Brewers, Distributors Battle Over Beer-Contract Bill

“While this is a New York State story, the Professor is sure this is going on all over the country. Old story: big brewers attempt to limit, even put out of business, smaller brewers through distributors that often rely on those big brewers for their main bread and butter. Often by getting lawmakers to back them up with rules and regulations.”- The Professor

Small manufacturers push to revamp New York law that can lock them into deals with indifferent wholesalers.

After Brooklyn Brewery entered a contract with an upstate wholesaler to distribute its beer outside of the city, its upstate sales steadily increased for a few years. But the wholesaler began adding more craft breweries to its portfolio, and the Brooklyn company saw its sales slip, even as its wholesaler’s overall sales grew.

When the brewery tried to terminate its contract, the wholesaler sued under New York’s alcoholic beverage control law—which binds brewers to one distributor within a marketing region once an agreement is in place—Brooklyn Brewery shelled out more than $200,000 in legal fees and had to pay the wholesaler an undisclosed sum to get the divorce it wanted.

Brooklyn Brewery survived, but its president, Steve Hindy, said most small breweries in New York cannot afford the litigation required to dump a neglectful distributor.

“That kind of money would sink them,” he said.
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