The Thirsty Beagle: How did Budweiser strike back in SJR 68?

Wednesday, March 16, 2016

How did Budweiser strike back in SJR 68?

A couple weeks ago -- right as Anhuesuer-Busch Sales of Oklahoma was tearing into Sen. Clark Jolley over the introduction of Senate Joint Resolution 68 -- I posted an interview with a local A-B rep.

SJR 68, as it was introduced, gave A-B five years to sell off its distributor businesses in Oklahoma City and Tulsa. It was not a matter of if, but when. This naturally angered A-B tremendously -- after all, it would upend their business model in Oklahoma. In response, they launched an attack campaign against Jolley.

My interview was spurred on by some of the rather fantastic claims A-B made in their attack ads. When I posted the interview, I said I had some thoughts to share about A-B's tactics.

For reasons I'll get to later in this post, I'm just now able to follow up on this issue.

First, as many readers pointed out, A-B's responses to my questions were heavy on pre-canned talking points and light on actual answers. Some of the responses actually did not speak to the questions at all, like this exchange:

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.

On that point, I followed up specifically about the possibility of an A-B initiative petition, since they had dodged that part of the question.

On some other questions they more generally spoke to the gist of the inquiry, although often in a markedly roundabout way, like here:

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.

What really wasn't accomplished in that interview, however, was a debate/discussion on some of A-B's more inflammatory claims: Hundreds of jobs would be in jeopardy; the price of beer would go up; A-B's sponsorships and community efforts would be compromised; and Budweiser would have to pull out of Oklahoma.

Let's analyze those claims.

-Hundreds of jobs would be threatened: Most likely not true. A majority of the local A-B employees would have been hired on by whichever distributor took over, as has happened in similar situations in other states. In fact, several industry experts told me that when A-B divests, it usually means more jobs are added in-state as the new company brings HR and other administrative positions in-house, as opposed to at A-B corporate headquarters in Missouri.

-The price of beer would go up: If that was true, A-B gave no explanation as to why that would happen. You could speculate that they themselves might have opted to raise their prices, since in a three-tier distribution system -- as opposed to the current two-tier low-point system -- they would get a smaller piece of the pie.

-Anheuser-Busch would discontinue local sponsorships and community support: Again, most likely not true. That doesn't even really make sense from a business perspective. For example, A-B recently had to divest of a large distributorship share in Illinois, and since that time has poured a lot of money into the state and has pretty much taken over Wrigley Field, as just one show of continued and increased sponsorships.

-Budweiser would be forced to pull out of Oklahoma: Perhaps the most ambiguous of all. As one Facebook commenter noted, "If SJR 68 forces Budweiser to stop selling beer in Oklahoma, can I line up to vote for it right now?"

Now, I had planned to post all of this a while back, but before I could do that, something funny happened: The language to SJR 68 as it relates to A-B was changed.

All the sudden, SJR 68 said that A-B would not have to sell off its distributorships. They would be allowed to keep them (with the caveat that the Legislature would be allowed to pass laws in the future that could force them to divest).

A-B was able to kick the can down the road. Now, any move to make A-B divest will almost assuredly end up being challenged in court, just like it has in many other states. A-B no doubt prefers that over a vote of the people. In court, they can throw high-powered lawyers at the problem. At the polls, less control. (Only problem for A-B is that they've consistently been losing such court cases in other states.)

So, A-B called off the dogs on Jolley and issued a statement saying they were content. The Senate passed the modified SJR 68 and moved it along to the House.

Of course, that still leaves one obvious question: How in the heck did A-B get the language changed?

Many have speculated that Jolley simply caved under the relentless pressure from A-B, but I don't think it was that simple. A more likely scenario is that there are numerous forces within the Capitol who felt that a prolonged fight with A-B was not in the best interest of getting alcohol reform passed this year.

I traded emails with Rep. Glen Mulready, the House author of SJR 68, and he spoke to that point:

"I was uncomfortable with the mandate of divesting," Mulready said. "My feelings from the beginning were, 'This is currently operating this way and has for years. It is not cratering the market. Let's just limit their (A-B's) footprint and move on. We don't need to pick this fight and potentially derail our larger efforts.'"

Mulready agreed that the process of moving SJR 68 through the system has required lawmakers, proponents and opponents to practice compromise. That's a term -- compromise -- that both the Beer Distributors of Oklahoma and the League of Oklahomans for Change Alcohol Laws (both supporters of the original language of SJR 68) have spoken to as well.

Clearly, not everyone will get everything they want when it comes to alcohol law reform.

But one thing we know is this: If anyone has the resources to either fight SJR 68 or to introduce a competing initiative petition intended to submarine the measure, it's the mega-international-conglomeration that is Anheuser-Busch InBev. And you have to remember that roughly 90 percent of Oklahoma beer drinkers still prefer light American lagers.

You might not like A-B and their hypocritical, anti-craft beer commercials, but you can't deny that they still have a lot of power to ply and money to throw around.

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