"Beer bill" protecting the three-tier system of brewing, distributing and selling passes Senate committee

03/03/2015 02:03 PM

FRANKFORT — A bill which would prevent breweries from holding distribution and retail licenses, bringing them in line with the three-tiered approach for companies making, shipping and selling wines and distilled spirits, was passed by a Senate panel Tuesday.

House Bill 168, sponsored by Speaker of the House Greg Stumbo, D-Prestonsburg, would change a law that allows out-of-state brewers to own their own distributors.

Since Prohibition, in-state brewers have not been allowed to own their own distributors. Kentucky uses a three-tier system that separates the alcohol industry into breweries, distributors and retailers.

A court decision in November 2014 allowed Anheuser-Busch to own distributorships in Louisville and Owensboro. A decision which was opposed by in-state micro-breweries and the primary reason for the legislation.

Damon Williams, director of marketing and sales for Anheuser-Busch, told committee members that his company, which has been a “good corporate citizen” in the state, would be unfairly punished the new law if it is enacted.

“We’ve done everything that you’d want a good corporate citizen to do and now we sit here on the verge of being told thanks but no thanks,” Williams said. “We don’t want you here anymore and we don’t care what happens to your workers.”

Jennifer Doering, general manager of Seligman Distributing in Northern Kentucky, said the three-tier system is essential for small micro-breweries around the state.

“Brewery owned distributors will readily admit that they have no interest in growing beers that they do not produce,” Doering told the committee.

Stumbo, the bill’s sponsor, said that he doesn’t think that the legislation will cost Kentucky jobs and protecting the three-tier system is important protection for other brewers.

“It would essentially do what the three-tier system is designed to do and that is to keep the large entities that are producers or brewers vertically monopolizing the market,” Stumbo said.

After the meeting, Williams said that it isn’t safe to assume that whoever would purchase and take over the Anheuser-Busch distributorships in Kentucky would keep all of the current employees.

“When you’ve seen consolidation in this industry, the majority of the time and even in this commonwealth, you’ve seen companies move people under one roof and lose jobs,” he said.

Daniel Harrison, co-owner of Country Boy Brewing in Lexington said that the legislation is essential for small breweries like his to get his product out.

“As micro-brewers, we are prohibited from owning houses of distribution, so therefore, we must rely on a small independent network of distributors in the three-tier system to get our beers out there,” Harrison said.

The final vote count was 8 to 3 with Sen. Joe Bowen, R-Owensboro, Sen. Denise Harper-Angel, D-Louisville and Sen. Jimmy Higdon, R-Lebanon, casting no votes.


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