Stirring Up the Brew

Californians drink nearly 640 million gallons of beer each year, about 24 gallons for every person in the state. All this chug-a-lugging costs about $4 billion, so it’s no surprise that lots of money is being tossed around Sacramento by lobbyists on both sides of a bill that would grant wholesale beer distributors monopoly territories.

Consumer advocates in Sacramento estimate that beer distributors have donated more than $420,000 to state legislators during the last two years, primarily to keep the controversial monopoly bill moving along. Spokesmen for the distributors counter that the bill’s opponents, who include some of the state’s biggest retail chain stores, have donated at least $360,000 to help defeat the measure. Consumer groups like Common Cause have aligned themselves with the bill’s opponents, warning that a state-approved monopoly distribution system would eliminate the competitive forces that now keep California beer prices among the lowest in the nation.

So far the beer distributors are winning. Their bill, sponsored by Assemblyman Jim Costa (D-Fresno), was approved 13 to 9 this week by the Assembly Ways and Means Committee, and has moved to the Assembly floor. There more lively debate and lobbying pressure can be expected, with both sides claiming that they have the best interests of the state’s beer drinkers at heart.

Whether or not one thinks that a beer-monopoly bill is necessary depends on what one thinks of the current beer-distribution system. About 200 wholesalers, independent businessmen, control about 90% of the state’s beer sales now under a system whereby major breweries grant them exclusive sales territories. The distributors say, however, that these agreements do not have the same force of law that a state-approved distribution system would. They point out that 28 other states grant beer distributors exclusive territories.

It’s a close call, but the fact remains that the current system does not seem to be working all that badly. The 10% of the beer market that is open and competitive gives retailers leeway to seek out occasional bargains for their customers. It also gives small, independent brewers a chance to compete with giant breweries for a share of the market. Without any evidence that something’s broke in the system, we see no need to fix it. The bill should be defeated.