RICHMOND, Va. (WRIC) — Major legislative changes could be made to Virginia’s craft beer industry if recently announced lobbying plans are successful at the upcoming General Assembly session.
The Virginia Craft Brewers Guild (VCBG) this month announced plans to expand the Virginia Beer Distribution Company, modeled after the Virginia Winery Distribution Company (VWDC) within the Virginia Department of Agriculture and Consumer Services (VDACS), and to allow all brewery licensees to have limited self-distribution directly to retail licensees.
As codified in the Beer Franchise Act of the Code of Virginia, the current Commonwealth craft brewer model limits them to a single distributor, who is then responsible for the delivery and movement of product.
“These laws were written a very long time ago, and that’s when most of the distributors were smaller, family-owned distributors, getting contracts with really big breweries,” Legend’s David Gott said. Richmond-based Brewing Co. told 8News. “It was intended, at that time, to prevent a distributor from taking a large brewery and really building their brand, spending their treasure and sweat and blood to build the brand, and then asking the largest distributor to take them away. of their.”
But since SB 604 was introduced in the 2012 legislative session, Gott said the landscape has changed.
“The problem now is that it’s the exact opposite. The distributors are huge conglomerates, some of them state-owned – many of them state-owned – and the breweries are small,” he said. “It kind of falls on the breweries to try and get the distributors to pick up their beers and push their beers, and with the onslaught of a number of breweries that have sprung up over the, say, 12 , past 13 years, there are so many and there are so few distributors now.
Gott noted that each of the few distributors in and around the greater Richmond area only have a limited number of beers they can purchase and then circulate.
“They can hold X amount of cases of beer and X amount of kegs, and if you quadruple the amount available, they have to start cutting somewhere,” he said. “When we started, our distributor transported everything we made, […] now they’ve brought us back to “We’re going to sell this, this, this and that” and “You have a pilsner, but we’re not going to sell your pilsner because I have to sell this guy’s pilsner, make him happy , and this guy has a carrier, so I’m going to sell his carrier, not your carrier.
Gott said Legend Brewing Co. has “a good relationship” with its distributor. But the model as it currently exists makes distribution difficult for small and new breweries.
“If you’re trying to break into the business, I mean, you practically have to get on all fours, begging,” he said. “They’re going to give up an imprint for something they already have, and you have to convince them that what you’re trying to bring them will make more money with that imprint.”
Gott said distributors also have the final say on pricing, and breweries are not allowed, by law, to enter into circulation contracts with multiple distributors in one territory.
The proposed Virginia Beer Distribution Company could change that.
According to a statement from VCBG, the company would share VWDC’s command, execution system and personnel for efficiency and economies of scale. It would also have an advisory board of industry representatives. Participating brewery licensees would pay license fees, as well as transaction fees to support the operation. The Virginia Beer Distribution Company would then operate virtually within the VDACS.
“The founding of the VCBG was driven by the need to make significant legislative changes that would ensure the growth of craft beer in Virginia,” said VCBG Board of Directors Chair Janell Zurschmeide of Dirt Farm Brewing. “We are now the South’s #1 craft beer state per capita, so this move is part of a long legacy of meeting market needs.”
8News spoke to VCBG President and CEO Brett Vassey on Friday, who said the guild was pursuing “some of the most aggressive public policy priorities in its history.”
According to a statement, VCBG is currently working with the Virginia Alcoholic Beverage Control Authority (ABC), VDACS, Virginia Wineries Association, Virginia Wine Wholesalers Association, Virginia Beer Wholesalers Association, senior members of the General Assembly and the Board of Governor Glenn Youngkin for “conducting research to determine the appropriate fee structure and allocation of general funds to adequately meet corporate staffing needs and computer system upgrades, develop operating rules in exclusive distribution territories; and determining the annual number of barrels that will be authorized for distribution by beer licensees.
“It will mainly be brewers under 5,000 barrels per year. These are the small breweries. There are 314 licensed breweries in Virginia, and the vast majority, well over 70%, fit that profile,” Vassey said. “It’s a way for the industry to build brands on its own, and it gives existing distribution companies a lot more opportunity to choose who they can help take to the next level, once they’re ready.”
The task force will report to the Virginia House and Senate by October 1, 2022.
“It gives them a place for their beer outside of their tasting room,” Gott said. “I think for small breweries, if they go with the Virginia Beer Distribution Company, […] what that means is mostly – probably almost everything – draft beer in little private rooms, you know, your local favorite spot.