The Illinois Policy Institute Editorializes About Beer Legislation And Gets It Very Wrong

In Beer News by The Guys

The Illinois Policy Institute was directed to our critique of their editorial late Friday afternoon. On Friday evening the organization either removed or corrected the inaccuracies we pointed out below.

Their updated post can be found HERE.

***END OF UPDATE***

While scrolling through a collection of political stories and links a week or so ago, we stumbled across a blog entry posted on the Illinois Policy Institute’s website regarding a piece of beer-related legislation passed this session.

The entry takes aim at a bill passed by the Illinois state legislature  — and signed into law by Governor Quinn — prohibiting a brewer from owning a distributor. The bill specifically forces a wholly owned subsidiary of Anheuser-Busch InBev to sell its minority interest in Illinois distributor City Beverage.

And the post totally misses the boat. Here’s why:

For a bit of background, the Illinois Policy Institute bills itself as an “independent research and education organization,” with a free enterprise system in mind. We get why such an organization would want to make an argument to repeal the three-tier system of alcohol distribution. But the information they use in this post to back up that argument is either misleading or not true.

Here’s the snippet that appears to be the backbone of their argument and why it’s way off base (emphasis ours).

The new law is only the most recent example of a long-going and troubling trend where laws reinforce the anti-competitive privileges a handful of businesses enjoy at the expense of competitors and consumers.

Under the Illinois liquor licensing system, established with the passage of the Liquor Control Act in 1934, the Illinois liquor industry was set up into three distinct tiers. There are the producers – or manufactures – of alcohol, including wineries, distillers and brewers; there are also retail outlets, such as liquor stores and bars, which sell alcoholic beverages to consume; and finally there are distributors, through which the act mandated producers must sell their beverages, making distributors the exclusive middle-men between producers and retailers.

As of today, there are only four licensed alcohol distributors operating in the state of Illinois, which all alcohol producers (except for a few craft brewers) must work through to get their products placed in stores.

We suspect one of two things happened here: (1) the writer knows little about the alcohol beverage industry, did a quick Google search on distributors, and came up with the linked PDF above or (2) the writer found a PDF with information to support his claim that there is zero competition in the distribution industry and knowingly used it.

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If number one is the reason, then that is poor research. If number two is the culprit, then shame on you, IPI.

We found who the unattributed PDF can be attributed to. In fact, it wasn’t that hard. A quick search turned up The American Distilling Institute, which represents craft distillers in the U.S. The PDF was linked on their Distributors and Retailers page, where they note the list, “is focused on wholesalers who want to carry and promote craft distilled products.” So this is not an all-encompassing list, but rather, just a list of the distributors who are craft-distiller friendly.

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We found a rather lengthy list of beer distributors on alcohol beverage equipment seller Micro Matic’s site, which showed over 70 in operation in Illinois. And the Wine and Spirits Distributors of Illinois have a list of wine and liquor distributors, which totals 70, although there is a bit of crossover with the beer list.

By my count that is more than four.

But wait: there’s more.

HB 2606 was motivated by opposition to an Oct. 21 Illinois Liquor Control Commission decision that allowed WEDCO, a subsidiary of Anheuser Busch, to retain a minority stake it had bought in distributor City Bev. Lobbies like the Association of Beer Distributors of Illinois, or ABDI, protested almost immediately, arguing that the arrangement would threaten the “day-to-day operations of the four beer distributorships” and “Illinois’ ability to regulate alcohol beverages.”

The full quote is as follows: “The large brewer could play a substantial role in the day-to-day operations of the four distributorships.” It referenced Anheuser-Busch’s role in the daily happenings at the four City Beverage distributorships — not the aforementioned, and clearly false, four alcohol distributors in the state.

It’s no surprise that the sponsors of HB 2606, including main sponsor state Rep. Frank Mautino, D- Spring Valley, have received thousands in campaign contributions from ABDI.

Just about EVERYONE has received money from the ABDI, which is why the organization has such a successful track record in Springfield.

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And finally:

But the system also inhibits market growth by provoking some brewers to leave the state altogether, rather than deal with Illinois’ burdensome distribution scheme.

We were just as broken up as the next guy when Larry Bell pulled his beer out of Chicago, but the way your sentence is written implies a business closed up shop and moved elsewhere. In reality, Bell’s stopped sending its beer to Chicago for a few years. Thankfully, Bell’s is back and has been since 2008.

Listen, Illinois Policy Institute: If you want to pen a rant against the three-tier system then be our guest. It’s certainly not hard to find flaws in the system. Which is why we find it baffling to practically make up a number to rail against something that many argue is imperfect and to distort a few facts to back up this number.

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Written by many, compiled by one, this is a collaborative post with contributions from at least two writers at Guys Drinking Beer.

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