Surely Surly isn’t Squirrely

I won’t go on (too) long about this, but it caught my attention and it galls me that an averaged-sized microbrewery in Minnesota is being kept from selling beer at its own facility by a strict reading of arcane 3-tier system rules – rules that have been modernized in half of the states without cataclysm.

I’m not in the trenches on this one. It is just an all too familiar story. I’m not from Minnesota and I’ve never even had a Surly beer. I’ve read two articles on the subject, and the quotations that follow came entirely from this piece and this other piece.

These journalists seem like good writers not prone editorializing, which is why I am writing this. Because I am outraged. All I’m going to do is repeat bits from these two pieces and add my own two cents. This is my editorial opinion.

The Background

Surly Brewing currently makes beer in Minnesota. Surly hopes to open brewpub which is costing them $20 million. This venture will contribute to the State’s coffers and commerce through permits, licenses, excise taxes, employment and employment taxes, purchasing of materials, and profit (and more taxes) paid by those who sell Surly’s beer in their networks and locations. [Ed. Who isn’t getting a slice here? It’s the distributors who want their 20-plus percent for stale-storing perfectly good beer in a warehouse while they collect graft, gratuities, or “sales incentives” from the top bidders. They’re P-O’ed that some business might have the gall to make beer and not pay them to ruin it! After all, they are entitled by law to distribute all the alcohol.]

The Board of the Minnesota Licensed Beverage Association (MLBA) appears to be run by some faction of: 1) fools, 2) pantywaists afraid of legal action by the major breweries who fund the distributorships, or 3) chicken littles that imagine an incremental change in outmoded law will result in a total collapse of beverage retailing.

Minnesota Public Radio states that the MLBA “represents Minnesota liquor retailers and wholesalers.” [Ed. Hello? What about the producers – the brewers and the distillers? Some 3-tier system when the agency in charge represents two of the three factions in this age-old farce. Who put these guys in charge and how does a brewer get fair representation?]

The Characters

MLBA Executive Director of Smug: Frank Ball. (Source: minnesota.publicradio.org/)

MLBA Executive Director Frank Ball, who earlier this week reportedly stated “We’re not opposed to any [emphasis added] of this. We want them to build a brewery. Surly has a wonderful product.” (Subtext: but we aren’t saying anything about actually selling said product.) A day later his tune was less catchy “We’re not talking about tires, batteries or accessories. This is alcohol, and it’s highly regulated. There’s a reason this law has been on the books since 1933.” [Ed. Yeah, because do-nothing bureaucrats can’t get past the bathroom mirror to modernize laws that were instituted in the wake of a) the Great Depression, b) 13 years of Prohibition, and c) lobbying by gangster-owned distribution networks].

Omar just wants be able to sell his beer at his new brewpub, but a capricious law says he's too big. (Source: blogs.citypages.com/)

Then we have brewery owner Omar Ansari. Seems sort of like Minnesota’s answer to Sam Calagione or Greg Koch. He has big plans for a destination brewpub that would draw big dollars to whichever city he chooses. “We’re not looking for the three-tiered system to go away. All we’re asking is to sell glasses of our own beer at our own facility.”

While Ball fights back with “You’ve got to play fair and Surly is asking for an unfair advantage. It would be one thing if they were a smaller brewer. But when you make over 3,500 barrels, you’re a pro and there are rules to follow.”

Meanwhile, other brewers in Minnesota, those without such grandiose plans, sound like 3-tier poster boys. According to Ted Marti, the president of Schell Brewing, “Our retailers are our lifeblood; they’re the reason we exist.” [Ed. No. Your customers are the reason you exist. Remember them, the people that buy your beer?] And then you have Mark Stutrud, founder of Summit Brewing. “We cannot survive without the three-tiered system.” [Ed. As lopsided as the 3-tier system is, all Ansari is seeking to do is sell beer at his location. He is not seeking a dismantling of the system. And for the record, total dismemberment of the 3-tier would likely result in Bud Light bars on every street corner like so many Starbucks. Hey how’d that happen?]

Final Analysis

Levy states that the 3-tier “separates manufacturing, distribution and retailing in the beer business.” Not exactly true. It does not prevent a major beer manufacturer from owning a substantial piece of a distributor. Just look at all the beer delivery trucks that say “so and so distributors” on the cab door, while the entire box is paneled with A-B or Miller-Coors hype.

When the major shareholder in the distribution company and the majority of product moved by that distributor are the same mega-brewery, it takes very little effort to: a) slow-pedal the small guy who is obliged by law to contract with a distributor, of which there is often only one! and b) fail to represent their beer fairly in the market because the squeaky palm gets the grease and by other nasty tricks like removing product from retailer shelves and stealing tap positions.

A small brewery signing an obligatory contract is like a promising musician signed on with a major record label. In other words, sorry to hear that. In this day and age of diversified sales and marketing strategies, social media, and mail order beer sales, it is simply outrageous that wholesalers use their bully pulpit, puppet liquor boards, and fat wallets stuffed by the smaller brewers’ competitors to continue to throttle the commerce of small brewers by referencing corrupt rules that weren’t fair when there were only 75 breweries after Prohibition was repealed and are even more outrageous now that there are over 1800 breweries.

I venture to guess that the reason Ansari is seeking a change in the rules is the absurdity of the following scenario. Under current rules, since the brewery is producing over 3,500 barrels of beer annually (more like 10,000), they exceed Minnesota’s brewpub definition. If they wanted to sell beer at their new location they would have to contract with a distributor and pay them 20, 30, 40% for the privilege to move a keg of beer from the brewery to the taps in front. Distributors/wholesalers argue that they are entitled to cut by law. It is bad enough that when they actually move craft beer from point A to B they don’t add that kind of value worth their fees, charging this bribe for doing nothing but a paper chase is un-freakin-believable.

As the old timers say, “For crying out loud!” I am getting surly. Well, I would if I could. Until then, I’m just plain pissed.

TPJ

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The Reinheitsgebot is Nonsense

There is a lot to be said for tradition, more so than ever with the current trends of cultural homogenization and closures of local businesses. And while it is often portrayed as tantamount to tradition, the famed German purity law is hooey, plain and simple.

Its relevance in focusing the styles of Germany has been been as instructive and destructive as 13 years of Prohibition were in this country. Gose (pron: gōz-eh, a sour beer made with naturally salty water), breyhan (sour wheat beer), grätzer bier (highly hopped, pale, smoked wheat beer), and many varieties of fruit or spiced beers – gone! Some of these lost styles are only now being made again in a few of the more risk-tolerant brewpubs.

I’m not going to get emotional about it, no not me, not like the rabid advocates of this misappropriated and antiquated policy. But it is fair time we let the cat out of the bag.

The Reinheitsgebot (pronounced something like: HRHINE-hites-ghe-boat) literally means “purity order.” However it was not until 1908 that that term gained use as a title. Originally is was called the “surrogate prohibition” decree. It was laid down in April of 1516 by the Dukes Wilhelm IV and Ludwig X of Bavaria. But the concept is even older. A similar document, predating the other by over 80 years, was uncovered north of Bavaria in Thuringia in 1999.

The order has since been touted as a way of protecting the wheat and rye for the baking industry, ensuring strange ingredients were kept out of beer, or even as a consumer protection act, but it holds darker secrets. As far as beer quality goes, the code does not require traditional methods like decoction, nor eschew off-flavors like diacetyl. Growers are free to use pesticides, and brewers can use chemical additives and chemically extracted hop oils. No, the “purity order” doesn’t say anything about healthfulness. In fact, organic beer producers pose a real threat to the house of cards upon which this marketing phenomenon has been built.

Brewers had been using wheat and rye and medicinal herbs and mushrooms in their beer. What is now Germany was a region of rich and varied brewing traditions that had been documented as far back as “the Holy Roman Empire.” Why worry about what brewers put in their beer? If you make a beer with weeds from your yard and rye with fungus growing on it (ergot is a rye rust from which LSD was first isolated), people will either like or not. If they like it they’ll come back for more. If they don’t, well, the brewer had better find a different line of work. Then again, maybe that’s the sensibility of the modern free market, and as we’ll see, the Reinheitsgebot is not at all about a free market system.

Only a single stanza of the decree deals with ingredients – the rest is about price controls. In the highly touted ingredient portion, the decree stipulates that beer must be made exclusively from barley and hops and water. One commonly hears about how yeast hadn’t yet been described by Louis Pasteur, so it was fine that yeast was left off the list. But even brewers in this dark time knew that one cropped the barm from one batch to the next. No, there was deeper meaning in the Reinheitsgebot…

One way to think about it is that the Dukes had created a more restrictive definition for the word “beer,” along with the provision that anything not meeting the definition could be confiscated by the authorities without compensation to the brewer.

Modern historians endlessly quote one another, saying that the underlying reason for the rule was to ensure that there was adequate wheat and rye for making bread. Frankly, bread, beer, what’s the difference? – they are both hearty, nourishing comestibles and generally immune to Medieval sanitation problems.

There was no way the people were going without their beer, so if the overlords said this is the way it must be, you might as well roll with it. Besides, if you didn’t abide by the code the authorities would confiscate your beer without remuneration. What these historians fail to mention is who owned all the barley fields. You guessed it, the Dukes. The original Reinheitsgebot was market protection for the wealthy. And you thought American corporate lobbying was a new idea?

 

The Reinheitsgebot has been modified throughout history - the current definition bears little resemblance to the original. (Source: google, frequency of historical dates with regard to the rule.)

As time went on the rule was variously massaged, abandoned, lost and rediscovered, until it ultimately arrived in its modern form – as a shallow marketing tool to help push claims of traditionalism behind your beer product. How could I posit such claims? Well consider the following, which I’ve knocked down to only a handful of points.

The original decree affected only the feudal region of Bavaria. Later, as Germany began its long crawl from 300 fiefdoms towards today’s single nation, Franconia and Thuringia were added, and the Reinheitsgebot came along for the ride. But after a couple of centuries one heard much less about the decree. It became seen more or less as a rule for pricing and taxation on beer.

Almost from the beginning the rule was gradually modified. In the 17th century a provision to allow brewing with wheat was added, but only members of the aristocracy were allowed to do so. Reorganization in 1803 resulting from the Napoleonic wars saw the famed brewing cities of Bamberg, Nürnberg, and Bayreuth added to a growing Bavarian state. The Reinheitsgebot now expanded northwards. Later, at the turn of the 20th century, the states of Baden and Württemberg in southwest Germany were added.

But back in 1810 Bavaria’s Crown Prince Ludwig married Princess Therese of Saxony-Hildburghausen in Munich. Five days after the royal wedding the commoners were invited to a field for horse racing and, it goes without saying, beer drinking. The party grew into an annual commercial enterprise, and by 1818 mercantile beer stalls had appeared.

The grand wedding reception had inaugurated the Oktoberfest tradition. Some say the Reinheitsgebot had been lost in obscurity and largely ignored for the previous couple of centuries. With the rise of Prince Ludwig, a descendant of the of the original Ludwig X, talk of the Reinheitsgebot re-ensued.

The latest ode to the Reinheitsbegot: the Kuchlbauer museum in Abensberg, Germany. It houses an exhibition on the German "beer purity" tradition.

So the Reinheitsgebot’s influence grew throughout Bavaria and other German city-states. In 1919, at the close of WWI, further consolidation took place when the Weimer Republic was formed. As a condition of joining, Bavaria, the largest single participant, asserted that the purity law had to apply to everyone else in the Republic. Even some other countries, Greece and Sweden for example, adopted the standard. In the most amazing display of vibrato, Germany even tried to leverage their participation in the EU with the five-centuries old ball and chain. But in 1987 the EU ruled it an obstacle to commerce. Which it always was.

Some American brewpubs and microbreweries even began touting the rule as a marketing device. It’s not so surprising. We’re victims of the preferential retelling of history and we love a hero. Just as we still think Benjamin Franklin was a great and mighty man of all seasons. No, he was a misogynist, turned-with-the-winds kind of guy who took credit for the work of those around him. But we really do admire that portly gentleman dangling a key from a kite string, don’t we? Now even Ben Franklin is a marketing device with the oft-misquoted “Beer is living proof that God loves us…” bit.

This is not to say that there aren’t other obstacles to beer commerce and that megalithic global corporations don’t dominate the market. There are, and they do. But at least the Reinheitsgebot is finally being seen for what it is: antiquated, price fixing, trade control, and pap marketing.

I’m not alone in thinking the Reinheitsgebot has outlived its usefulness:

[Note: with this piece I am inaugurating a new category on the Palate Jack called Gripefruit – my bitter editorials. Don’t fear, there will always be sweet stories to temper the bitterness.]

Cheers! TPJ

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