Yankee Brew News Archive

Proposed Deregulation Poses Serious Threat to Mass. Craft Breweries

Originally Published: 08/96

By: Dann Paquette

In a move to lower alcohol beverage prices and posture himself as the blue-collar candidate for the U.S. Senate, Massachusetts Governor William Weld has proposed to all but end the regulation of alcoholic beverages in the state. Weld, who's running against Democrat John Kerry for Kerry's current Senate seat, proposes to eliminate the three license cap per company which currently prevents the proliferation of liquor chains as well as supermarket giants like Star Market from selling alcohol in all but three locations. He also proposes to dismantle the "three tier system" which currently prevents package stores and on-premise establishments from buying directly from wholesalers.

Finally, according to the Boston Globe the most controversial of the proposals that is expected to appear in his fiscal 1997 state budget is the abolition of the state Alcoholic Beverages Control Commission (A.B.C.C.). Most notably the A.B.C.C. is the agency in charge of how beverage prices are set.

In his State of the Union address earlier this year Weld took a decidedly working class theme by opening with a recollection of the Malden Mills fire, where several hundred jobs were lost and then given back due to the generosity of the mill's long time owner. He strengthened his "Joe six-pack" appeal in the middle of this speech when he said that "by cutting government regulation, we propose to give you relief from hidden taxation--like the extra 75 cents or so that needless regulation adds to the cost of a six-pack of beer in Massachusetts."

This "needless regulation" state brewers would say, is what has kept the playing field level in the Commonwealth. Level enough at least for an in-state brewer like Wachusett Brewing Company in Westminster to have a small but quickly growing business. Wachusett hasn't even been open two years yet it currently employs thirteen full and part-time workers. Co-founder Ned LaFortune expressed optimism that this proposal would never become a reality but cautioned that liquor store chains would really hurt Wachusett's best customers: the small independent package store.

Paul Sylva, co-founder of the Ipswich Brewing Company in Ipswich and current President of the newly formed Massachusetts Brewers Association (MBA) agrees that the loss of the "mom and pop" package stores to chains could sting local brewers the most. He describes an atmosphere where because of the elimination of the three license cap on businesses, chain supermarkets, liquor super-stores and wholesale clubs buy up small independent package stores. Many local brewers see what Sylva calls "a situation where local micros are tolerated but not promoted."

The relationship between the small store owner, their employees and the employees of the brewery cannot be underestimated. A lot of our in-state packaging micros rely on that sense of loyalty and community that you get with a one-on-one relationship with the buyer. Sylva and the MBA shiver to think what kind of alternative giant supermarket chains will provide. "There would be a dumbing-down of staff," Sylva said. "It would degenerate to the lowest common denominator."

Finally, Sylva believes that local microbreweries, especially smaller ones, will find it hard to even make it on the shelves of these local giants. "They (the chain stores) will have neither the wherewithal or desire to deal with smaller microbreweries," predicted.

Yankee Brew News tried to get find out where the Governor stood in regards to the in-state microbrewing industry but was sent a non-specific e-mail response by an External Relations Aide for the Weld-Cellucci administration. The theme of the letter was similar to Weld's original pitch; the A.B.C.C. is a waste of money and distributors are merely a cog that drive up the final cost of booze. "Regulations essential to protect the public will be maintained and enforced, while those serving only to maintain the economic status quo will be repealed.," the missive proclaimed.

Strangely, despite Weld's pro business, anti-bureaucratic, pro-working class comments in his State of the State Address and in the Boston Globe article regarding this proposal, much of this letter pointed out that the primary interest the state has is in the alcohol industry is policing its drinkers. Paul Sylva does stress that the Massachusetts Brewers Association stands firmly behind the A.B.C.C.. "We believe as a group that alcohol should be regulated".

Incidentally, the "needless regulation" Weld has referred to, the A.B.C.C., which regulates 11,000 licenses, presently costs Massachusetts tax payers the grand total of $1 million according to the Massachusetts Package Stores Association. This is in comparison to Connecticut which regulates 7,000 licenses at the cost of $2 million. The state alcohol industry on the other hand generates $171 million yearly in state and local taxes. So the A.B.C.C. costs just over one-half of one percent of state and local alcohol tax income.

The MBA along with Massachusetts Wholesalers and Malt Beverages and the Massachusetts Package Store Association have started a letter writing campaign in opposition to the proposal. In fact this issue has become one of the first tests of the Massachusetts Brewers Association, recently formed to deal with such issues as promoting locally brewed beer, researching possible group insurance plans, and keeping up-to-date with state and federal laws that would effect the industry, among other issues.

One piece of literature from the Massachusetts Package store Association entitled "The Real Story" claims that "jobs at the local level would be sacrificed for sales at the regional level. A Super Stop & Shop or Wal Mart selling wine, spirits, and beer in its Fitchburg store would readily experience increased volume sales, but package stores and other 'family owned' stores in Fitchburg and surrounding communities like Leominster, Gardner and Athol would feel a negative job and revenue impact at their local establishments. "It is also very doubtful that a Super Stop & Shop or Wal Mart is going to create any new jobs because of increased wine, spirits, and beer sales; in fact, they already have the work force required, at minimum or near minimum wage, to sell the product," the piece concluded.

Pull quote:

In a move to lower alcohol beverage prices and posture himself as the blue-collar candidate for the U.S. Senate, Massachusetts Governor William Weld has proposed to all but end the regulation of alcoholic beverages in the state.