The Thirsty Beagle: Budweiser responds: Use Oklahoma's existing 3.2 system for full-strength beer

Saturday, February 20, 2016

Budweiser responds: Use Oklahoma's existing 3.2 system for full-strength beer

Good morning folks -- hope your weekend is off to a good start. I mentioned in a post earlier this week that I had sent some questions to Anheuser-Busch concerning SJR 68 and Oklahoma alcohol law reform in general. Eric James, senior director of sales and marketing for Anheuser-Busch Sales of Oklahoma, has responded, and I wanted to share those responses with you here.

So things are clear, this was an email exchange, and I'm presenting the responses unedited. I do have some reaction and interpretations of my own on some of the answers, but I will save those for a later blog post.

Without further delay...

The Thirsty Beagle: I know you are aware of the initiative petition filed by Oklahomans for Modern Laws. Is Anheuser-Busch Sales of Oklahoma considering filing its own initiative petition? Or would you prefer to seek a legislative solution?

Eric James: We support modernization of Oklahoma’s alcohol laws, but not if it would force Anheuser-Busch out of Oklahoma and threaten hundreds of jobs. We cannot support a bill that would inhibit our ability to operate in Oklahoma.

(Blogger's note: I didn't feel like that answer specifically addressed the main gist of the question, so I asked a follow-up: Is AB Sales of Oklahoma considering filing its own initiative petition on this matter? The answer from James: "We are committed to moving forward through the legislative process. Of course, if this language continues we will have to review our options.")

TTB: I think the issue of distribution is clearly an important issue, but one that can get technical and go over the head of a lot of average craft beer fans. Could you please explain in everyday terms what kind of distribution agreement Anheuser-Busch Sales of Oklahoma is interested in establishing in a single-strength system?

Eric James: We support modernization that would utilize the existing 3.2 distribution and regulatory system for full-strength beer so it can be available to consumers in grocery, convenience and liquor stores. A single-strength system means that beer, high point or low point, would all be treated the same.

Currently, 3.2 beer distribution law allows brewers to require distributors to meet specific requirements when delivering the beer to keep the quality intact. Some of these requirements include keeping it cold throughout the delivery/sale process and pulling the product from shelves if the product has hit its expiration date. However, current strong beer distribution laws do not allow for those same requirements to be placed on strong beer (Class B) distributors to ensure product quality.

Our distribution agreement is designed to ensure that consumers are buying the highest quality beer and we will continue doing so in a single-strength system.

TTB: Building off that last question, I myself have had concerns and have heard a lot of people express concerns about ABI distributing its own products in a single-strength system. Specifically, people are fearful of ABI controlling distribution in certain geographical areas and thus limiting the types or brands of beer distributed in those areas. Is this a fair concern, and if not, why?

Eric James: In Oklahoma, there are 12 3.2 distributors and 11 Class B distributors. We only operate two distributors: one in Oklahoma City and one in Tulsa. We operate by the same laws and regulations as all other distributors in the state in accordance with Oklahoma’s three-tier system. We, just like any other distributor, purchase beer from the brewer and then sell to the retailer. There is no separate system or special rules for our business in the state.

Anheuser-Busch’s footprint in the wholesaler distribution tier has existed for more than 100 years. It is worth noting that some of Anheuser-Busch’s owned and operated distributorships are in markets that have thriving craft brewing industries, such as New York, Boston, Portland, Seattle and San Diego.

TTB: Setting distribution issues aside, what would be the main goals of alcohol reform you would like to see accomplished?

Eric James: Since July 2015, we have been supportive of modernization that allows the sale of cold, full-strength beer to consumers in grocery, convenience and liquor stores using the current 3.2 system. The goal is to provide consumers with what they want – cold, full-strength beer.

TTB: To be blunt, this is not the first time ABI has faced a situation like this, and in states like Ohio and Kentucky, I know they still sell Budweiser. Please explain why Oklahoma would be different than the other states and why a five-year window isn't a fair compromise.

Eric James: We are proud of our Oklahoma employees and operations here. We employ 700 Oklahomans, have invested $300 million in our operations, contributed thousands to local non-profits last year and put $4.2 million toward marketing sponsorships in the state in 2015. Our operations include our two distributorships and a lid plant, and these facilities provide well-paid jobs.

We also promote responsibility, which includes significant investment in responsible consumption programs and marketing. Locally, we provided more than $150,000 in 2015 to support responsible consumption through programs like TIPS training, Good Sports, We ID and water donations to disaster relief efforts.

We believe modernization and distribution ownership are two wholly separate issues. We support modernization that gives consumers the strong beer that they want. However, modernization can be accomplished without putting anyone out of business.

The role of the government is to provide the legislative framework for companies to operate within. We believe beer drinkers should pick the companies and brands they want to support.

TTB: Lastly, please feel free to share anything you would like me to share with my readers that I haven't broached here.

Eric James: We have been a long-standing business partner in Oklahoma for more than 35 years. We employ 700 Oklahomans, have invested $300 million in our operations and contributed thousands to local non-profits last year. We invest in our employees and in the community, and there is no guarantee that another business entity would have those same values. In other states where this has happened, employees have lost their jobs, their careers and benefits have been disrupted. To say otherwise is factually inaccurate.

5 comments:

  1. What a crock of crap! AB cares about one thing; AB. They will possibly lose market share if craft brewers can sell their product right alongside the AB crap. Their political ads are the most deceiving things I've seen in a long time. I will NEVER drink anorher AB product

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  2. Didn't see any answers to any of the questions...kept saying they'd take their ball and go home. I like most other Okies don't care for idle threats.

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  3. I think it's important to note that AB has legitimate and legal business interest in maintaining their current system. The argument that they are an immoral big business out to destroy craft beer is entirely unfounded. If the language were to be amended to support AB then they would be able to do as they do now and continue to distribute their own beer, except now it would be strong point (an outcome that would save them money at a manufacturing level where they no longer have to brew 3.2% "beer" just for us and 4 other states).

    It is also likely important to realize that the "craft beer lobby" which is essentially just BDO and LOCAL isn't all about craft beer as they would have citizens of Oklahoma believe. In fact, Miller-Coors is an honorary member of BDO, who, in turn, controls LOCAL. The reason they are so adamantly opposed to AB maintaining distributorships is because Miller-Coors is jealous that they do not own a distributor in the state (something that would be, and currently is, entirely legal). Additionally, BDO (who controls LOCAL) is made up of DISTRIBUTORS who want to absorb AB's market share, thus lining their pockets while kicking out a major Oklahoma employer.

    AB has a legitimate business that provides Oklahoma with jobs and tax revenue, two things our state desperately needs in the current economic environment. At the end of the day you, the consumer, get to pick which beer you imbibe. Allowing AB to put their own beer on the shelves (where it has always been) next to craft beer will do nothing but give you the option between the both. They don't own the point of sale, just some trucks and warehouses. They don't decide what gets to go where, they just employ hard working Oklahomans. If you don't like their beer then don't drink it, but 700 Oklahomans shouldn't lose their jobs because other distributors want to be market share vultures while being legislatively sponsored by Miller-Coors (the other beer giant).

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    1. Obvious Troll...not one Oklahoman will lose their jobs if Anheuser-Busch InBev (Budweiser) is forced to divest themselves of the two Oklahoma beer branches. Do a little research into the same law that was recently passed in Kentucky. New ownership would be eager to hire experienced workers currently employed and I can guarantee they will be treated better under local ownership than under the mostly Brazilian management that has fired over 2600 older American workers since 2008 at their St. Louis headquarters. Profits earned would remain in Oklahoma vs. going to Belgium/Brazil. As far as Miller-Coors, you conveniently fail to mention A-B-I is buying their parent Company, South African Breweries, and to try and avoid anti-monopoly issues, is selling off Miller-Coors to Molson-Coors of Canada.

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  4. Folks, please begin referring to the foreigners that own, manage and fire older American workers as not "Budweiser" (simply a beer brand as you well know) but Anheuser-Busch-InBev, the correct name of the gigantic International Corporation. Please point out frequently their foreign ownership and how their Brewing raw materials have declined to include use of 3rd tier malt and how the time honored recipe for brewing Budweiser has been altered from spending 6+ weeks in the Fermenting cellars down to 3 & 1/2 through use of additives. Thank you.

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