Everyday, in almost every area of production, the Government intervenes, often by favoring some at the expense of others. The defense of the some is often that 1) they are needed in order for customers to be protected, hence need government protection themselves; sometimes that 2) without the protection their sector would be threatened by bigger (or not) players and it will result in job losses.
Government favors can take different forms, including (but not limited to) tax and other financial incentives, cutting red tape, or limiting entry to a market.
Tesla Motors, which has benefited from government favors before, suddenly found itself on the side of opposing such government favors, because it wants to sell its cars directly to consumers, and in states such as Texas, only independently-owned, licensed dealerships can legally – thanks to franchise laws – sell new cars.
Then, there is also the excuse that Government intervention is needed to help preserve competition. Since when has Government been encouraging competition, especially by defining who does what?
In Florida, a new Senate bill
would force craft brewers to sell their bottled and canned beer directly to a distributor. If they want to sell it in their own tap rooms, they would then have to buy it back at what is typically a 30-40 percent mark-up without the bottles or cans ever leaving the brewery, according to Joshua Aubuchon, a lawyer and lobbyist for the Florida Brewers Guild.
The rule would not apply to draft beer.
“That to me looks like racketeering,” Aubuchon told Reuters.
Emphasis is mine.
In Florida, where craft brewers say their market share remains under 6 percent and most breweries produce under 3,000 barrels annually, the small beer makers are out-gunned in the legislature, where influential politicians have vowed loyalty to the national distributors.
Mitch Rubin, lobbyist for the distributors’ Florida Beer Wholesalers Association, told Reuters their goal is to re-write the state’s rules governing the craft brewing industry to create strict lines between manufacturers, distributors and retailers, which he said would preserve competition.
Craft brewers say the distributors’ clout has resulted in odd regulation in Florida, including a ban on the use of 64-ounce (half gallon) “growlers,” which are reusable jugs that can be filled directly from a beer tap and sealed for sales to-go.
Florida allows the use of quart and gallon growlers, but the 64-ounce size is the most popular in 47 other states where it is legal. Craft brewers are trying for a fourth straight year to overturn the ban.
“It’s not going to be that big of a deal (to distributors),” said Joe Redner, owner of Tampa’s Cigar City Brewing. “But their response is always to come over the top with a nuclear option.”
The result was a Senate bill filed without a named sponsor that permits 64-ounce growlers but forces direct sales of all bottles and cans to a distributor, Aubuchon said.
How is competition going to be preserved by forcing craft brewers to sell their products to distributors, then buy them back from them, at a higher price, the bottles and cans that they want to sell themselves, without the bottles and cans even having to leave the craft breweries? There used to be a few names for that kind of “deal.” Joshua Aubuchon gives one of them in the article linked to above. John Cheek, founder of Orlando Brewing Co., calls it thievery:
“It’s thievery,” he said.
Cheek has no say where his beer goes or how much it costs. Instead, he must pay a distributor to pick up his bottles of beer and deliver them to whatever restaurants the distributor picks.
His downtown Orlando brewery produces organic ales and lagers for some 200 stores, restaurants and bars from Sarasota to Daytona Beach. Yet “I have no control over what they sell my product for,” he said.
The microbrewers want the right to sell one another’s experimental and small-batch brews without using a middleman.
But huge beer companies such as Anheuser-Busch InBev argue the laws protect the market from overproduction and monopolies. Regional distributors want to ensure craft brews keep flowing through their trucks.
Retailers ranging from Orlando-based ABC Fine Wine & Spirits to Whole Foods want to make sure microbreweries don’t get an unfair advantage when they bottle their beer.
“An unrestricted Wild West of small brewers operating as their own distributors is a threat to the system,” said Eric Criss, president of the Beer Industry of Florida, which represents MillerCoors and other craft-beer distributors.
“An unrestricted Wild West of small brewers operating as their own distributors” if they so wish is what I would call free-market or laissez-faire capitalism, the best way known to this day to foster and preserve competition, as well as the interests of consumers.