Wholesalers battle over bill on mixed beverages
Mixed alcoholic beverages like White Claw and Truly hard seltzers have in recent years exploded in popularity, and wholesalers — the middlemen between manufacturers and retailers — all want a piece of the pie.
But the beverages are categorized as liquor under current Indiana law, leaving beer wholesalers out of the action. Senate Bill 1544 would open sales to all wholesale types — and has already reopened industry squabbles over who gets to sell what.
It is just one alcohol-related bill moving through the General Assembly. Others would let salons sell patrons alcohol — among several other provisions — and create a new state craft beverage council.
Beer, liquor and wine “guys” duke it out
Indiana has three types of alcohol permits, and no entity can hold all three. That’s why there are major implications to how the state categorizes beverages.
“You can only do liquor and wine, or beer and wine,” Rep. Chris Jeter, R-Fishers, told the Capital Chronicle. “And so as a result of that, when we have new products come to market — that are not exactly beer, they’re not exactly liquor, they’re not exactly wine — the question becomes: who gets to wholesale them?”
Right now, liquor wholesalers have dibs. Jeter’s House Bill 1544 would define mixed beverages and put them under wine licenses, allowing all wholesaler types access.
It’s been done before.
“That happened in the ’90s with flavored malt beverages … They were wholesaled as beer but they weren’t really beer based,” Jeter said. “And so we created a new category and put them under the wine license because everybody, anybody can compete.”
His mixed beverages edition is limited to containers with 24 ounces or less of the beverage, and that are 15% or less alcohol by volume.
Stanley Ziherl, president of Five Star Distributing, told lawmakers that wholesalers and their suppliers have tight-knight, “multi-generational relationships” and that a beer wholesaler should be able to carry all of a supplier’s products.
But spirits wholesalers object.
“Please do not allow all of my colleagues’ work and my work to simply go away into the hands and pockets of the beer people, especially if I do not have the parity to be able to sell what they have,” Tiffany Pascoe told lawmakers at a late January hearing. She’s a key accounts manager for Republic National Distributing Company.
“I’m all about free market [but] why can they come and take my products away and not give anything to compete for? This is pure greed,” she added.
Lawmakers clarified that the bill itself doesn’t take products away, but Pascoe countered that if she wasn’t gaining something on par with the beer wholesalers, she was losing.
Tom Morgan, executive vice president for the firm’s Hoosier operations, suggested that spirits wholesalers get franchise protection like their beer counterparts, but lawmakers implied there wasn’t enough competition to warrant such a change.
Jeter said he didn’t know how his bill would fare against that deep-rooted divide.
“Look, there’s really heavily invested interests in this industry, obviously,” he said. “I don’t think it’s a given that it gets heard or that it passes, but I just felt like it was kind of the right thing to do.”
Several more alcohol-related provisions are moving in House Bill 1217, which its skeptical Senate sponsor has dubbed a “Christmas tree bill.”
One would let “beauty culture salon” employees with the necessary permits dispense beer or wine to customers.
Sen. Ron Alting, R-Lafayette, led the charge to bring alcohol to movie theaters, but told the Capital Chronicle that they’re a more “controlled environment.”
Indiana has about 8,000 licensed salons — “That could have the possibility of 8,000 additional places serving now,” Alting said. “That is a heck of an expansive amount.”
He’s also considering cutting a provision letting small breweries get, bottle and package beer from other small breweries, as long as they meet certain requirements.
The bill incorporates several other former bills.
It adds five historic district restaurant permits in Valparaiso and changes the cost; lets artisan distillers produce 20,000 gallons of liquor annually instead of 10,000; allows some brewers to sell their beer to food manufacturers and lets those with farm winery permits give free samples at nonprofit farmer’s markets — among other provisions.
Alting said he’d had staff pull out each distinct provision and was reviewing each.
Bill author Rep. Ethan Manning, R-Logansport, said he’d put several small changes together into one big bill for the sake of efficiency “instead of wasting everybody’s time with separate bills.”
“I know Sen. Alting hasn’t been a fan of that [salon provision] in the past, and that’s okay,” he added. “We’ll have those conversations about, ultimately, what happens with that provision.”
New council gets broad support
It turns out there’s something alcohol types can agree on: a new state craft beverage council, replacing one specific to wine.
“I think it’s pretty rare that you see all three segments of the craft industry come before your committee and ask for a piece of legislation jointly,” said Chris Gibson, a lobbyist representing the Indiana Winery and Vineyard Association.
He spoke at a Senate committee last week on House Bill 1624.
The legislation sets up the proposed body’s funding infrastructure — it would get a small chunk of excise tax revenue — as well as a governance structure, responsibilities and the authority to start a nonprofit for fundraising purposes.
“When the funding was cut off from the grape wine council, it was kind of a blessing in disguise,” author Rep. Steve Bartels, R-Eckerty said. “That was a catalyst for the Indiana Distillers Guild to step back up. But more importantly, this actually started the collaboration and also the unification of all three manufacturers.”
Alcohol and industry representatives said it would boost collaboration.
The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.