Last year we reported on the growing concerns that many brewery owners have about pay to play. Pay to play is the act of either distributors or breweries paying, through money or goods, to put their beer on tap in the place of a competitor. This has been illegal since the end of Prohibition. The alcoholic beverage industry is the only industry where this is illegal. Look down your average cereal aisle and all of those folks paid for shelf space.
Last year we reported a story showing the serious pay to play issue in Boston. A regional distribution company, Craft Brewers Guild was put on trial for paying bars cash for putting their client’s beers on tap. According to Washington Post, that case has now been settled. Craft Brewers Guild has been fined an estimated $2.6 million in lieu of a 90 day suspension. The $2.6 million obviously was less than what the impact of a 90 day suspension.
Tom Schreibel, the company’s vice president of industry, community, and government affairs, said in an interview that Craft Brewers Guild decided to pay the fine to avoid disruptions to its employees and its approximately 4,000 retail customers.
Generally, the ABCC allows companies whose licenses have been suspended to avoid shutting down by paying a fine equal to about half the profits they would have made during their suspensions. Officials declined to confirm the exact amount of the fine but agreed it would total millions of dollars — easily the largest ever collected by the ABCC.
The pay-to-play scheme was discovered by ABCC investigators after a brewer whose beer is distributed by Craft Brewers Guild complained about the practice on Twitter in 2014. Using subpoenas, they soon obtained financial records showing the distributor had paid at least $120,000 to Boston bars and shell “marketing” companies set up by Boston restaurant groups for the purpose of accepting the money.
The pay to play issue isn’t just a far off concern. In our investigative piece “Craft Beer’s Silent Crisis” we took a look at the impact the pay to play issue has on our state’s breweries. Make sure you read that piece to better understand the culture and issues at work.
Craft beer’s stratospheric rise has led to many growing pains, including Big Beer buying out craft breweries and, more to the point, establishing business practices that might threaten craft beer’s ability to even make it out of the brewery. Pay to play practices threaten all of the craft industry and puts the power of access into those willing and able to play the money game.
What do you think? Is pay to play an issue for you and your brewery? We’d like to hear about in our forum!