“Most of these laws have been in effect since the 1930s, well before the recent and growing boom in craft beer in our state,” the Guild writes on its Freedom For Beer website. Reform, the guild says, would “update the current Three-Tier System of alcoholic beverage laws to better serve not just manufacturers, but retailers, and distributors for the benefit of Florida consumers.”
The Guild says licensing fees—which a brewer needs to make and sell their beer—should be determined on a sliding scale based on production, not the flat, “one-size-fits-all” approach that forces a small brewer to pay the same fee as a large, sometimes multinational, brewer.
At the heart of the Guild’s issues, however, is distribution.
Florida law requires breweries to work with beer distributors, which make profit by getting beer from breweries to stores, bars, and restaurants where the guild says consumers see a markup (the distributor brought it there, after all). Distributors also bring beer to festivals like Bolts Brew Fest happening at Tampa’s Amalie Arena on Aug. 11.
The center of that relationship is the state’s complicated beer franchise law which requires a brewery—but not a wine or spirit supplier—to give its distributor the exclusive right (“franchise”) to distribute the brewery’s beer in perpetuity, even when the brewery or distributor experiences a change in ownership.
The Guild cited the 2016 merger of Belgian brewer InBev and Anheuser-Busch, plus recent Brown Distributing portfolio sales in its argument for franchise law reform. In the first deal, “breweries had no rights to consider whether this was good for their businesses or not,” and with Brown, “breweries had no choice but to go with the subsequent purchaser, rather than selecting a new distributor that was the best fit for their brands.”
A brewer can get out of a “franchise” agreement through compensation to the distributor in the form of a buyout that includes “reasonable compensation for the diminished value of the distributor’s business.” Longwood, Florida’s Brewer’s Law adds that the brewery must also “buyback the distributor’s inventory of beer and pay to the distributor 100% of its laid-in costs (that is, the price the distributor paid for the beer plus its reasonable costs freight, storage, and handling).”
While Miami’s M.I.A. Beer Company is using a “corrective action plan” clause in franchise law to try and break up with its distributor, most Florida breweries are locked into their agreements.
The Guild says franchise laws should be limited to breweries of certain sizes based on production capacity. “These changes would continue to protect distributors from losing large manufacturers that comprise the majority of their sales and affect the stability of their business, while allowing smaller breweries to negotiate their contracts based on their specific needs for the benefit of both parties,” the Guild writes.
And while Florida brewers caught a break this year when State Reps. Lindsay Cross (a Democrat from St. Petersburg) and Brad Yeager (a Republican from New Port Richey) got Gov. Ron DeSantis to sign a bill that limits branding fees brewers pay the state to only those sold to distributors, the Guild wants more reform in 2024.
Self-distribution is a big part of the ask. Permitted in 38 other states, the Guild wants Florida to help small brewers by letting them “self-distribute their beer until their brand reaches a certain volume level or they determine it is in their best interest to work with a distributor.” Since most established beer distributors focus on efficiency and predictability (which leads to profitability), they end up working with mostly familiar brands, leaving out smaller breweries.
Emerging distributors like Tampa Bay’s Altered Craft Distribution serve small shops in six counties, but the Guild says self-distribution gives the smallest brewers a chance to build sales and gauge demand (there’s only so much room on store shelves, after all) before entering a contract with a distributor.
“It also allows a small brewery to capture some additional profit to help build their brand and company, while remaining competitive in price against other brands,” the Guild adds. “I think a lot of distributors would probably agree with that.”
Devon Krepps, co-founder of Dunedin’s 11-year-old 7venth Sun Brewery, echoed that sentiment, and told CL that a lot of distributors don’t want somebody that wants to just distribute a few kegs here are there. “It’s kind of crazy. Why can’t they just sell their stuff down the street to somebody if they want to, in their own community especially,” Krepps added.
Meers, who co-founded Tampa Heights’ Magnanimous Brewing in 2020 in the midst of the pandemic, teamed up with a tiny distributor, Mr. Beverage, in his brewery’s early days. The partnership allowed Magnanimous to place its beer in friends’ bars around Tampa Bay, and eventually in Orlando, Miami and surrounding markets before Mr. Beverage amicably let Magnanimous rework its contract. Now the brewery now works with J.J. Taylor—whose portfolio includes local favorites like 7venth Sun Brewery, BarrieHaus and Cigar City—for most of its distribution.
Most customers, he admits, don’t know the ins-and-outs of Florida beer law; they really just want to know where they can get Magnanimous—or whatever their favorite Tampa Bay craft beer is—in Panama City and other parts of Florida.
“Breweries need more options on how to get that out, whether it’s direct shipping to customers, which I think for some breweries offers as much benefit as self-distribution, or other things of that nature,” Meers said. “There just needs to be more leeway to what a brewery can do on a daily basis to be able to get beer out.”
Meers’ schedule recently forced him to step down from the Guild’s Board of Directors, but he thinks legislators, including the governor, might be ready to seriously consider reform. More so than others from small towns with crumbling infrastructure and other needs, elected officials from the Bay area have a lot of constituents who make money off craft beer—and even more who enjoy it daily.
Yes, opening up distribution could mean more reps for small breweries showing up to bars and package stores to try and sell beer, but the upside could very well trump any inconvenience.
“Smaller breweries being able to distribute their stuff does multiple things for them—it makes it easier for getting into events, festivals, things like that, getting exposure,” Krepps, who recently had to close her second location in Seminole Heights, added.
And the little change, Meers said, could someday make a huge difference.
“It always helps out to be able to build a little bit smaller to begin with and then work your way up,” Meers added about being able to self-distribute. “It would definitely give them a leg up.”
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This article appears in Aug 10-16, 2023.