By JIM PURUCKER
Guest Columnist
When an Indiana consumer purchases a six-pack at the store, they may not be aware that they are the end user in a convoluted scheme specifically designed to take money from their pocket and put it into the pocket of a beer wholesaler.
It’s time for policymakers to defend Hoosier consumers and once and for all crack the unfair monopoly that it has granted to powerful beer wholesalers.
Over the years, beer wholesalers have successfully lobbied policymakers to create and maintain an anti-competitive regulatory infrastructure that is specifically designed to give them an unfair advantage in the marketplace. It gives them an effective monopoly on beer and allows them to operate in a privileged spot outside of the free market to keep prices high – even in tough times when other businesses are struggling.
The advantages are vast. State-granted franchise protections make it nearly impossible for a brewery to change wholesalers, locking in the relationship forever even if the supplier wants to make a change. Beer wholesalers are granted exclusive geographic territories to lock out potential competitors and keep prices high. Finally, state law prohibits beer wholesalers from extending credit and mandates that retailers pay cash up front for all beer deliveries from wholesalers.
These monopolistic advantages are exclusively granted by the government to powerful beer wholesalers, giving them a near-permanent state-sponsored stranglehold on the marketplace. None of these advantages are granted to other businesses in Indiana – including to wine and spirit distributors.
Now beer wholesalers are asking legislators to expand their beer monopoly into spirits with House Bill 1544, which is now under consideration. The law would allow beer wholesalers to sell spirits to retailers while maintaining their beer monopoly arrangement and continuing the prohibition on wine and spirit distributors selling beer.
The law is written to exclusively favor beer wholesalers at the cost of virtually everyone else in the marketplace – most importantly consumers who will end up paying more. When retailers are forced to purchase a product from wholesalers in relatively small exclusive geographic territories, it reduces the retailer’s ability to negotiate for a lower price to virtually zero.
This bill is only the latest in the beer wholesalers anti-competitive push for more power. In 2021, beer wholesalers successfully lobbied to tighten their monopolistic grip on the marketplace by expanding their franchise protections. The move adversely impacted small brewers who were at their weakest during the global pandemic and made it all but impossible for a brewer to ever change wholesalers or even amend their agreement.
For too long, beer wholesalers have thought that they can use their political connections to get away with anything in the halls of the Statehouse. Those days are over. It is time to level the playing field for all companies and organizations involved in beer, wine and spirit wholesale and distribution, which include some of the smallest and largest operations in the nation.
Indiana must work to end franchise protection laws that make it virtually impossible for a supplier to change wholesalers; end exclusive territories that allow beer wholesalers to lock out competitors and keep prices high and end sweetheart laws that force retailers to pay cash upfront for all their product.
Indiana consumers deserve a policy infrastructure that priorities consumers and safety – not the profits of beer wholesalers.
Jim Purucker serves as the Executive Director of Wine and Spirits Distributors of Indiana. He is an expert in state law with regard to alcohol sales and distribution.