Legislation could help brew success for small businesses
For craft breweries, support from the wholesalers helping to get their products in stores plays a crucial part in their success. But ending a contract with a wholesaler not doing their job can take a huge chunk out of their profits. Sarah Blazonis has more on a proposed law that brewers say would level the playing field for the little guys.
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UTICA, N.Y. -- When officials with the Matt Brewing Company tried to end their contract with a wholesaler of one of their beer brands seeing low sales, they didn't think they'd have trouble, but the company refused.
"We ended up losing $200,000 or $300,000 on that brand and were not able to develop it at that time," said Nick Matt, chairman and CEO of the F.X. Matt Brewing Company.
A similar situation could cost some craft brewers even more.
"For a small business, that could be the end of it," said Matt.
Assemblyman Anthony Brindisi says that's because of the 1996 Beer Franchise Law. The law was meant to protect state wholesalers from large, national brewers ending their contracts without good cause.
"Since that time, the wholesalers have really consolidated their power in New York State. A lot of large wholesalers, some have not been promoting these smaller brewers' brands," said Assemblyman Brindisi.
New legislation authored by Brindisi could still protect wholesalers - while allowing smaller companies to flourish.
Under the new law, small brewers unhappy with the wholesalers trusted to get their products onto store shelves can choose to opt out of the contracts and pay the wholesalers fair market price for any distribution rights that may have been lost.
Brindisi says there's been resistance to the law from some large wholesalers, but smaller ones could benefit from the increased competition.
"These businesses have grown so much over the last ten years that we really need to update the law to deal with some of the realities we're facing today," said Brindisi.
The bill was passed both houses of the legislature. It will next be up to the governor to decide whether to sign it into law.