Payola in the Beer Industry

If you hang around with industry people long enough, eventually you will hear some talk about the dark side of the beer industry that Ben Johnson covered yesterday for Torontoist. Take a moment and read his piece if you haven’t already – it’s got some great anecdotes and is a precursor to my response piece. It’s a topic that a lot of beer writers and bloggers have thought of writing about at one time or another and I’m glad someone finally did, so my hat’s off to Ben for that and for Torontoist for running the article.

Basically, the issue of payola (to steal a word from the music industry) runs deep in the industry and is one of the practices from the larger companies that is slowly spreading down into the craft beer world. Of course, the problem is that no one wants to really talk about it on the record. Not even the craft beer guys, which should strike people as fishy (except for Jason Fisher, who has the advantage of being able to sell most of his beer through his brewpub). The reason is that because almost all (if not all breweries, to some level) participate in this practice. I’ve heard stories of craft breweries buying lines, giving kegs away, installing draught towers or cask engines, so I find it unfair in some way that only MolsonCoors and Labatt get mentioned by name. Sure, they have the bigger budgets and can throw around more freebies, but that doesn’t make it worse for them to participate. Everyone should be treated equally and I would have liked to have seen craft breweries called out and been forced to answer about their practices. Being smaller doesn’t make it right.

The more I’ve thought about the payola issue, the more I wonder who is at fault – the breweries or the licensees. It’s the bars asking for extras, yet it often seems like the breweries get blamed for the practice (saying, for instance, “it’s often the brewers who dictate what’s on tap,” which comes from the first paragraph of the Torontoist article). Isn’t it the licensees who should be blamed for dictating what breweries must do to get on tap? I’m not trying to absolve the breweries of wrong doing, I’m just saying that there are two participants whenever payola occurs. If something evil or unethical is occurring, both sides share equal guilt. (At the same time, breweries can buy promotional space in the LCBO, so there is a precedent in Ontario for breweries paying to make their beer more accessible to the public. Obviously this isn’t a direct comparison as other products are still available, whereas buying all the taps at a bar completely limits selection.)

The end of Ben’s article brings up what this means to us, the consumer. How do we feel about someone else choosing our beer for us? It’s an interesting sentiment, but I’m not sure if it really matters. As a consumer, I have a choice about what bars I go to and what beers I purchase, a choice that is often made by tap and bottle lists. Yes, there are Molson bars and Labatt bars, but you’re probably not frequenting either if you’re reading this. As Ben’s sources said, there is nothing to stop a bar from dropping a brand at any time, so the actual impact of payola on draught lists is harder to determine. Beer drinkers can choose to go to bars that reflect what they want on tap. In the case of craft beer lovers, this increasingly means going to bars with rotating taps, bars where dedicated tap lines are becoming a thing of the past.

While this system often works out for the bars, I’m also curious about why bars would let people buy lines without some consideration for how that beer may sell. Sure, an extra $1,000 per tap line would be great, but it’s not going to save your business if people don’t want to drink what you’re serving. It seems bizarre that bars would just let personal gains dictate what they offer customers. If that tap is now only moving one keg a week versus three or four, it will slowly eat away at the profits you could be getting from a better selling beer that came with no freebies.

The real question is how to end the practice, but that’s not going to happen until people in the beer industry are willing to go on record, use their real names and vow to end the practice. Until then it’s just a bunch of people airing dirty laundry and pointing fingers while claiming innocence.

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One response to “Payola in the Beer Industry

  1. http://www.sellingcraftbeer.com This video explains why craft beer can be a better, more profitable choice for bars and restaurants. From higher margins to more loyal customers, craft beer is the best use of valuable draught real estate and bottle lists. Stone Brewing CEO Greg Koch explains why switching from mediocre brands — which can sometimes rely on illegal giveaways and unethical incentives — and switching to quality craft beer will improve the bottom line.

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