Beer Distribution Bill Easily Passes Assembly, Goes to Governor

A heavily lobbied measure to establish monopoly territories for beer distributors won easy passage in the Assembly on Thursday and was sent to Gov. George Deukmejian.

The bill, which has become a centerpiece in the call for campaign finance reform because beer distributors are some of the state’s biggest sources of political contributions, was approved on a 51-22 vote with no debate.

Although Deukmejian has not taken a position on the measure, the Administration’s Department of Consumer Affairs opposes the bill, according to a spokesman. Deukmejian two years ago vetoed a similar bill sought by the wine industry.

Legalizing the Situation

The beer bill’s author, Assemblyman Jim Costa (D-Fresno), contends that the measure would merely put the force of law behind beer distribution contracts that already exist.

That system, Costa said, “maintains one of the lowest prices of beer to the consuming public in the United States (and) protects mom-and-pop retailers and local neighborhood liquor stores.”

Beer distributors, who act as middlemen between the brewers and the retail stores, already control about 90% of beer sales in the state under contracts with the brewers. Independent wholesalers compete for the rest of the market.

Costa’s bill would divide the state into territories and give individual distributors the sole right to sell their brands of beer in those regions. Retail stores, which have fought the measure, would be prohibited from buying from anyone else.

Higher Prices Seen

Major consumer groups and retailers argue that the bill would lead to higher prices for consumers and greater profits for wholesalers. Richard A. Elbrecht, supervising attorney in the Consumer Affairs Department’s legal services unit, said the bill would set a bad precedent.

“It’s a bill that will basically undermine the competitive marketplace, and we’re strongly supportive of the competitive market on the basis that it is the consumer’s best protection against quality problems and higher costs,” Elbrecht said.

“This bill would depart radically from the past in structuring relationships among participants in a major industry.”

Advocates for campaign finance reform, meanwhile, cite the measure as a prime example of the influence large contributors have on the legislative process. The beer wholesalers have contributed nearly $500,000 to legislators’ campaigns since January, 1985.

Concentrated Effort

“What enables the wholesalers to be as effective as they are is the fact that they feel very intensely about this issue, they are willing to invest heavily in passing it, and they don’t have a broad agenda, so they’re able to target all their resources and all their intensity into one issue,” said Walter Zelman, executive director of California Common Cause.

But Costa argued that his bill, which he insists is good for consumers, is “no better example” of the influence of campaign contributions on the fate of a single measure than many other bills the Legislature has considered this year. He pointed out that the retailers who have been on the losing end of this battle are also major contributors to campaigns.

“Wholesalers and retailers . . . both have a host of issues they’re concerned with, from workers’ compensation to liability reform to the bottle deposit,” Costa said. “Neither the retailers nor the wholesalers are one-issue groups.”

The bill includes a provision that would repeal the law in five years if a study finds that the change causes an increase in beer prices.