Brew Talks: Beer Industry Trade Group Leaders Discuss COVID-19 Crisis 6 Months Later, Legislative Efforts and More

Speaker 1 [00:46] Hey everyone. Thanks for hanging out with us. Uh, we are back, uh, 5 months after we brought these guys together to discuss their efforts. In the early days of the pandemic, the leaders of the beer industry's 3 major trade groups are here again to discuss their efforts during the pandemic. And what the rest of 2020 and beyond looks like. Uh, but first, we got to thank our sponsors, uh, Dogfish Head for presenting this edition of Brew Tas. We are very appreciative of their support as well as Sk Fabricating, ABS Commercial, G&D Chillers, Graphic Packaging International, North Star Pills by Raar Malting and Reyes. Uh, thank you all for your support. We really appreciate it. A reminder, starting Monday, Brewbound will become subscription-based. If you're not already a charter member, we'd love to have you join us on the journey. Look for details at Brewbound.com/subscribe. All right, let's get to this. Joining us now are Jim McGreevy, the president and CEO of the Beer Institute. Thank you for being here, Jim.

Speaker 2 [01:57] Thanks Justin. Glad to be here with you and the panel.

Speaker 1 [02:00] We're glad to have you, and uh it looks like you're in the Beer Institutes ski lodge.

Speaker 3 [02:05] That's right. Yes indeed.

Speaker 1 [02:07] Also joining us today is Bob Pease, the president and CEO of the Brewers Association. Thanks for being here, Bob.

Speaker 3 [02:16] Always a pleasure to be here with you, Justin. Welcome and good afternoon to everybody and uh greetings from uh sunny Boulder, Colorado.

Speaker 1 [02:25] Well, we're, we're live streaming here from gloomy Massachusetts and uh we couldn't have this panel without Craig Percer, the president and CEO of the National Beer Wholesalers Association. Thanks for being here, Craig.

Speaker 4 [02:40] Thanks. It's great to be here, Justin. Uh, 5 months ago, I thought maybe we'd be on to bigger and better things, but that's not exactly the case. But, it's good to be with you as always.

Speaker 1 [02:50] You would think that we would be by now, but uh our hopes were dashed. So, a reminder to our viewers, uh, you can text us questions at 617-336-8560. That's 617-336-8560. Let's get to it. Uh, the clock is ticking on the federal excise tax. relief that brewers and import and importers have enjoyed since 2018. That is slated to expire at the end of this year. Jim, what is the status of a potential extension of the Craft Beverage Modernization and Tax Reform Act, Whether that's a year, two years, permanence, where are we, Jim?

Speaker 2 [03:31] Well, it's, uh, it's pretty unclear to, to sort of say where we are at this point, Justin. I mean, obviously, you probably talked in the first panel about, uh, about the need for the federal government to come, uh, come together again for uh another COVID-related package, which is not happening. I think, uh, I saw this morning that the White House Chief of Staff and Nancy Pelosi spoke for the first time, uh, in a few weeks this morning. Uh, but, um, if, if we can't get to that, then we probably can't get to some of the other stuff that's important like the renewal of the craft Beverage, uh, Modernization and Tax, uh, Tax Reform Act. Um, I think there's two points about, uh, the Tax Reform Act that we should start with. The first is we should continually congratulate ourselves for all coming together to do this together. Uh, the, in what I would say were the bad old days, uh, the small brewers and the big brewers were fighting over what tax relief should look like. What, and that took years. Once we came together on one bill, it took us about 18 months to pass the bill. So I think there's a sort of a collective uh pat on the back, that should always be uh given to us for doing that back in 2015 at this point. Um, uh, so that's number one, and we got to keep that going, and we are gonna keep that going. And then I think number two, the, the continual related to number one, the continual Um, support that we have in Congress for the bill. 75 members of the United States Senate and 347 members of the House of Representatives on our current Craft Beverage Modernization and Tax Reform Act bill. Um, I think this is likely to be a, um, a lame duck issue. So after the elections, when Congress comes back in to Figure out what's left to do before uh they close up for Christmas. They, um, they, they always pass some, some lame duck bills. Uh, we were in a lame duck bill at the very beginning here. That's, um, um, uh, that's how we got the, well, at least how we got the extension. So, I think we're likely to see the same thing this time. Uh, so that's a post November. Post November elections, um, kind of discussion, and I think we're really just sort of pushing ourselves and positioning ourselves for that moment in time. Sadly, the COVID issues, uh, and the effect they've had on brewers, um, uh, uh, make this, uh, a very important thing for us to do. We, I think I'm confident that we can get it. Um, it's just a matter of, uh, sort of following the action on the Hill and making sure that we're ready to go when the time is right.

Speaker 1 [06:05] Bob, in your conversation with the, the supporters that Jim sort of outlined there, how, how much of an appetite do they have for taking this up? I is this, like Jim said, gonna be a, a lame duck, a lame, lame duck, uh, Lame duck legislation, you know, are we gonna have to wait till after the election here, you know, what, what's the appetite?

Speaker 3 [06:29] Well, anybody that tells you they know what's gonna happen in Washington, please run as fast as you can away from them because nobody knows what's gonna happen in Washington, right? Uh, but with that said, uh, I'm optimistic. Uh, we have done our, we have done the groundwork. We have, you know, we've done our spadework. Uh, the level of support that we have, the bipartisanship, the bicameral, uh, you know, we have the support of some of the, the heavy hitters in, in, in both houses. Uh, we recently did a virtual hill climb for over 200 of the brewers Association members and we were very heartened by the response that we got. Uh, from all the, the congressional offices that we met with virtually and especially with leadership. I think they recognize the importance of small business and doing something for, uh, small business. You know, the PPP program has been very, very impactful for our members. It's really been a lifeline. Uh, to small and independent craft breweries, but at the same time, uh, the members that we're talking to, uh, they understand the importance of the craft beverage bill. We don't have to explain to them anymore, uh, you know, what the, what the reasoning behind it is. We have the track record to show that we created. Jobs in 2018 and 2019. Now, our message is, is pivoted somewhat slightly as this is a bill that's gonna help sustain breweries into 2021, uh, to raise, let the bill expire, let the rates expire, and to, you know, implement 100%. An increase in federal excise taxes for 8200 small and independent breweries. It's really small businesses across the country is not something I think they want to see. So I do agree with Jim that it's going to be happening in the lame duck. I am optimistic. Uh, you know, and my, my objective, and I'm sure I speak for Jim. Our, our, our objective is not for an extension, at the minimum, a multi-year extension, or ideally, we will actually, when we pass the legislation, that means that the new rates will be permanent, and that's the objective. I think we can get home this year, uh, but, uh, people have called me crazy before, but, uh, it, it's a big deal. It's a, it's a, you know, it's a, uh, it's an existential, existential moment for a lot of these small and independent businesses, so. Onward

Speaker 1 [08:54] and they get that that they get that this is a moment.

Speaker 3 [08:58] Yeah, this is something that, you know, that they can come together on. Uh, you know, we're not going to be a piece of stand-alone legislation. We need the stars to align. We need there to be a bigger, uh, a bigger vehicle that almost typically in the lame duck, there is end of year package, uh, and, you know, there's been some administrative hurdles that. that we have faced that have prevented us from uh getting a longer than a one-year extension. We're doing the work to confront those administrative challenges now. I'm optimistic that, you know, with the leadership of the BI, the BA, and the other trade associations, uh, we'll be able to resolve those challenges and, you know, make the case for permanency.

Speaker 2 [09:35] I think that's right. I mean, that, that last point, I think is important, just in, uh, related to the coalition of folks that are working on this. The spirits, wine, and, uh, beer trade associations are all working on this together. Obviously, even as, uh, lately as yesterday or today, our lobbyists meet monthly. Uh, we're always sort of looking at who's not on the bill, who can help us move the bill. Um, we're probably gonna be talking on a number of issues today about the different coalitions that the beer. Trade associations are leading or working in on various issues, but this is one of the most important ones. So don't underestimate the, the power of uh bunches of businesses together to uh get what you want.

Speaker 3 [10:17] For uh your listeners, Justin, the people that are, uh, you know, tuning in today, uh. What we'll be, you know, we're going to be engaging with the, the coalition on a day of action on September 9th, where we will be, you know, hoping to generate, uh, tweets, emails, uh, what have you, contacts in the congressional offices from all That will be, you know, led by all the different trade associations to really try to heighten awareness of the legislation to all members of Congress. So September 9th, look for, look for an email from your respective trade association soon on how you can get involved and support the effort.

Speaker 5 [10:56] So another thing that all of your organizations have linked up on is the perishable food and beverage tax credit. Craig, can you give us a brief rundown of what that measure would do and where these efforts stand right now?

Speaker 4 [11:07] Sure. Um, and thank you, Jessica. The, and it's great to be with you guys, and, and just as it relates to the, to the, uh, Excise tax relief bill, it's important to note that there hasn't been a lot of activity around tax legislation. And so, when, when, uh, these guys are talking about the efforts to either make permanent or extend Uh, the Craft Beverage Modernization Act, the, there, there hasn't been a great deal of, of effort around, uh, provisions of the tax code. All of Congress's efforts to date have been around pumping money into the economy. And that's just really, really important for us to note. It's especially important for us to note because we all sell beer to bars and restaurants. And those folks have been absolutely devastated. They don't have another outlet for their business. And so, whether it's paycheck protection or whether it's Main Street lending, all of the efforts to date have been around that. I think they'll get to the taxes. But we're very excited to be part of and be helping lead the perishable uh Food and Beverage Tax Coalition. Um, when we were together, hard to believe back in April, we talked about this idea, this concept for relief for beer that is, that was in the pipeline that was perishing. Uh, that was spoiling. Part of the feedback we got in the earliest days from members of Congress and their staff was, you know what? We don't wanna do this 27 times. If we're interested and we can visualize a tax credit for these products that are basically going bad because of the government shutdown, you guys go out and build a coalition, and that's exactly what we've done. There are 19 different trade associations that have come together under this banner. They include, uh, obviously, the National Restaurant Association. They includes the, the American, uh, Beverage License, which represents those bars and restaurants more specifically. But it also includes, uh, the, the, uh, International Food Service Distributors Association, which is an organization that's been devastated because they had all of those food products that were in our same channels that were shut down by government fiat in, in March and April of this year. And so we've got, um, you know, and, and, and it's kind of an eclectic group of folks. We have the American Gaming Association, uh, that, that's joined the, the, the group. We've got the Food Marketing Institute from the, the retail grocery side. But like I said, 19 different groups that have come together to support this policy solution to help recoup some of the losses from this, uh, spoiled food and beverage. We spent a good portion of our time. Uh, focusing on the US Senate, trying to socialize and move this concept as part of one of these relief bills. As we look at the reality, the, the fact that Jim mentioned early on in this conversation today, That the two sides have not been talking for a while. We're gonna continue to evolve and pivot. We may ask to have uh legislation introduced and working in a more traditional sense, go back over to the house and talk to some of the folks that we talked on, talked to early, but we remain optimistic about this idea. We had a couple of folks that were together with, uh, senators earlier this month, and one leading, uh, Senate Finance Committee member said to our member, Um, we've got to get this done, and the fact that they're aware of this and that they see this as a way for folks to get back on their feet is very, very encouraging.

Speaker 5 [14:43] Great. Jim, do you think that the perishable food and beverage Tax Credit has, uh, is looking at it as though it has the same trajectory as Craft Beverage Modernization Tax Reform Act before the election?

Speaker 2 [14:53] I, I think just you have to think of these things in, in sort of their own lane, right? So as Craig said, uh, legislators haven't talked about taxes all year. They really, this is typical of other years, um. Uh, related to taxes. Um, uh, but, uh, from the perishable related to the perishable food and beverage, uh, uh, issue, this is very front and center around the COVID-related issues, right? So, um, we're doing all the things that we need to do to tell members about our problem and to offer up a solution. Um, but I don't think you can ever underestimate the power of coalitions in Washington DC or in state go in state legislatures. Um, the fact is Craig said that we brought the grocers and the food distributors and the restaurants and the gaming people together just amplifies the problem that we saw in beer and helps us move the ball forward. So I'm, I'm, uh, you, you know, we, again, just like craft beverage, we have no idea what the future tomorrow or beyond looks like in terms of how actually pass the thing. But we're putting ourselves in a position to get uh what the kind of relief that we're looking for in the future when the issue ripens.

Speaker 1 [16:11] In our first panel, we discussed a lot of the faces that are faced, that are, that are, a lot of the challenges that are facing craft brewers right now. Uh, there are can shortages, CO2 shortages, aluminum tariffs. Uh, this is all mounting, uh, uh, just, it's a lot of pressure all at once with an on-premise business that hasn't really come back. So, I'd, I'd like to, for each of you to sort of describe how you view the current health of the industry and what you think are the biggest needs of each of your constituencies. And I'll start with Bob, since you, you have a huge base of members. Uh, Bob, go ahead. I think you're still

Speaker 3 [16:57] muted. Remember, remember to unmute. Yes, every, every, uh, all of our calls at the brewers Association, when you forget to unmute, you have to put a six-pack into the kitty. So we're gonna have, we're gonna, we're gonna, we're gonna have, we're gonna have a big party at the, uh, end, end of COVID, right?

Speaker 1 [17:12] Um, I, I was gonna say you're gonna have to send some to my house if it, if, you know, DC DTC is allowed here.

Speaker 3 [17:21] Well, you know, what I would say, Justin, is that our members, you know, in the craft brewing community are under extreme pressure. Um, maybe, you know, that it's probably what Bart said this morning on the collab hour when he did the, you know, the, the midsummary of the mid-year survey, but, you know, 40% of craft volume is, you know, was draft, right? So, primarily um on on-premise, but the majority of breweries get the majority of their revenue from on-site sales. And so, the on, the on-premise has not come back. Uh, so, you know, really for our members to be made whole, we need the on-premise to be Back and no one knows when that's gonna be, but I'd say it becomes, looks more clear, clearer every day that until there is a vaccine, um, the majority or a significant part of the population is not going to feel safe or feeling comfortable going into, into the on-premise especially indoors when, uh, you know, You know, we're we're entering into the cooler season, cooler weather season, uh, so sitting outside or dining outside for taproom or brew pub is going to become less and less likely. So what do, you know, what do my members need? They need the on-premise to return and then they need access to market, right? They need the on-premise isn't going to come back and those sales have gone away, we need alternative. Channels to, uh, to, to get the beer to the beer drinker. You know, initially, you know, when we were talking to our members early on in the pandemic, yeah, we got impact, we got feedback that maybe 60% of our members thought they might have to close and would not be able to survive the pandemic. That was before uh the PPP program and the adjustments at the state and local level that have allowed for to go delivery and in some cases direct to consumer shipping. So my members need all of those things, uh, moving forward into, you know, the last part of, uh, 2020 and into 2021 to, in order, in order to survive. I mean, if you're a brew pub or a taproom, this is an existential moment in your existence, right? And that's 70%, 70% of the breweries in this country are taprooms or brew pubs. And, uh, you know, what are they operating under? 50% capacity at best case scenario? Uh, it's a pretty bleak picture for a significant majority of our members. Now, as we talked about a few weeks back, it is, it is at the same time a somewhat of a tale of two cities, uh, because if you are a larger craft brewery, and if you're putting your beer into bottles or cans, you're probably doing OK. And in some cases, you might even be doing a little bit better than you were doing, you were doing, uh, last year. But, you know, like, There's been the mention of, there'll be many mentions, I think of this during our call today, but the can shortage is just another, you know, really significant hurdle for our members. I mean, you know, I talked to a brew pub the other day, and it's like, you know, yeah, we're doing OK. We put in a small canning line at the start of the pandemic, you know, we worked with the mobile, and we're also working with the mobile canner, and we're selling more beer than we can make. Now, they can't get cans. So, uh, supply chain issues, access to market issues, and the on-premise are all things that, uh, my members need. We need the craft beverage bill to be made permanent, and we need to all work together and fight together to prevent state excise tax increases. Uh, from occurring when the state legislatures convene in the end of this year and the early part of next year. We know the states are going to be looking for money that they are, you know, revenue strapped, but, uh, putting that burden on small business, small Main Street business is the wrong way to go.

Speaker 1 [21:11] Is an additional tranche of PPP money or some type of state or federal assistance, something that you think your members need?

Speaker 3 [21:21] Yeah, I mean, we are big supporters of the Restaurant Act, uh, piece of legislation introduced by, uh, Earl Blumenauer, uh, in the House and Roger Wicker in the Senate. Uh, it's a hospitality, uh, focused, uh, piece of legislation that would, uh, aid the hardest-hit, uh, segment, uh, one of the hardest-hit segments of our economy, and that's the hospitals. Hospitality industry. And that's brew pubs which are restaurants and taproom breweries. So absolutely yes to I mean PPP funding is scheduled to run out end of October, right? There's no, there's no help on, right now, there's no white knight on the horizon, man. I mean, there is uh it, it doesn't look good for another piece of, of federal legislation. So, but, uh, that would be very much welcome.

Speaker 1 [22:04] Jim, when you look at the health of the industry, what do you see and when, what are you hearing from Beer Institute members that they need?

Speaker 2 [22:13] I think there's, uh, there's probably 3 things that we need. We, number one, we need to remain essential. And I don't think, um, I don't think that we can sort of underestimate the, the idea that, uh, a beer being essential from the very beginning of this crisis was very brewery openings and all of that was very important. Uh, being able to make, distribute, and sell the beer where possible, I think was very important. So, keeping that essential designation. Uh, may sound kind of strange, but we don't know, like, like Bob has said, we don't know where this, uh, uh, COVID crisis is going. Um, so I think from, from the, the, the, the first thing is, um, understanding how important it was to be considered essential and not, not beer and, uh, beer and alcohol in other parts of the world. Other countries sort of went into prohibition for a little while. Um, uh, is important and then keeping that distinction. And then I think the second thing for the overall sort of, um, health and reputation of the industry is making sure that every chance we get, we make sure that folks understand that because of the, uh, the crisis, we are not seeing, um, rampant drinking, folks uh drunk on the. Streets. There's a lot of opportunity here for folks who are critical of our industry to say that uh drinking occasions and uh per capita consumption is way up because of COVID. We've even heard it a couple of times from the President of the United States, uh, uh, from, uh, from the White House. So, we need to make sure that the counterargument gets out there, the fact that there are There are many studies, uh, growing number of studies, even from April, uh, the earliest times of the crisis, that show that drinking, uh, levels are the same or even in some areas less than they were before. For some, for some consumers, less than they were before. I think that's important for us to, uh, to make it clear that, um, uh, that's the case. Uh, because the, uh, the, the critics of our industry out there are ready to pounce, to say that, uh, we are taking advantage of a crisis. Um, and that just puts us in a, in a bad political way and reputational way on, on, uh, any of the other issues. And then the third is that I think Bob said and probably Craig will say. We need to watch and uh have an effect on these various pieces of legislation that are out there at the federal level or at the state level. Um, uh, from the craft beverage bill, which we talked about and the perishable food, uh, food and beverage bill that we talked about to whatever happens, uh, uh, in, uh, uh, if there is a future, um, uh, phase 4 bill, um, Uh, for the bigger crisis. I mean, um, as Craig said, the federal government has been pumping money into the economy since, uh, since April, and it has really made a difference. So we just have to make sure that, um, we're players in that legislative and regulatory environment so that, um, uh, that we can keep our, uh, our members, uh, moving in the right direction.

Speaker 1 [25:21] Craig, when you look at the state of the industry, how do you gauge the health and, and what are the biggest needs right now of wholesalers?

Speaker 4 [25:31] We have, we have two more weeks left in the summer of 2020, and, you know, we, when we were having this discussion in April, I think it was, it was beyond our wildest dreams that we would have the, the, the frequency and the number of out of stocks that we've had this summer. Um, so, from a distributor standpoint, The thing that they need, and needed the most during the summer is more beer. And I realized the challenges associated with that. I mean, when you take, um, you take draft beer offline, in a sense, and you strand all that, uh, all that keg product that was out there for all those springtime events, and all that product and all that demand, more importantly, went to other channels. You know, you're, you're gonna have something like this. So, some of this is understandable and explainable. And when you have a need to package beer that was destined for draft, you're gonna have these challenges. And you have all of these cans and all this aluminum that's allocated, a lot of it's contracted, and there's difficulty to get there. And you have a segment of the beer industry, as Bob pointed out, that, that really makes their products to be consumed in, in their, you know, in their tasting room. So, you have this disruption that is beyond our wildest dreams. And so, so, definitely, the whole idea of more beer is important, but I also think Jim hit the nail on the head when he talks about that, that continued dynamic of essential. Um, we didn't have to look across the, the, the ocean, we looked to our south and saw what the marketplace looked like in Mexico, when the government there did not deem the production or sale of beer as essential. And that aided and added to the supply challenge that we've been dealing with. And so, um, I was, you know, I, I, this is the longest time in my, uh, career in the beer industry where I had not been in a, in a beer warehouse. And I went to the beach with my family at the end of July, and I called up one of our members and I said, you know what, I'm jonesing for a visit to a warehouse. And it, it was a Friday afternoon, and they A couple of folks, uh, you know, they, they opened up and they said, we're not usually here on Friday afternoons, especially with the new protocol. And I went into the warehouse and I was just astonished cause I'd never seen such an empty shell of an operation. And it was, it was very gratifying to see, you know, and experience how these members had altered their business, how they changed the way that they do things to mitigate risk and to continue to be open and operate safely. So, While, and, and back to Bob, he's 100% right. This is A Tale of Two Cities. It's a tale of Two Cities between the segments, but it's also A Tale of Two Cities between some of these marketplaces. If you are a 30 or 40% on-premise volume, uh, marketplace, or even if you're a distributor, that, that, that has that kind of a mix, um, you know, you've been devastated. You've been affected very disproportionately. than somebody that's next door that's got a more suburban territory or more of a, a, a different kind of balance. And so, you know, when, and we've said this, kind of as an organization, you know, we talk about what we're gonna do, but also what's important is how we do things. And we talked about the fact that we were gonna be, we were gonna be serious, we were gonna be sensitive, and we were gonna be sober as we work through this. And I, you know, I wish that we weren't having this conversation like this 5.5 months later. But as, as tough as things are, because we've been open, because brewers have been brewing beer, and because distributors have been selling beer, and because consumers have been able to go to whatever outlet or place they wish to get it, we're weathering the storm better than some industries, and we need to recognize that.

Speaker 2 [29:27] Justin, can I just say one more thing about this, uh, sort of related to what Craig said. I think at the same time that, um, you know, it's, it's obviously important and, uh, necessary for folks to deal what's, deal with what's in front of them related to the survival of their businesses in many cases because of the, uh, the health crisis. But I don't think we should take our eye off the ball on what we were trying to accomplish before March 13th, before the COVID crisis uh hit the United States. Um, you know, there's a can shortage. Uh, but there's obviously a, uh, a problem with, uh, the trade issues and the tariff issues related to aluminum. I think that, that those things play together in some ways. And then I think, just think, you know, related to what we've been able to do as beer collectively, um, related to the Beer Growth Initiative, I think we have to keep sort of remembering. That spirits, spirits was kind of cleaning our clock there uh before uh COVID. Um, uh, I think the numbers still sort of bear that out. There's been some great work that's happened related to the Beer Growth Initiative, uh, the Austin pilot. Um, we have to keep things like that going. So it's easy to sort of move to the, the latest problem, but, um, we also have to sort of keep the sense of where we need to be as an industry going forward. So, um, there's a, there's a lot of Uh, great things that are happening even as this crisis is affecting individual businesses dramatically.

Speaker 3 [30:58] Yeah, Justin, I would just quickly uh echo or amplify Jim's comments that, you know, one positive aspect of, uh, of the pandemic has been, at least within the beer world, the enhanced cooperation between the free trade associations and the number of different issues that we're working on together that, you know, Jim just mentioned a lot of them, but the craft beverage bill, opposition to tariffs, beer growth initiative, the perishable food tax credit, uh, Lots of things coming down the pipe that, uh, you know, we're working together on to try to move the, move the category of beer forward. So that's been a real positive.

Speaker 5 [31:33] That's so great, and we definitely really need the collaboration right now. Um, so as Chris from Green Bench laid out in our first discussion, craft breweries have struggled with being lumped into designations as bars in several states, as reopenings either get rolled back or there's new restrictions get tightened, and a lot of these restrictions and operating operating procedures are not really. Being leveraged evenly across all categories of business. So Bob, what efforts is the BA taking to prevent breweries from being classified as bars?

Speaker 3 [32:01] So glad that you asked, Jessica. That is certainly something that our government affairs team has been engaged on, you know, primarily, I think probably over the The last 4 weeks as bars uh quickly became the poster child for bad behavior within the bedbridge alcohol segment, uh, in terms of reopening the on-premise. Uh, so what we have done is, you know, we have provided, uh, all those, our, all of our state guild leaders with a resource that lays out for them why the differences between bars and breweries. Uh, and I think all of us, you know, I could run through the list for, for, for, for everybody, but everybody knows, I mean, You know, most, most, most breweries, most, uh, taprooms, most bupa, uh, might not have a full bar, all right? Or they don't stay open until last call at, you know, 1:15 in the morning or however late that is, depending on the state. Uh, most, uh, tap rooms, most breweries close on a fairly responsible time. Most of them, you know, if it's a taproom, only serve beer. So, And you know, brewers have to get a federal, you know, federal, a federal, a federal brewer's notice, uh, in order to operate. Uh, so there's lots of differences between, uh, a restaurant and a bar and a brewery. And, uh, you know, we're, we're trying to provide that resource to state guild leaders so that they can advocate, uh, and illustrate the difference to policymakers at the state and local level.

Speaker 5 [33:26] Jim, are you remember seeing this as an issue as well?

Speaker 2 [33:31] Yes, I think, um I, I think we always have to differentiate ourselves to, to remain essential in whatever way possible. Um, uh, you know, the, the bars have become, as Bob said, the poster child for uh the problem here. Um, and we are different in many ways and can make that case.

Speaker 5 [33:53] Great. So, we have an audience question that came in for Bob. Um, and if you have a question watching at home and you want us to ask these guys, shoot a text to 617-336-8560. Um, so, Bob, how does the BA navigate seeking, uh, direct to consumer rights for members while not upsetting relationships with their wholesaler partners, because that's a, uh, somewhat of a delicate balance. So, Craig's. Constituents might not be too happy with that, but how do you thread the needle and is there a middle ground to find here?

Speaker 3 [34:18] I just call up Craig and say, let's get behind this, and he says, OK, and then it's all over. Uh, you know, the way direct to consumer is going to work or what will work is gonna be at the state level, right? It's going to be a state by state issue. The Brewers Association doesn't set priorities at the state level for state guilds. State guilds set those priorities for themselves. If a state guild wants to engage in direct to consumer shipping and wants to get a bill introduced at the, at the, at the state legislative level and they came to the BA for support, we would support them. Uh, we think that, you know, just from a macro perspective, we think the time has come for breweries to be, to engage, be able to engage in direct to consumer shipping. That's another channel that they need to survive. Uh, wine has proven that it can work for a decade, maybe two decades. Why should wine have the, the right to ship beer to consumers and not beer? What message does that send about beer family if we don't have the same rights as uh some of our sister uh beverage alcohol products that have a higher, higher alcohol content? It's, they've, wine has proven it can be done responsibly and safely and so we do think the time has come for direct to consumer shipping. But again, we will take a reactive and supportive role on uh pieces of legislation that get introduced at the state level.

Speaker 5 [35:46] Craig, is there any common ground we can find here?

Speaker 4 [35:50] Well, I was, I was gonna, um, kinda revisit the, you know, because I think there's a relationship between the way that breweries, um, are treated as it relates to their consumption or their retail privileges, and that's the word that we choose to use, is, it's, it's just a different vernacular. But in alcohol, you know, our, our, uh, you can call it a right if you want, but it really is a privilege. And when, uh, When we're talking about some of these, uh, whether they're closures or whether they're restrictions on the way that these retail operations conduct themselves, you know, we like all of our customers. And if, if a distributor is distributing a beer, a, a brewery's beer that actually also has a tasting room, we've got an obligation to ensure that that is getting to that retail bar or restaurant, and that that is open in a safe manner. So, You know, I think when we, when we think about this, we do our level best to not differentiate between our retail partners, um, whether they're a, a brewery that our member may have the privilege of distributing, um, or whether it's one that has the privilege to sell that product to the consumer. So, I think there is some common ground, but we've gotta be looking at that common ground. Uh, with that same level of understanding of the disadvantage that that closed bar on the corner may have. That closed bar on the corner that has spent the last 25 years, for instance, building craft brands. That has, you know, taken risk and invested in all these many and new varied uh products. So, it is an ongoing conversation. It's ongoing, you know, in every state capital every year, but it's ongoing between the partners. And You know, I think what we've gotta do is we've gotta ensure that what we're doing during this pandemic doesn't give rise to a, a dynamic where we've, we've thrown out all the rules that help protect competition. And that's, you know, that's part of this ongoing dialogue as we get through this. I do believe that COVID is going to end. And we wanna make sure that we're evaluating all these many rules and regulations with a manner that, you know, that helps keep this hearty. I also think that, you know, we're all learning lessons from this. And, you know, one of the difficulties, I was talking to a, a craft brewer that sells very, very little package recently. And he said, my gosh, I wish I could, had a magic time machine and I could have gone back and I would have invested in that can line. And, you know, it, and, and, and just even watching just a little bit of the previous panel, those are real, real problems that those folks are dealing with, as they're, you know, trying to repurpose and build partnerships in a very different dynamic right now. So, none of this is easy, that's why they call it work.

Speaker 2 [38:49] You know, one of the Not to change the subject, but one of the lessons we have learned over the last few months, I think 6 months is, uh, I think the, the anniversary of this, uh, this terrible thing is, uh, approaching us, uh, uh, next week. Um, one of the lessons we learned is that there is a, again, I'm changing the subject, but there is an active sort of, uh, Activist, critic, critics group out there attacking beer, wine, and spirits. Um, and, uh, we see it in the dietary guidelines, uh, discussion that we're having now where the, where the recommendation that came from, uh, the science advisory panel was to lower the moderate consumption guidelines for men from, uh, up to 2 drinks a day to up to 1 drink a day to, to match it with women. I don't think that we can sort of take our eye off the fact that there are plenty of critics, both globally and in the US that would like to see us uh restricted in some way. Uh, so, I mean, this, this discussion of, um, uh, of, um, uh, consumer, direct consumer shipping and other things, um, it's important. Um, but, uh, uh, finding the, the things that if you could find common ground on it, it would be great, I think. I mean maybe that's possible. Um, but there's a, there's a growing sort of outcry here against alcohol, which I think is very, um, uh, not based always on fact and on science that we can't take our eye off of.

Speaker 1 [40:26] What is the appetite for changing those dietary guidelines? Do, is there a, a groundswell to do that? Is, what's the likelihood it gets reduced from You know, 2 drinks a day to 1 drink a day.

Speaker 2 [40:40] Well, those are two different questions. What's the likelihood of it happening and is there a groundswell to, to see it? Is there a groundswell to see it happen? There isn't a groundswell to see it happen. I, in fact, I think there's been plenty of coverage of, of this topic that shows that, um, uh, people are sort of scratching their heads like, huh, what? Uh, you know, you can't have 2 beers. Uh, uh, 2 beers is not a moderate amount of consumption for a person. Um, so, we don't know, again, like all of these other issues, we don't know what's gonna happen related to uh the final outcome of this that will come in the months to come when the USDA and the HHS, uh, put out the final recommendations around moderate consumption and all of the other things that go into the The dietary guidelines for Americans, um, document. But, um, I, I, I think, you know, we're all seeing it at the BA, MBWABI, we're all seeing in various ways, um, how, um, critics to the industry, um, are using COVID, or, or, or even before COVID, sort of gaining strength, um, uh, using Using sort of facts that aren't completely accurate, using circumstances that are uh difficult for everyone to sort of move their case against alcohol, and that includes beer. Um, and that's unfortunate.

Speaker 1 [41:59] Jim, what you brought up earlier about working together, it, it, it resonates, and the, the one thing that I, I sort of keep thinking about here is, uh, and I, I think everybody's thinking about it at this point is Beer needs to be more diverse, like there's not gonna be growth over the next 5 years without reaching and speaking to new drinkers. You guys have worked together on the beer growth initiative in the past, uh, your organizations have. How can that effort sort of translate into reaching these more diverse communities? What needs to be done there? And, and I'll, I, I guess I'll start with you, Jim.

Speaker 2 [42:45] Well, I think we have to make sure that we are responding to what's happening in the culture today. Um, even, even, uh, you know, we see it, uh, in Wisconsin and now again in Minneapolis. Um, this need to be promoting diversity, to be thinking about these issues. We're not just selling beer in a vacuum. We're selling beer in a culture that has these issues, has had these issues for many years. So I think it's incumbent upon brewers. Uh, I think the brewers Association has, uh, tried to address this over the last few weeks and months, in particular, in their membership. Uh, I think, I, I, we, we have to be constantly, uh, uh, um, making sure that we are part of the solution. And I think you see that from the largest brewers, that have various programs and other things that they've done just in the last few, uh, months during COVID to, to address some of the, the issues that have been raised. Um, uh, you see it from the small brewer's perspective, you see it from the distributor's perspective. We need to be an industry that is seen as reaching for solutions, um, uh, beyond our business.

Speaker 1 [43:51] Craig, how are wholesalers reaching for those solutions? How are they reaching out and, and reaching to communities in authentic ways?

Speaker 4 [44:00] Well, for distributors, it really starts with the workforce. And that's one of the things that I think we've been, as we're having these conversations about how do you grow beer piece of the licensed beverage pie, and how do you make the product more relevant. And, and obviously, when you look at the data, and you look at where our challenges are, and you look at the last uh generation of, of drinkers, um, and you look at the decline. In, uh, consumption with key cohorts, you see that there's some, some things that have been ignored. But when you look at opportunities, and you look at the fact that some of those cohorts have changed, um, I think engaging more of the workforce of the industry is gonna be really important. I mean, beer distributors employ Uh, a lot of, of, of, uh, black and brown, uh, employees, folks that are part of our community as part of the workforce. And we began to have some of these conversations with some of the folks, and that includes it with the, with the brewers as well, that are, um, You know, we need to be tapping some of those folks. We need to be engaging them. We, we've been pleased as we've, we've kind of watched some of the growth, um, you know, from a career standpoint. This is still an industry where somebody can come in and grow. You know, from, from, uh, an, you know, an, um, a more entry-level position to, uh, a supervisory or management role over, over a time period. And how can we harness those folks' perspective to address, um, part of what Jim was talking about as it relates to the, the social change and many of the, the, the external issues, but how can we harness those folks and use their points of view. To broaden the, the base of consumer. How can we be more effective in, in, in, in, um, plugging in those perspectives so that we can grow beer's piece of the pie?

Speaker 5 [46:04] Craig, you bring up a really great point about, uh, growing your employee pipeline and making sure that people have the ability to, you know, raise it through the ranks, and in the BA's 2018 brewery operations benchmarking survey, uh, recorded, you know, race and gender demographics by position. I think it was the first time the BA collected such data. So, uh, in that survey, we saw that women and employees of color were concentrated in service roles at higher rates than at production roles, brewing roles, managerial roles, and I know Jim mentioned that we are looking at having Men's daily allowance of beer to become equal to women's, that is not at all the equality that I ever wanted to see for women in the beer industry. So, um, Bob, what do you think the industry can do to ensure that these employees in taproom roles are able to raise it through the ranks over their careers? What can breweries do to help foster them?

Speaker 3 [46:56] There is so much we can do, right, um. We can listen We can learn And we can challenge each other to learn. And take it upon ourselves to educate ourselves. What it must be like not to look like everybody on this call. Well, the brewers Association is committed to listening. To learning And to educating, and then finally, in leading. We don't condone racism in any form. We take our leadership role in the beer community very, very seriously. And we recognize now more so that, that we need to be active, actively anti-racist. And what does that mean? And, you know, I probably know this much, and I'm committed to, you know, learning this much more about it. We know we have a long, long road ahead. Uh, at the same time, you know, we have been engaged in trying to provide resources on equity, diversity, and inclusion to the community for the last 3 years, and we're proud of our efforts in those areas. But we recognize, and, you know, I'm, I'm gonna be the first to say that we haven't done enough. And we are committed to doing the work. This is a priority for, for myself personally, for my staff, for the board of directors of the association. And for our diversity committee.

Speaker 5 [48:43] OK, I know you guys have,

Speaker 3 [48:45] go ahead, go ahead. I was just gonna say we're working on a lot of different things that I could talk about, but I might take up the rest of the time, so I wanna be I wanna be respectful.

Speaker 5 [48:56] Very considerate of you. So I was going to say that you guys have been on the receiving end of a lot of criticism on social media over the summer, and as a result, you've taken quite a few actions, and I'm sure some of those were planned before, but you just released a code of conduct, uh, a couple of weeks ago, and the next step was to, uh, create a mechanism for breweries to file complaints and potentially revoke membership. So where are we on, uh, on those, those items?

Speaker 3 [49:21] Uh, Working very hard on all of those items. Uh, you know, when we started hearing the criticism, you know, loud and clear that we were quote unquote, harboring racist breweries, we realized that If we wanted to revoke somebody's a brewery's membership or a member's membership in the VA, we did not have a mechanism to do that. So we realized we had to create that mechanism first, which meant changing our bylaws, which you would think would be easy, but as these two gentlemen can tell you, uh, an association, that is not an easy thing to do. That has been done. Second was then create a code of conduct for all members that, you know, is going to try to hold our membership to a higher standard. And produce a more welcoming and inclusive environment for craft brewing. So the code of conduct has been written and disseminated to all of our members. And then the final piece in closing our, what we call our governance gap is the creation of a complaint process where a member brewery, a member, any member of the association, not just brewery members, but Uh, allied trade members or individual members will be able to, uh, uh, lodge a complaint against another member for violating the code of conduct. Now, I think an important point I want to make here and drafting the uh the complaint process is unbelievably complicated. Just, just think of all the different scenarios. Um, it makes my head spin, but we've done a lot of work on it. I would say mid-September, we hope to have this, to be able to launch the, the complaint process. But an important point I want to make about it is We're not, and we're taking a lot of our philosophical orientation and approach to the, all of this through our diversity committee, uh, which is made up of, uh, you know, a, a, a great, uh, some really engaged and active brewery owners. We're not looking to take a punitive process, a punitive approach. We're not buying into the cancel culture or the off with your head, uh, mentality. We're gonna take an educational approach. In a remediation approach, because we think the way, the way to really to affect change in our community and through our society. It's through education.

Speaker 5 [51:50] Makes a ton of sense. I know in 2017, the BA created a similar system to combat sexist and offensive beer names and labels. Has that system been effective and have any brewers ever filed complaints against their peers? I can imagine that might be a little awkward to have to do.

Speaker 3 [52:07] How that, Jessica, how that uh mechanism was designed to work was, uh, again, uh, you know, we didn't really have at that time, the governance structure to, you know, remove a member for uh sexist or offensive or racist brewery names or labels. But what that, what we tried to do there is, uh, put a system in place and put a review panel in place so that It was focused primarily on our events and our competitions. So that if a brewery won a medal in the Great American Beer Festival or the World Beer Cup, and they won a medal with a brewery name or label that was deemed to be offensive, racist, sexist, or any, uh, you know, to take your pick, uh, then what we, what we instituted was we were not going to let that brewery who won that medal. Use our intellectual property to market, uh, market that medal that they won, and we were not going to read the name of the, of the beer from the brewery that had the offensive name or label. So that has proven to be effective. I think it's raised the consciousness of our members and enter into our competitions that we all need to take a second look about, uh, you know, the names and the labels and the imagery that we're marketing and that we have a responsibility that is, uh, I think people are, are, are, are, are really now waking up to.

Speaker 5 [53:38] Great. So it sounds like you guys knew you had a lot of work to do and you've done it and you're, you're certainly on your way on this path, um. Craig, how do you think the industry can better represent all people?

Speaker 4 [53:50] Well, I think, you know, I, I think Bob's hitting the nail on the head when he talks about listening. I think all of us can do a better job of exactly that. We've also got to do a better job of being present and being reactive to these things that are bigger than us. I think all three of us, um, during the, uh, biggest part of the civil unrest and After the, the murder of, of George Floyd, um, in our own way, in our own voices, all addressed the, uh, issue. And I think a number of association leaders did that beyond the, the beer industry and the alcohol industry. Um, I think standing up for injustice matters. Uh, I think that, um, recognizing that where we are right now is a big, big moment, and being able to name names. And talk about injustice has gotta be a part of that. I mean, um, I did one of these, uh, forums for, for somebody else, and I talked about the fact that, um, 3 of my children, uh, who were all home this summer, we, we all had housefuls of folks, um, how encouraged I was that they were all participated in the protests, and how that feels very, very different than past issues that are, you know, that have been top of mind. And I think we're all disappointed, frustrated, saddened by the most recent activities in Milwaukee or in Kenosha. Um, but we're also, um, you know, we're, we're, we're engaged in these bigger issues, and we're listening, um, and we're serious, um, about what we can do. Like I said, part of what we're gonna be doing is, is utilizing our workforce. And Um, taking a, a deeper look at that and understanding that better, because we have some success stories. We have some folks that really have, um, have made a great life out of this industry, and how can we learn from them, um, in an effort to make a better path for more.

Speaker 5 [55:56] Great. And then Jim, what efforts do you think the, the BI can make and what else should the, should all of us be doing to better diversify the industry?

Speaker 2 [56:03] I mean, I think you can also look to, uh, to, to take, to things that are already in place in some of the associations. You know, Bob's talking about, uh, making sure that there's a, a code of conduct that holds people accountable for their racist or sexist, um, uh, uh, comments. Um, we, uh, or labels. We've had at the Beer Institute, uh, similar to the Brewers Association, we've had since, uh, the end of prohibition, the, the Beer Institute advertising and marketing code that, uh, we, we have in the past received, uh, complaints to the code and to the, uh, the, the, the, uh, committee members who sit, um, uh, executing the code. Uh, uh, uh, complaints about racist, uh, labels, uh, sexist labels. So you, we shouldn't forget about what's already, what mechanisms are already in place that our trade associations could use. But, uh, obviously, it's very similar to what Bob and, um, and, uh, Craig said. Uh, we need to use the, the power of our workforce. Uh, all of us, uh, all of our member companies, brewers and distributors have, uh, have, um, uh, big workforces that need to reflect what America looks like. Um, we have the power of our marketing, or whether that marketing be Uh, local, regional, uh, national, or international. I mean, there's just plenty of things that, uh, beer brewers and beer distributors can do in an authentic way. Justin, you used that word earlier, and I think that's very important in an authentic way, uh, to have an impact on these issues.

Speaker 1 [57:38] We are in overtime, uh, but we'd be remiss if we didn't ask one last question, sort of lightning round style if we could. Um, last week was the DNC. This week is the RNC. Uh, it wraps up tonight with, uh, President Trump's speech. We've had 4 years of a Republican administration with President Trump. Who doesn't really operate like any other president we've seen. So, as we look forward to this November election, how could a changing of the guard affect the industry and conversely, how would maintaining the status quo affect this bigger business? And I'll start with you, Jim.

Speaker 2 [58:21] I think we need uh elected officials in place in Washington who want to pass uh and make permanent the Craft Beverage Modernization Act, who, uh, see the problems that we have related to uh aluminum tariffs, and at least attempt to mitigate some of those problems. Um, we need, uh, we need elected and appointed officials in Washington DC who understand that beer is the moderate choice for consumers who choose to drink. And that uh we can't be, uh, uh, we need those moderate consumption guidelines to reflect, uh, the proper science. So we, as trade association executives, really take the politicians and the elected officials that, uh, the, the people give us. We have to deal with the, the, the folks that are in place. We have to be able to show them the important social, cultural, and economic, um, impact we have on, uh, their districts, their states. Um, uh, so, but we need folks who understand what it's like to run a small business, what it's like to run a big business, um, and make sure that they, uh, they understand our point of view on the issues and accept them. And we see that over and over again in Washington DC, whether it's brewers, whether it's distributors. Upwards of 350 people in the house on the craft beverage bill, um, a growing recognition that, um, that something needs to be done on spoiled, uh, food and beverage, including beer. Um, so I'm optimistic that, um, that, uh, that, um, uh, we can, um, We can have the laws and rules in place that help uh brewers and distributors, um, build their businesses. Um, but we have some big issues that, uh, we need folks to take heed of.

Speaker 1 [1:00:12] Bob. I've, uh, you, you're gonna owe me another six pack.

Speaker 3 [1:00:19] Oh my gosh. Uh, I think many of the people on, on the call today will have heard me say this, uh, I, I've said this before, you know, there are, from the BA's perspective, there are no red states, there are no blue states, there are only blue states. And we have got to keep hammering our message that beer brings people together. That beer is a major economic driver in this country, and that we create and support a lot of jobs. And that is the message that resonates on Capitol Hill. That is how the Brewers Association has established itself as an entity in Washington DC. Um, we've worked with the Democratic administration. We've worked with the current administration. We'll be able to work with whoever wins the election in November. But I do want to say that the Brewers Association has decided to endorse presidential candidate. And I'm proud to share with you now that we will be supporting Finney for president in 2020.

Speaker 1 [1:01:33] Thank you. A write-in candidate, huh? Craig, we're gonna give you the final word. Can you top

Speaker 4 [1:01:39] that, man, I can't top that. That is an artful dodge, my friend. Uh, no, in, in all seriousness, I think, uh, both of these guys are right. We have a policy agenda that is in front of us, and that's not gonna change after November 3rd. Um, we have a history and an ability to work with anybody and everybody. You know, Democrats, Republicans, uh, libertarians, vegetarians, we love all, we serve all. And I think the dynamic is, part of what we're gonna need to do is, we do want folks to vote, and we want our employees to be able to vote, and we want our, um, and our member companies all do a great job of encouraging folks to participate. Uh, this is going to be a very important election. And, um, and I will say just a little bit, that's, that's important to note. Typically, our industry has fared better when we have divided government. When we have 111 party has a check on the other. And maybe that's getting a little political, but I don't mean it to be. What I'm saying is, we're gonna work with whoever's elected. We're gonna have a lot of work in front of us because we know there's gonna be a lot of new faces. We're gonna need to be in front of those folks. We know that politics is a participation, uh, sport, and you must be present to win. So, continuing to, to be there and to do the work is going to be especially important. Um, and, you know, for anybody that's out there, do your own research. My gosh, it, it's, it's like you watch the, the broadcast coverage of these conventions, and depending on who you watch, you get a whole bunch of different perspectives on things. What do I do? I, I try to watch a little bit of everything. Kinda like I never drink the same beer in a row. You know, you're always trying to get a little bit better at whatever it is that you're doing, and politics needs to be that way too. But the good news is, um, I think we're gonna be covered up and we're gonna be able to, uh, to work with whoever is elected, House, Senate, or the administration, uh, come November 4th.

Speaker 1 [1:03:44] And that's Brutox, folks. Thank you for tuning in. Thanks to Bob, Jim, and Craig. I know you all have a lot of work to do from the sounds of it, so we will let you get back to it. Thank you again to our first panel, Sam, Natalie, Chris, and Samantha. A big thanks to all of you for tuning in. Thank you to my co-host, Jess Infante for surviving her first brew talk. A final thank you to our sponsors, Dogfish Head for presenting Brewal, Ska Fabricating, ABS commercial, GND Chillers, Graphic Packaging International, North Star Pills by Raar Malting and Reyes. A big thanks to our AV team. A final reminder, time is running out to be a charter subscriber to Brewbound. Head over to brewbound.com/subscribe for more details. We will see you next Thursday, September 3rd, for Brewbound Frontlines. Jess and I will be discussing how COVID-19 has affected beer tourism, tourism. Uh, we'll be joined by Jeffrey Stuffings from Jeff Chester King and Tim Gormley from Burial Brewing. Man, I'm losing it. Good thing this thing's over. We will see you then. Thanks, folks. Jessica.

Speaker 3 [1:04:56] Thanks, Justin.