{"id":8412,"date":"2013-08-07T11:32:21","date_gmt":"2013-08-07T18:32:21","guid":{"rendered":"https:\/\/archives.csusm.edu\/westcoastersd\/?p=8412"},"modified":"2013-08-07T11:32:41","modified_gmt":"2013-08-07T18:32:41","slug":"the-doctors-office-a-reputation-on-the-line","status":"publish","type":"post","link":"https:\/\/archives.csusm.edu\/westcoastersd\/2013\/08\/07\/the-doctors-office-a-reputation-on-the-line\/","title":{"rendered":"The Doctor’s Office: A Reputation on the Line"},"content":{"rendered":"

The traditional three-tier system of beer was born out of The Prohibition Era in these United States. The law was set up, in theory, to provide a system of checks and balances, not unlike the idea behind the three branches of government. In terms of beer, from production to consumption, the beer starts with the brewer – who sells to a wholesaler – who distributes the beer to a retailer. You, the craft beer drinking consumer, can then buy from the retailer. In California we do, however, have the designation of being a self-distribution state and, therefore, we are an exception where brewers can distribute and sell their own beer directly to retailers and consumers. Though there are opportunities for brewers to sell there wares and distribute them directly, distributors already have the relationships with retailers such as liquor stores, bottle shops, bars, and restaurants, as well as a workforce of sales reps who can make or break a brewery’s business.<\/p>\n

\"560912_395171797199433_1340630960_n\"<\/a>
Nathan Lang, Sales Representative of Manzanita Brewing Co. stands by his product. Manzanita, opened in 2010, self-distributes their beer.<\/figcaption><\/figure>\n

It\u2019s not as ominous as it sounds. There is a finite number of bars, with a finite number of tap handles. There is a finite number of markets, liquor stores, and bottle shops with a finite amount of shelf space. There is a finite number of consumers. However, what seems to be infinite is their selection on that finite number of taps and shelves. The infinite selection, in and of itself, is not a bad thing. In San Diego, with more than 70 operational breweries, there are few locations that have a tap system that could pour even one beer from each locale.<\/p>\n

So then how do brands find themselves in a retail space? Of course, the quality of the beer is key. Also, if there are existing relationships among people in the industry, that too can be advantageous. If there is buzz for a new brand and people clamoring for it, that will help. Yet there exists something nefarious, a potential cancer in any beer market, which is the dreaded quid pro quo \u2013 \u201cthis for that\u201d in Latin. In the business of beer this back-and-forth, barter, commutation, swap, trade, whatever you want to call it, can mean the beginning of the end.<\/p>\n

According to a ChicagoBusiness.com article titled \u201cGraft Beer\u201d by James Ylisela and colleagues, the authors divulge that their fair city \u2013 which for our purposes can serve as a cautionary tale \u2013 has faced pay-to-play in their craft beer industry. \u201cIndependent (Craft Beer) brewers say the brand-name distributors, with deep pockets and abundant supply, often resort to pay-to-play business practices,\u201d the report reads. \u201cOffering cash, new tap systems, free beer and other incentives to tavern owners and retailers in exchange for taps or shelf space. Federal and state laws prevent producers and distributors from offering money, loans or anything else of value to retailers to freeze out the competition, with such exceptions as signs or ad materials under certain dollar limits. It’s also unlawful for bars to accept these gifts. For fledgling, cash-strapped brewers, the practice can force a difficult choice: dig deep into their pockets and play along by giving distributors discount beer or freebies that can be passed along to bar owners\u2014or effectively be shut out of the taps and shelf space of the businesses that serve alcohol.\u201d In talking to local business managers and owners, these incentives, though offered, do not outweigh reputation and are indicative of a day gone by. How has that come to be; what makes San Diego special?<\/p>\n

I spoke to Sonny Jensen, former general manager of The Beer Co. in Downtown San Diego and current operating partner of Stumbling Steer Brewing Co. in Albuquerque, New Mexico. \u201cPay-to-play is bad for the craft beer business. It turns craft beer into a commodity. People care about quality, local beer, and supporting local brewers. It\u2019s crucial not to play these games.\u201d When asked about \u201cthese games\u201d Jensen specified: \u201cfree kegs, free shirts, and other free tchotchkes, that\u2019s not what San Diego is about. We are about good local craft beer. Larger distributors in San Diego know not to play this game in here, at least at craft beer bars. They are, however, likely still playing those games at chain restaurants and the like. I was given pitches by these large distributors for free beer, et cetera, and I let them know that, for me, it is all about variety and new, local beers. The major concern of local craft beer bar owners, operators, and staff isn\u2019t to get free stuff, it is to support local breweries so that they can keep making good beer. I love to buy a shirt, and wear it proudly, knowing I am supporting a local brewery.\u201d<\/p>\n

\"Right<\/a>
Right to left: Ian Black and Nate Soroko of Toronado SD pouring out lots of Russian River Consecration in July 2012.<\/figcaption><\/figure>\n

Nate Soroko, of Toronado San Diego, went on the record to talk about what new trends he has seen in the realm of pay-to-play. \u201cI guess you would say there\u2019s a sort of pay-to-play in the craft side too.\u201d How so? \u201cWell in a subtle way craft beer bars play. It\u2019s a unspoken rule that you can\u2019t get a company\u2019s specialty keg without selling their core line of beers.\u201d I asked Greg Koch, co-founder and CEO of Stone Brewing Company, to comment on this matter. From his perspective, it is less pay-to-play, and more about good business sense. \u201cWhen you have a limited beer with a limited amount of kegs, you want those kegs to go to places that have shown loyalty. This is not a shocking concept,\u201d he said. \u201cWe have no official policy, we do things that make good business sense. You have 10 kegs, but 50 places that want them. You\u2019re going to be smart about where you place them.\u201d<\/p>\n

The most important factor in San Diego for a brand to find shelf space, however, is the brand\u2019s reputation and integrity. Reputation can mean a variety of things: quality, flavor, personality, sense of community, a name that is synonymous with beer. Integrity means having respect for San Diego\u2019s craft beer culture and community. In San Diego one such company whose reputation is synonymous with beer is Stone Brewing Company. I asked Greg Koch if he felt that pay-to-play culture exists in San Diego. \u201cYou will always find people on both sides of the aisle when it comes to this issue. That culture still exists in spots and pockets in San Diego, but it is not pervasive.\u201d Not pervasive? \u201cIn 1996, when we started, the culture was much more pervasive. Lots of places would lay out their desires: free shirts for staff, free glasses, and even free beer. We refused to do it. Always have. Never will,\u201d Koch continued. Why not I wondered? If pay-to-play can get you handles and shelf space, why not play?<\/p>\n

\u201cThis is a slippery slope. In the short term, it might get you somewhere, but it\u2019s a lazy sales person\u2019s sales technique. There were places in San Diego where, when Stone began, that would shake me down. One day I asked a bar owner Why?<\/em> To which he responded incredulously \u2018It\u2019s you (breweries) that taught me to do this, to expect this.\u2019 The industry practice of buying their way in, there was an influx (in 1996). If consumers think that this will result in cheap drinks and free swag, there is no such thing. Their choices become limited if decisions are made for them ahead of time. \u2018Selling out\u2019 means \u2018sold out\u2019 and \u2018selling out\u2019 rarely leads to a better situation; that\u2019s the nature of being a \u2018sell out\u2019 in this industry.\u201d<\/p>\n

\"Left<\/a>
Left to right: Greg Koch, Sonny Jensen and Michael Bowen (Beer-Con).<\/figcaption><\/figure>\n

I asked Koch who is responsible for pay-to-play antics? Is it the producer, the distributor, the retailer, or is it even the consumer? \u201cEveryone.\u201d Koch replied. \u201cEveryone is responsible. The consumer can be responsible as to what beers they buy and where they spend their money. Brewers need to be smart about who they do business with. Distributors and retailers are responsible for not engaging in, or perpetuating this.\u201d In his video Craft Beer Profitability<\/em> (www.sellingcraftbeer.com) Koch shares his thoughts on why the beer itself should be the most important factor. Koch asserts that \u201cBeer selection makes a big impression.\u201d Retailers should be using their \u201creal estate\u201d to provide consumer with actual choice of quality. Koch also touches upon why pay-to-play is bad for business when he states that \u201cfree kegs lowers profits.\u201d How so? Essentially a retailer has said that the cost of real estate is worth $0, and that their customer only deserves, in all likelihood, access to a mediocre beer. However, craft beer drinkers are looking for quality beers, will have loyalty to establishments that serve quality beers, and will, in the end, be the people who keep the lights on, not the entity that gave a free keg.<\/p>\n

In researching this story I found people at all tiers that said pay-to-play either does not exist, or exists only “in pockets” of San Diego. That, to me, means it is not eradicated, and therefore, could see a reemergence, especially with the industry\u2019s growing popularity locally, nationally, and worldwide. How can this be prevented? First we can establish a formal dialogue. The San Diego Brewers Guild can put out a formal statement on the matter, for example. Moreover, they, as a unified industry voice, can engage the San Diego hospitality industry and other industries within the county to educate them on the detriments of pay-to-play.<\/p>\n

Managing the reputation of our craft beer community is everyone\u2019s responsibility because our craft beer reputation is, in a real way, the reputation of our city and county. Even with an exponential increase in beer production, beer quality, beer education, and beer tourism, the craft beer movement in San Diego, though a quarter century old, is still not very well known. We have our future to think about, and that future is worth a lot more than a free t-shirt, glass or keg.<\/p>\n","protected":false},"excerpt":{"rendered":"

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