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The Big Guys with Unfair Advantages

Friday, April 08, 2016

Having size and scale tends to help in business. Economies of scale and the ability to leverage size in procurement and marketing are undeniable. Perhaps the biggest impact is in distribution, where the larger players have enormous influence. Hopefully, someday, we can find a better way and can level to playing field a bit so that the main driver in distribution is beer quality: let the consumers have access to as many beers as possible and let them pick the winners.

Related to the topic, I was surprised to read today about another dynamic in the craft beer industry that doesn’t seem quite right. When larger craft brewers are looking to open a new site, they often are awarded grants and bonds from cities trying to attract them. My initial reaction to that is “Fine. That makes sense.” But then you have to consider the fact that local tax payers are then taking on a risk on a private entity that could actually be harming an existing local brewery by bringing in (and subsidizing) competition. Take a read of this article on the topic and let me know what you think. There is something to be said on both sides.

Comments
Johnny commented on 11-Apr-2016 12:02 PM
It makes sense that a city, like Asheville, would provide incentives for a brewer to open up in their city. It means jobs, tax revenue (if they haven't given that all away!), and in some cases it can lead to that city being a beer destination. Hopefully, in the case of Asheville, the smaller truly local brewers benefit by the reputation the area gets for being a craft beer hub. Good article though. Thanks for sharing it. Definitely food for thought.
Pete Cook commented on 18-Apr-2016 01:53 PM
Related to this topic, the State of Wyoming just dealt with this issue. A state business council was initially going to recommend the state grant some land to a distillery to help them expand and create jobs, but outcry from other distilleries (saying it would give them an unfair advantage) convinced the state to deny the grant:

http://trib.com/news/state-and-regional/states-board-denies-money-for-idaho-distillery-following-outcry-from/article_13a466cc-5fa4-5a64-9e2d-1509ae48f9c8.html
Pete Cook commented on 19-Apr-2016 01:31 PM
An very interesting read on how these deals happen and the competition for them: http://www.citizen-times.com/story/news/local/2016/04/16/how-ashevilles-big-beer-deal-fell-flat/82888810/

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