Another Brewer Speaks

Yesterday I wrote a couple pieces (here and here) about the Brewpub Tourism Development Act and its potential effect on the microbreweries here in Wisconsin. Thusly I was unsurprised to see that the Wisconsin State Journal has an article today called "Proposed law alarms Wisconsin vintners". I refrained from commenting on it because of time but now, after a phone call, I've got something to say about it and more on the Brewpub Tourism Development Act. Are regular readers tired of this issue yet?

Earlier I spoke with Jeff Hamilton who is the Vice President and General Manager of Sprecher Brewing. Mr. Hamilton is also on the governing board of the Wisconsin Brewers Guild and he said that he was speaking to me on behalf of his brewery and the Guild. Our conversation was extremely interesting as it clarified something that Russ Klisch from Lakefront mentioned to me yesterday as well as giving me some new information. Readers are strongly encouraged to go back and read my previous two posts on this matter that are linked above if you have not already done so.

Hamilton said that the Brewpub Tourism Development Act was introduced by lobbyists representing two brewpubs, one of which is the Great Dane, and not lobbyists representing the Wisconsin Brewers Guild. This is problematic as both microbrewers and brewpubs are members of the Guild. He reiterated what Mr. Klisch told me yesterday, namely, that the new law would prohibit brewers from having more than two locations if both didn't get 50% or more in sales from food. But he also explained where Costco fits into all of this.

As I noted yesterday, Costco is going around challenging the three-tier system to put themselves in a position to buy directly from producers. Hamilton explained that they do so by trying to exploit openings or loopholes in state laws which treat in-state and out-of-state producers differently. Does this sound familiar? If you read the WSJ article today, it would:

Under the proposal, Wisconsin wineries would also no longer be able to sell directly to state retailers because out-of-state wineries aren't allowed to -- an unfair advantage the Supreme Court decision forbids, Wittenwyler said. Without these changes, state law might be vulnerable to a court challenge, he said.

Like Klisch, Hamilton was quick to note that the beer distributors in Wisconsin are a powerful lobby. The Brewpub Tourism Development Act was a compromise in which the brewpubs got what they wanted but the distributors also got something they wanted. It was his opinion that the distributors want to make it so that beer producers in Wisconsin fit neatly into one of two groups: either one that sells their product onsite or in bottles only. With the craft brewing market doing well, brewpubs want to get into the bottling market – think the Ale Asylum here in Madison. With this act, the distributors are trying to get the brewpubs off in one corner and essentially give the microbreweries no option other than to use distributors to get their beer to retailers and consumers.

The proposed law which has vintners so alarmed would also effect some microbreweries. While on the phone, Hamilton perused an email he had received from a group representing the state's wineries. One of the perceived effects of the legislation would be to restrict the direct shipment of all alcohol. Hamilton said that the language is very restrictive and would prevent him from being able to sell alcohol at his brewery when people rent the facility for parties, weddings, and the like. And who is behind this law ostensibly aimed at vintners? The wine distributors.

That lobbyists came up so often in my conversations with brewers led me to look into just who these folks are. The Great Dane is represented by Timothy Hoven, Ryan Natzke, and Michael Welsh of Hoven Consulting, Inc. for which I can find no webpage. Curiously enough, according to an obviously outdated page up at brewersadvocate.org, Mr. Walsh used to represent the Wisconsin Brewers Guild although he is not currently listed as doing so for the 2007-2008 legislative session. Indeed, the Wisconsin Brewers Guild does not have a lobbyist lined up nor does it appear that any entity in the craft brewing industry of Wisconsin has one save the Great Dane.

Eric Jensen is the Executive Director of the Wisconsin Beer Distributors Association which, according to the Wisconsin Ethics Board, has three lobbyists. One of them is Jensen himself in his capacity as member or employee of Jensen Government Relations LLC. Both the WBDA and Jensen Government Relations LLC have the same address here in Madison: 16 North Carroll St, Suite 950. Mr. Jensen also uses the same phone number in each capacity. I don't know why I feel like Jim Garrison in JFK discovering that Lee Harvey Oswald and Guy Bannister both had offices at the same address in New Orleans since this shouldn’t be at all surprising. The WBDA also enlists the services of Bryan Brooks of Whyte Hirschboeck Dudek Government Affairs LLC and Peter Kammer of the Essie Kammer Group.

Did anyone watch last week's Bill Moyers Journal? I'm referring to the interview with Ken Silverstein in which he related how he posed "as the representative of a fictitious investment group with business interests in Turkmenistan, and approached several prominent Washington lobbying firms to see how they might bolster the image of Turkmenistan as a viable international economic and diplomatic partner." Hearing about the lobbyists behind the Brewpub Tourism Development Act reminded me of that.

"No bills were successful that were opposed by the liquor lobby or the tobacco lobby. I think both the tobacco and alcohol lobbyists, unfortunately, had considerable influence on the Legislature." These words were spoken by Sen. Fred Risser back in 1995. He is a sponsor of the Brewpub Tourism Development Act. At this point, the Wisconsin Brewers Guild is in the process of assessing the Brewpub Tourism Development Act to determine it's impact and a course of action. Hamilton told me that there is a possibility that a clause could be added to grandfather in the state's microbreweries and that the distributors are amenable to this. However, any future breweries would be out of luck. Exactly how this would affect would-be entrepreneurs can only be guessed at. The desire of the Wisconsin craft brew industry is to see the laws changed so that brewpubs can open up to 6 locations as well as small breweries, current and future, are given a chance to expand as well.

Folks on all sides will no doubt be scrambling this summer to get this bill modified and we'll probably see how it all pans out come the autumn. Now, I wonder if can get a lobbyist to talk to me…