By: Colin Nystrom
Pixar’s Wall-E gives an example of the effect AB 1133 could have on the California beer landscape. Everywhere you look in the film, the walls and screens are covered with global monopoly Buy n Large’s branding. With so much marketing, the population begin to mindlessly consume the corporation’s products and ultimately loses the ability to make their own decisions. The opportunity afforded by AB 1133 is analogous, albeit on a much smaller scale; beer manufacturers have the opportunity to flood each and every retailer throughout California with branded glassware, an opportunity that easily favors “Big Beer” – companies like AB InBev and MillerCoors. That’s because, more than likely, a majority of the glassware will be provided by these entities. It is clear to see how beer consumers will be subject to an even greater level of marketing on behalf of the massive corporations which dominate the beer manufacturing market.
Just over a year ago, Professor Dan Croxall published, “The Glassware Bill is Dead: Good News for California Independent Craft Beer” regarding Governor Brown’s veto of AB 2573. California craft beer dodged a bullet. In Governor Brown’s veto letter to the California Legislature, he indicated a two-fold concern over the proposed law: (1) it would allow manufacturers to influence the decision making of retailers and (2) it created an economic disadvantage for small beer manufacturers who cannot utilize the opportunity like a large manufacturer can. Large manufacturers have tremendous marketing budgets and wide-spread distribution; both of which far exceed the even the most successful independent brewers. It takes no stretch of the imagination to be concerned about the impact that a flood of their branded glassware in retailers would have throughout the state. In the following legislative session, a nearly identical bill was introduced by Assemblymember Low. Neither of Governor Brown’s concerns were addressed in AB 1133, yet the bill still easily garnered the support it needed in both houses of the California Legislature and was ultimately signed into law by Governor Newsom on October 8, 2019.
The most significant impact will be seen in local bars and taprooms where a direct-to -consumer marketing opportunity presents itself. Given the focus on bottom-line profits for many of these retailers, it is easy to see why they are excited to have a bit of overhead costs covered by manufacturers. But slim margins for small, independent breweries are what will prevent many craft brewers from providing glassware to their favorite retailers. The combination could have a catastrophic effect on independent beer’s place in the retail marketplace. It is easy to understand how a particular supplier’s “willingness” to provide something of value—in the form of free glassware or abnormally large tips when a sales rep comes in for lunch—could leave a retailer feeling indebted to that supplier, leading the retailer to reserve a number of taps for the manufacturers who provide them direct value. Over time, every tap in that bar could be occupied by the various brands of a single, large manufacturer. This would mark a return to the tied houses which dominated the market before prohibition.
As a result, we see how easily the California market could be saturated with Big Beer’s branding and products. This will have direct impact on access to retail opportunities for our local brewers and make it all that much harder for consumers to support them and for these small businesses to survive. Only time will tell how this plays out, but due to the extensive efforts of Big Beer, a potential return to the decades of a one-note beer market does not seem farfetched.