because of its role in society. All of the things that make beer great. What we've seen in the U.S. is a gradual erosion of some of those differentiated regulatory practices in a number of places. And, you know, I don't represent the U.S. We have a member who is the Beer Institute, who is the one that would speak to any particular policy. But it's certainly something that we're paying attention to and that we see, and that is part of a larger narrative that's happening around The Worldwide on equalization of hard liquor with beer, wherever it's possible. And that's an agenda that we're really attuned to and working with brewers to make sure that we have the right way of reminding policymakers why the status quo is the status quo in a lot of different places.

[00:11:24] Schlafly Brewing: What comes to mind first is the need for a look back, right? We're focused on the moment and we're thinking, you know, hard liquor is trying to make these changes to tax laws in various states or trying to make lower strength RTD, you know, based spirit based products available where beer is available. but this is part of a 20, 30 year effort. I think it would be very helpful. I know I'm gonna be doing some work on this, and this is part of the role I think of the WBA is to provide the support from a research standpoint to really be able to describe for people what has happened over the past 20 years. Because you have to put these efforts into context. Discus, for example, representing hard liquor, are doing things on the basis of a game plan that was worked out a long time ago. And so for brewers, it's really important to understand that background, and for everyone looking at this to know that this is nothing new, and therefore our response needs to be based on that common knowledge and history, and also what came before it, meaning there were differentiated alcohol policies between beer and hard liquor. that date back hundreds of years, and in the U.S. date back to the Prohibition, and there was a reason for these things. So why did policymakers coming out of Prohibition want to treat beer differently to hard liquor? First and foremost, they're made very differently. The economic basis for them is very different. The employment platform is vastly different. I mean, it costs a lot more money and takes a lot more people to deliver beer to consumers than it does hard liquor. So it's important to understand that context because it's that information, it's that history that is gonna guide us in terms of the approach we take to advocating for beer, whether that's at the federal level or the state level in the United States.

[00:13:30] Jessica Infante: What is it about this moment that that context, that history is sort of being either lost or swept aside

[00:13:39] Schlafly Brewing: Well, things get swept aside in the moment, right? So I believe our role at the WBA is to help provide that historical context and support others, whether that's the work going on at the Beer Institute or the Brewers Association or the NBWA. You know, we want to provide that context. We want to provide that history and provide a blueprint for going forward. Again, we're not the tip of the spear. That's the trade associations here in the US, but we can provide support. And that's really our role. And also the work that we do at a global level will trickle down. that will have an impact. The work that is going on at the WHO, for example, at the moment will have an impact all the way to state and local policy eventually. So just making sure that the differentiation message is part of the conversation is where you have to start. That everyone involved in beer, all stakeholders understand that differentiation is important and that beer and hard liquor are different. in all sorts of ways and should be treated differently by whether it's a policymaker or a consumer.

[00:14:53] Dan Kopman: The opportunity at the global level to remind people why the industry exists as it did is an important one because the conversation is happening right now. There's a lot of interest in issues related to alcohol all over The Worldwide that are going to impact the way that companies go to market, the way that regulatory structures spring up in different environments all over the place. And if we're not reminding people why the differentiated policy environment exists in the first place and the elements that went into those choices, we'll get different outcomes and won't have the same operating environment that we've been accustomed to. And what you can see from the story in the US in terms of ShareShift, I think what you could see in other environments is that the regulatory environment that you operate in matters and it can influence what happens within the business. And if you're not telling the story, then other people are going to tell the story on your behalf and they're not going to tell it the way that that you want it to be told. And so, you know, I think Dan said it well, we need to knit together the industry so that we're all telling a similar story with the same level of conviction and that, you know, we can really bring this to all different levels so that when policymakers are making decisions, they have a full picture of what it is that we bring to society and why our industry can be so important to these issues.

[00:16:11] Worldwide Brewing: So one thing that we hear and say all the time is that beer is losing share to hard liquor. And I just want to put some numbers to this because you guys were kind enough to share with us some really kind of eye-popping data over the weekend as we prepared for this conversation. So you shared with us numbers that show beer volume has increased by 8 million barrels between 2000 and 2021. But in that same time period, hard liquor volume has increased by about a million barrels or 335.7 million gallons. So in that same timeframe, hard liquor has grown its share of ethanol from 28.9% to 38.4% in 2021. So what has liquor done so effectively that it's chipped away a beer share? Beer share in this time period went from 57.8% in 2000 to 45.6% in 2021. So what do you think are some of the forces driving these shifts?

[00:17:10] Dan Kopman: So it's a complicated question, right? There's no one single answer that's going to explain the entirety of what we see over the last 20 years. But I think for me, coming from the background that I come from, what I see is an environment for the sale of the different products that has shifted quite a bit over the last 20 years. And that is coincidental with shifts that we see within consumers and the choices that they're making. And so different policies that expand the availability or the advertising of hard liquor can have an impact on the market that exists for the consumer. And I think that over that last 20 years, what you've seen is quite a bit of regulatory change in terms of availability, in terms of you know, where liquor can be advertised, the prevalence of hard liquor in places like stadiums and events like that, that have changed the environment where we're operating. And some of that is attributed to this loss of differentiated policies and the way that states in the United States regulate the availability and marketing of these products. So it's a pronounced thing. I think the thing that I find most interesting is that it's been a very slow and gradual shift, right? You don't see huge swings in these numbers. It's a pretty consistent change over time where it's been just an incremental change in the share level that you've seen over that 20 years. And so here we are looking back over that long period of time, wondering how all of this happened. And to me, that's one of those things that goes to the root causes is that you're looking at a different marketplace than you had 20 years ago, where everyone is competing for the consumer.

[00:18:53] Schlafly Brewing: Yes, I think the incremental nature of it speaks to the regulatory system in the United States. So you get small incremental changes at state level every year and even local level. These changes are not easily made. Look at, for example, direct shipping for wine. That didn't happen overnight. That took 20 years. So the same thing happens in this case with hard liquor, getting more market access, getting more favorable tax rates, They've done some amazing things at the federal level to reduce their effective tax rate by getting credits on different ways in which they might produce something. Flavored spirits, for example, they get a credit there. So they've done these things incrementally over time because of the incremental nature of the US system. The same would apply to the rules that we had to get changed to allow craft brewers to have retail licenses. right? Those things happened, you know, we got a law changed in 1991 in the state of Missouri to allow us to open, but these laws are still being changed in states today. Look at Alaska just this past week. It's a place where policy changes happen incrementally, and I believe that was baked into Hard Liquor's plan. They took the landscape for what it is, and they worked at it slowly and steadily over time at both a state, local, and federal level. It's really smart.

[00:20:27] Jessica Infante: I've heard people say that equivalency is an inevitability and I'm not sure that I believe that because that's a lot of dominoes that have to fall. Where do you guys fall on that?

[00:20:40] Dan Kopman: I don't think it's inevitable by any stretch because I think that what we offer as brewers is really a unique and distinct thing among different categories. The experience that brewers can offer through the beer occasion is, I think, a very unique experience among different types of beverage alcohol. Again, going back to the localness of it and the economic impact, we have this enormous value chain that is unique in terms of its size, even among general industries in The Worldwide. We have agriculture, we have huge amounts of distribution, a large manufacturing footprint, all of these things, and they tend to stay within the country where it happens. Beer is a good business to have in a lot of different countries if you're trying to promote economic activity, things like hospitality, where a lot of people actually work. And more and more, beer is going to offer products that are aligned with some of the things that are going on in global policy circles through low and no alcohol beverages. Dan mentioned what was going on in Geneva this week at the WHA and work that was coming out from the WHO on alcohol policy. And what I can't help but note there is that they call on manufacturers to create low and no alcohol beverages, to look at research on alcohol differentiated by alcohol content. These are trends that brewers are driving and that are aligned with things that brewers are doing. We can offer an occasion with non-alcoholic beer where A consumer can stay engaged in a drinking occasion but opt out of the alcohol and still really enjoy the moment with their friends, their colleagues, whatever it is. That is a real differentiator for us in those sorts of discussion and something that's increasingly being recognized. I think we need to really lean into the beer occasion discussion and explain to policymakers the different ways that alcohol is consumed and the drinking patterns that are associated with different types of alcohol. And, you know, focusing on the occasion is a powerful way to tell our story because that's how people react to it, right? That's most people's experience of it is within the beer occasion. Reminding people why that's special is a natural thing for us to do, but it's an important part of telling the story and to prevent equalization because we're not the same. Dan can talk about the investment calculus from the perspective of someone who's owned and operated a brewery, right? But every decision that you make starts with, what am I going to produce for the consumer and why? And there's a whole host of consequences that happen alongside those choices that are interesting and special for us.

[00:23:13] Schlafly Brewing: Justin, I think what's interesting about the point you just made about low and no is I noticed this past weekend in the Brewers Association saver announcement that this year's saver beer is not a double IPA or a big Belgian, it's a 3.7% ABV table beer. Now, I'm not saying that what's going on on a global basis is impacting those sorts of decisions, but there clearly is a connection between the thinking that's going on around low and no alcohol beer and beer's role in that. And it's not like a table beer is any, you know, this is a centuries old type beer made from what we would describe in the brewing industry as last runnings. You know, the weaker wort, you ferment the weaker wort as well as the stronger wort. And that becomes your table beer, your lunchtime beer. It's a fabulous, you know, great brewery making it up in Connecticut. And, you know, it's going to be a great beer for what is a beer and food event. To your question about equivalency, I think we've actually hit a peak for hard liquor on the equivalency conversation. And I'll pose it to you as a question. 30 years ago, I don't believe consumers thought of a drink as a drink. And for the past 30 years, the hard liquor industry has told us that a drink is a drink. I don't think consumers are going to believe that forever, because that's not how we consume alcohol. and ask yourself the question, when you consume beer, how do you consume it? What occasions, what quantities, what ABVs? And when you consume hard liquor, how do you consume it? I think they're different. And that's part of the conversation we have to have is, is a drink a drink?

[00:25:04] Dan Kopman: It's a complicated question, right? Because there's a role that we're trying to create in these new occasions and in the growth that you see in a certain class of products like low and no that enable this occasion with the consumer. And ultimately, people want to be able to establish a balanced lifestyle and that they want to be in control when they're drinking. And I think you see that in these consumer trends. You know, no one orders a dose of alcohol when they're at the bar, and these products really enable a much more natural relationship to these occasions, I think. And we see a lot of it in the evidence, right? A lot of people use these to switch within occasions to change what they're having within the drinking occasion. It's a great trend to see.

[00:25:47] Justin Kissinger: Is there anything particular that you see like trending approach wise that spirits companies are doing in order to get these consumer attention to get their minds, their hearts and their wallets kind of over on their side rather than a beer offering?

[00:26:06] Dan Kopman: I mean, I think a lot of what the trend towards their advocacy on equalization is, is exactly that, right? It's trying to find opportunities to equalize the marketing with beer, to equalize the taxes with beer. The differences between the product are ultimately what's going to sustain that. And I think that the proposition, because the products are different, will remain distinct between the two. So I think you see a lot of them positioning with products that can compete on the shelf or that have a similar portability. But I really think that beer offers a unique experience even for those consumers.

[00:26:43] Justin Kissinger: Is there anything that spirits companies are doing that maybe beer could learn from right now to kind of take advantage of what they are?

[00:26:51] Dan Kopman: Yeah, I mean, I think that they, you know, they sell a good product and I think that they have a very organized way of telling their story and that, you know, they've been very intentional with how they've brought it to people over the years. And I think that beer, because we're such a large and diverse industry, maybe hasn't been as focused on that. And if brewers can come together and really, like I said, remind people why things exist the way that they do and what makes the category special, we have this opportunity to take what they've been doing and bring our own level of intentionality to that story. And historically, it's one that's been very powerful and that people have responded to and that people from consumers to policymakers all understand intuitively when you bring it to them.

[00:27:41] Schlafly Brewing: Beer has a real soul to it. I found that, you know, when I, I was a kid from St. Louis, you know, who went to university in Scotland. So you would have thought that I would have headed towards scotch whiskey, but where I ended up was beer in Britain because what attracted me to it was it had a flavor. You know, the beers I tried in Britain in my early twenties were, you know, beers with great stories, great soul, great provenance, neutral grain spirit, not so much. And brewers have that. We just have to rally around it and remind people of how important that soul is. That soul leads to a very broad economic footprint. And Justin and others can give you the full download on all that, but beer has a real soul to it. And we have to take full advantage of that. and remind everyone, all stakeholders, how important that is. And, you know, again, neutral grain spirit, you know, that's the basis for all vodka, all gin, almost all whiskey, you know, anything made from grain, any grain-based distilled spirit, not so much.

[00:28:55] Dan Kopman: I think I'd say a little bit differently. I think that we're all proud of our products, right? And I think that there's a lot of craftsmanship that goes into a lot of the products that are made around The Worldwide. I think that the beer community has a unique energy and we come together around a unique type of occasion that is a celebration of the product. The beer occasion is a thing that's fixed in people's minds. It's a family barbecue. It's a dinner with friends. It's a meeting at the bar after work. It's the happy hour occasion. It's a particular type of social occasion that evokes the beer moment. And that energy is something that is really unique to this community. It's so diverse. There's people from all different types of backgrounds that come together around brewing. In the United States, it's different people in every state that are coming together around this. But around The Worldwide, it's the same phenomenon. You have locally produced beers in places like Africa that come from ingredients as diverse as sorghum or cassava, in addition to traditional malt. You have all sorts of different brands and products around The Worldwide that are exciting to different types of consumers. And harnessing that energy, bringing that together and making sure that people can hear it in an organized and thoughtful way will be a unique contribution that brewers haven't made in the global conversation around these issues. And I think that the more that brewers can recognize this opportunity to come together and tell this story, the better the outcomes are going to be, and the better we'll be able to push back against this equalization narrative from spirits, because whether it's economic activity, whether it's. the role in reducing harmful consumption through product innovation increasingly whether it's a role in development in certain places because of the local impact of the product. Harnessing that energy of the sector is something that we can all get behind and we can all drive with these stakeholders that need to hear.

[00:30:50] Worldwide Brewing: Speaking of neutral green spirits and storytelling, just today we saw a campaign by Ian J. Gallo's High Noon that specifically targets malt-based hard seltzers, includes those words in everything. And I don't know, I don't know that anybody who drinks hard seltzers thinks of them as being malt-based unless they've had the unfortunate experience of hanging out with me and having me be like, so what do you actually think this is? But yet they called it out. Last year, we saw Jim Beam targeting craft beer drinkers with a cocktail. There's the on-premise occasion. How do you guys view these efforts of these spirits companies specifically going after beer drinkers?

[00:31:25] Dan Kopman: I mean, I guess it's difficult to comment on the strength of that marketing campaign, right? But I think that there's a difference between the bases and they're calling it out, right? Why is the tax structure the way that it is? Well, because the bases are different. I guess it strikes me as an irony that in a product that you're calling for a lower tax base on, you're then marketing based on the differences that sustain that different level of taxation. So in terms of the debate on the tax structure around RTDs, I guess it kind of goes to the point that beer producers have been making, right? This is not a product that needs a subsidy in order to be competitive in the marketplace. And that seltzer is a different type of proposition because it's fermented because of the way that it's made. It's not the same thing and therefore it's distinct. I think it's difficult to sustain the argument that something is equal when you're at the same time trying to make a consumer argument that they are in fact different.

[00:32:21] Worldwide Brewing: Great point. The other thing that gets my goat on this, pun kind of intended, because that Jim Beam commercial did have a really cute goat in it. But most hard seltzers aren't technically malt, and I'm making air quotes for when you listen to this on the podcast, malt-based. They're hard cane sugar, but that's just me being a stickler about words.

[00:32:39] Dan Kopman: Fermented product, a fermented base.

[00:32:42] Worldwide Brewing: That's a much better way to put it. Thank you.

[00:32:45] Schlafly Brewing: I mean, we need to frame this conversation as fermented beverages versus still. And remember that fermented beverages are thousands of years old and industrial distilling only started in the late 1700s. And that was really the first time that we had this huge debate about beer versus hard liquor with Hogarth, Beer Street and Gin Lane. So there's a historical context for all this. This is not the first rodeo. This is not the first time that beer and hard liquor have sort of been pinned as opposites, as different. And that's an important historical context. This is going to go on for a while. But Justin, I do believe that in some ways, hard liquor has reached its pinnacle in terms of its efforts towards equivalency. And I do believe that if we work together, the brewing community, we can gain the share back for beer.

[00:33:41] Jessica Infante: Why do you think it's reached that pinnacle? What is it? Because, I mean, they just reached some type of compromise in Vermont on legislation that passed. And so far, I think that might be the only victory this year, although- No, Spear pushed them back for the first time.

[00:33:59] Schlafly Brewing: So remember that Spear has had the playing field, not to themselves completely, But because beer has been fighting beer a bit for the past 20 years and been occupied with other issues, hard liquors had a good go at this. And the effort that the BI and the Brewers Association and the NBWA put forward this year was really the first that I can recall of such a coordinated effort. And the only bill that made any progress was Vermont. And I would say Vermont was as much progress from a hard liquor standpoint in terms of getting their products into other stores as it was a tax win because we kept a differentiated tax basis. Again, it's America, it's incremental. Think about it this way. If we would have lost all 12, you would have seen incremental changes benefiting hard liquor in 12 states as opposed to one. that's pretty good result for beer. And this is as a first year effort. So it's really important for the future leader of the BI, along with the whole team at the BA and MBWA to keep working together. There were some remarkable events this year in that collaborative effort. We would have not seen such efforts years ago when brewers were sort of battling each other. There was some really great collaborative efforts on behalf of beer this past year at the state level.

[00:35:34] Dan Kopman: I think that's the thing that stands out to me. I'm not as familiar with this round of issues as maybe Dan is, but the thing that sticks out to me is the close collaboration between the leaders in the brewing sector on these issues and that the Brewers Association, the Beer Institute, the National Beer Wholesalers Association are working so closely and engaging so thoroughly amongst one another on how to talk about these issues and how to engage around them is the important thing. you know, leaders leading on these, these discussions is what's going to get us the best outcomes. And it's going to be the best opportunity for us to bring our story to bear on these dialogues, you know, as Dan said, with, you know, with some real authoritative people in the industry making those, those cases for us. And I think that's a real, not to belabor the word, but differentiator from what we've seen in the past.

[00:36:28] Justin Kissinger: We recently had a conversation with Katie Marisic and Mark Cerini from the BA, and we talked a little bit about how some craft brewers are actually interested in getting into canned cocktails. They're exploring maybe bringing on spirits into their production and may not actually be inclined to fight back against things like equalization. Why do you think there's a gap between their views and maybe some of the larger producers out there?

[00:36:55] Dan Kopman: business people are going to make the decisions that make sense for their business. And I don't think that it makes sense to try and swim against that tide. Right. I think that most people who are craft brewers got into brewing to be brewers as the thing that they're trying to do in the experience that they're trying to bring to consumers. They'll do their own calculations. And I don't want to speculate on what those ought to be. I guess There are large hard liquor producers that are also competing in that space and that have a lot of inborn advantages in terms of the on-premise and things like that. I mean, just the advantage of scale that comes with it. You know, everyone's going to make their own decisions based on what they think that they can sustain. The point isn't that there's something wrong with someone getting into those products, right? The point is that beer is going to bring something unique and a unique contribution. And that's the basis for all of these conversations. It's not that there's something wrong over there, it's that there's something special right here and that deserves to be preserved and that the policy environment that enabled it deserves to be preserved and if not accelerated in certain instances.

[00:38:00] Schlafly Brewing: Zoe, it's important to understand that small brewers are very adaptable and we can do more than one thing at once. And you're trying to grow a business when you're running a small brewery. You're trying to keep people employed. You're trying to move the ball forward every day. You're trying to make payroll next week. If launching an RTD, a spirit-based RTD, is a tactic that you can use to help you make your bank covenants next year, you gotta do it. but it doesn't mean that you're abandoning your core mission. The thing about RTD spirits is they're quite easy to make. You buy in neutral grain spirit in a tote. You dilute it as it's coming into the building so that you can meet the safety codes. You blend it and you pack it. But who are you buying the neutral grain spirit from? You're buying it off big liquor.

[00:38:57] Jessica Infante: What's soulless about that, Dan?

[00:39:01] Schlafly Brewing: There's nothing soulless about it except if you ever sort of, well, have a look at neutral grain spirit, not a lot to it. But, you know, compared to making hard seltzer, the base for hard seltzer is quite challenging to make for a lot of small brewers. Fermenting cane sugar is not like fermenting wort from malt. So it's hard and you need a lot of downstream equipment for filtration, which is expensive. So making a spirit-based RTD is easier for a small brewer than it would be to make that hard seltzer base. But the point I'm making is that small brewers can do that, understanding though that the shelf space is scarce and what they need to be focused on first is beer. and that you can have a look at the short-term or medium-term goals of making your financial goals and things like that while at the same time knowing that your core mission is beer and your core product is beer. And without that, you're talking about a completely different business and one in which you're going up against. some of the largest spirit companies in The Worldwide. Because craft spirits, for example, will not have the footprint that craft beer has. The way hard liquor is produced, the way it's distributed, the way it's, you know, the whole system is very different. And it's not as resource intense. And therefore, it's just a completely different business model.

[00:40:35] Jessica Infante: Well, we've got one final final for you guys. Justin, what are some issues or what's one issue that may be on the horizon on a global scale that we haven't seen quite here in the US that we should be aware of?

[00:40:50] Dan Kopman: I think that the debate around alcohol and health is one that people really need to be attuned to and one that's coming down the pike. I think you saw glimpses of it during the debate around the U.S. dietary guidelines and some of the, you know, hardcore views that are out there on alcohol and alcohol control. The dialogue that's been happening in Geneva over the last couple of years where there has been proposed by some countries a framework convention on alcohol control. All of these are issues that bear watching and something that people need to be aware of. Like I mentioned, I think brewers are in good shape for that debate as it unfolds in the future because of the way that product portfolios are moving. But definitely something that's coming down the pike and it's gonna be a bigger and bigger part of the discussion around alcohol going into the future.

[00:41:36] SPEAKER_??: you

[00:41:37] Jessica Infante: Well, we're gonna leave it right there. We thank you guys for your time. We really appreciate it. So thanks for coming on and chatting with us about the WBA.

[00:41:46] Dan Kopman: Justin, thank you so much for having us. This is really great and it's really great to be a part of this. I love listening to the podcast and all the things that I learned from the different guests that you have. So I really appreciate you including us and having us on to talk about what we're doing. It's a great time for beer. It's gonna be a great future for the industry and it's exciting to talk with guys like me about it. Thanks everybody for having us.

[00:42:07] Jessica Infante: Yeah, thank you guys. With that, we'll say that's our show for this week. Thanks to our one man audio team, Joe. Thanks to all of you for listening. We'll be back next week.