Thursday, January 19, 2006
On this day:

Beer wholesalers and the anti-keg law

Their involvement with the bill is even more direct than I suspected. Turns out that not only do they support the bill, as I said yesterday; they were the ones who initiated it. Yesterday, the Mobile Register reported:

Sen. Bobby Singleton, D-Greensboro, sponsored the bill, which, he said, was brought to him by the beer industry, chiefly the Alabama Wholesale Beer Association. The organization represents the 25-plus distributors operating in the state.

"I just want to do something to help solve the problem, and it's a tribute to the industry that they came up with this idea," Singleton said. ...

Donna Alexander, executive director and lobbyist for the beer wholesalers, said her group approached lawmakers about the idea in response to public pressure regarding underage drinking and in answer to calls for a statewide keg registration system like the one used in Mobile County.

That process requires a written record of keg sales, thus allowing law enforcement officials to trace the purchaser of kegs when underage drinking occurs.

Singleton's bill would make such a system moot.

It simply writes a new definition for "keg beer" in the portion of state law that details what kind of alcohol is legal in Alabama. The new definition would read in part: "beer sold in factory-sealed containers not less than 5 gallons. This beer is to be sold by retail licensees for on-premises consumption only."

Again, I'll reiterate. The industry is not asking for this legislation out of a concern for underage drinking. They're concerned about one thing - the bottom line. The Register goes on to explain:

In addition to Alexander's group, lobbyists for beer manufacturers and retailers have expressed their support for the new definition -- or at least pledged not to oppose it.

Presumably, the proposed change could give some manufacturers, if not wholesalers, a financial boost: At different stages in the distribution process, the profit margin by volume is typically higher when selling smaller containers.

For retailers such as bars and restaurants, profit by volume is greater selling draft beer from kegs, meaning they could also stand to gain from the bill. Retailers who depend heavily on off-premises keg sales, however, would suffer.

Alexander said Alabama law, in which distributors act as a mandatory middleman between manufacturers and retailers, is set up so that her clients will make money either way.

Yeah, and you'll make more money by making keg sales illegal. There's nothing wrong with wanting to make money. The objection in this case is that beer manufacturers and wholesalers are trying to do that through collusive, anti-competitive, and anti-market means.

There's a name for what the businesses supporting this bill are doing: it's called rent-seeking, and it involves lobbying for restrictions on free markets in order to secure advantages over one's competitors or potential competitors. It's not an uncommon behavior, unfortunately, but it's an exceptionally bad one, especially when it makes it harder to get cheap beer. Remember what Ben Franklin said: "Beer is proof that God loves us and wants us to be happy."