Pay-To-Play Will Have Its Day in Court


Dear Client:

Earlier this year the Massachusetts Alcohol Beverages Control Commission seemingly caught the Craft Brewers Guild red-handed of paying Boston retailers for placements in their establishments.

The Sheehans, owners of the Craft Brewers Guild, admitted to their involvement in pay-to-play activities as did the retailers.

So case closed, right? Not exactly.

We've already seen one Boston retailer (Wilcox Group) get off the hook and the four others involved could walk away unscathed if their defense holds up.

Earlier this week it was the Lyons Group and Briar Group's turn to testify. The two Boston restaurant companies admitted to accepting "tens of thousands of dollars" in incentives from the Craft Brewers Guild, but they claim the arrangement was legal in the state. Huh?

NO TIED HOUSE? The attorney representing both restaurant companies, Stephen Miller, argued that the 1946 state law only bans inducements between breweries and wholesalers, and makes no note of retailers accepting or requesting incentives. This law was eventually repealed in the 1970s, but the attorney claims that the ABCC's regulation to replace it "was never properly promulgated or, until now, enforced," per Globe. Although, it seems the Wilcox decision [see BBD 08-01-2016] may have refuted that argument.

"Any enforcement of the regulation today is completely and totally inconsistent with the will of the Legislature," said the attorney. "The regulation at best is vague and has been dormant for 46 years. . . . If you break it down, it absolutely, positively does not apply to a retailer."

The ABCC's chief investigator, Ted Mahony, calls the defense bologna saying, "The retailers are as much participants in this scheme as the wholesalers are.

"To hold retailers responsible would certainly be just," the chief investigator added.

FORMER RETAILER UNIQUE SITUATION. The one retailer already off the hook, Wilcox Group, got away by somewhat of a unique decision, one Truth Squadder tells us.

HERE'S THE THING. A new restaurateur buying Wilcox was waiting around for that license when all of this went down. But the ABCC couldn't approve Wilcox transferring the bev-alc license to the new owner while the pay to play hearings were still "open." So Wilcox and the ABCC were eager to come to a quick decision so that the new licensee would not be liable for the past licensee's transgressions. Also, there were no documents in evidence naming specific Wilcox bars. The other bar groups weren't as fortunate -- their invoices say exactly how many kegs of which beer went to which restaurants, from what we understand from sources.

Meanwhile, the Sheehans are still working out their case with the Mass ABCC, and we've heard from industry legal eagles that they have a good case. But you never know. Stay tuned…..

So now we see which distributor poop hits which retailer fans.


Our good friend Dan Wandel at IRI sent us a summary of key summer holiday beer trends.

The 30,000-foot view ain't pretty.

LABOR DAY: LOTS OF RED. We just got the official 2-week period read on 2016 Labor Day. In multi-outlet and convenience, the 2 weeks to Sept 11, beer barely grew dollars during the period (+0.7%), which had a pretty straight comp to the prior holiday. So no excuses there. But volume was down 1.1% overall.

Where domestic premium dollars were up 7% last Labor Day period, the two weeks to this September 11, they were down more than 2%. Do you even need to know the volume trend? (it's down 3.4%; last year's holiday saw it grow more than 7%).

Craft shit the bed. It was up a measly 2.7% in dollars, and up less than 1% in volume. Last year dollars were up 24% in the holiday period. Brooks and Dunn.

DOMESTIC SUPER PREMIUMS. So who "won?" Domestic super premiums (AKA Mich Ultra: see BBD 09-19-2016) and imports. Domestic super premium dollars were up almost 7%. Though a far cry from their +16% trend last holiday, they gained more share this year than last: 0.40 vs. .24 last go-round.

Imports were up 7.7% in dollars this year, vs. upward of 20% last holiday. They gained 1.30 dollar share (1.40 last go-round).

ABI, STZ WIN KEY SUMMER HOLIDAYS. Dan also provided us a tally of suppliers' holiday trends. Summary: In food, ABI and Constellation gained category share during all three holidays (ABI gained share of volume alone; Constellation gained share of both volume and dollars). ABI was up 0.29 volume share for Memorial Day, 0.08 for July 4 and 0.29 for Labor Day. Constellation was up 0.13 volume share for Memorial Day, 0.47 for July 4 and 0.49 for Labor Day. (A handful of craft brands gained volume and dollar share for all periods: read about them in CBD.)

When you look at the largest channel universe, MULC, the closer you get to the most recent Labor Day holiday period (the two weeks to 9/11), the more ABI volume share trends consistently improve: their share was down 0.84 the 52 weeks to 9/11, down 0.71 the 26 weeks to 9/11, down 0.65 for 13 weeks and -0.36 the two weeks to 9/11.

Meanwhile, Constellation Beer's gains continue to grow each of these periods: they were up 0.85 volume share for 52 weeks, 0.86 for 26 weeks and 0.96 for 13 weeks... but then back to a 0.85 gain for the two weeks to 9/11.

Until tomorrow, Harry

"I'm tired of all this nonsense about beauty being only skin-deep. That's deep enough. What do you want, an adorable pancreas?" - Jean Kerr

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