Beer and Politics

For those of you with an interest in the business of beer, The Oregonian has an article describing the politics of lobbyist Paul Romain and the clout of distributorships in the state. Romain got a little unwanted press last week when the O reported on a Hawaiian luau Romain threw for a number of Oregon legislators--in Maui--which went unreported by the pork-fed pols. It doesn't tell the whole story--and particularly not the role of smaller craft brewers in the state--but there are some good bits of context.

For instance, the clout of the distributors' lobby:

The Hawaii trips are just part of the group's influence strategy. Since 2002, the distributors have showered $1.2 million on lawmakers through lobbying and campaign giving, The Oregonian found, with much of the latter going to legislative leaders and committee chairmen who have the power to pass or kill bills.

Distributors, which have a unique, protected niche in American business, have maximized their power through consolidation:

Distributors have consolidated in recent years. Among the Oregon association's 19 members are some of the largest wholesalers. They owe their commercial niche to post-Prohibition reforms that split the alcohol trade into three tiers -- producers, distributors and retailers -- so gangsters could no longer infiltrate the entire supply chain.

In 1981, lawmakers also gave distributors exclusive rights to sell individual beer brands in their delivery territory. A tavern in a given area of Southeast Portland can buy Pabst only from Mt. Hood Beverage, for example, and Coors and Corona only from another distributor.

Romain cemented his influence in 1989, when he negotiated with big brewers to write the law that governs Oregon's beer trade -- the statute that, among other things, makes it difficult for producers to dismiss a distributor. He takes credit for getting many of the contractual terms between distributors and suppliers enshrined in the law.

And, although the article doesn't mention it, law prevents small brewers from self-distributing, but in many cases, they're too small to attract the attention of distributors. Hair of the Dog, notably, was stymied early in their existence because their small volume was ignored by local distributors. And in other parts of the state, distributors may have a monopoly, so small breweries have no alternatives for distribution.

Much could be writ, but perhaps we'll just watch the story and see how it develops.