THE V OICE OF AMERICA’S BEER, WINE & SPIRITS RETAILERS
ABL INSIDER VOL. 11, NO. 4 | WINTER 2017
A PUBLICATION OF AMERICAN BEVERAGE LICENSEES
The Transparency in Music Licensing and Ownership Act 01010100 01101000 01100101 00100000 01010100 01110010 01100001 01101110 01110011 01110000 01100001 01110010 01100101 01101110 01100011 01111001 00100000 01101001 01101110 00100000 01001101 01110101 01110011 01101001 01100011 00100000 01001100 01101001 01100011 01100101 01101110 01110011 01101001 01101110 01100111 00100000 01100001 01101110 01100100 00100000 01001111 01110111 01101110 01100101 01110010 01110011 01101000 01101001 01110000 00100000 01000001 01100011 01110100 The Transparency in Music Licensing and Ownership Act 01010100 01101000 01100101 00100000 01010100 01110010 01100001 01101110 01110011 01110000 01100001 01110010 01100101 01101110 01100011 01111001 00100000 01101001 01101110 00100000 01001101 01110101 01110011 01101001 01100011 00100000 01001100 01101001 01100011 01100101 01101110 01110011 01101001 01101110 01100111 00100000 01100001 01101110 01100100 00100000 01001111 01110111 01101110 01100101 01110010 01110011 01101000 01101001 01110000 00100000 01000001 01100011 01110100 The Transparency in Music Licensing and Ownership Act 01010100 01101000 01100101 00100000 01010100 01110010 01100001 01101110 01110011 01110000 01100001 01110010 01100101 01101110 01100011 01111001 00100000 01101001 01101110 00100000 01001101 01110101 01110011 01101001 01100011 00100000 01001100 01101001 01100011 01100101 01101110 01110011 01101001 01101110 01100111 00100000 01100001 01101110 01100100 00100000 01001111 01110111 01101110 01100101 01110010 01110011 01101000 01101001 01110000 00100000 01000001 01100011 01110100 The Transparency in Music Licensing and Ownership Act 01010100 01101000 01100101 00100000 01010100 01110010 01100001 01101110 01110011 01110000 01100001 01110010 01100101 01101110 01100011 01111001 00100000 01101001 01101110 00100000 01001101 01110101 01110011 01101001 01100011 00100000 01001100 01101001 01100011 01100101 01101110 01110011 01101001 01101110 01100111 00100000 01100001 01101110 01100100 00100000 01001111 01110111 01101110 01100101 01110010 01110011 01101000 01101001 01110000 00100000 01000001
2018 Annual Meeting Preview (p. 3)
Member Spotlight (p. 5)
Policy Outlook: H.R. 3350 (p. 10-11)
Policy Outlook: H.R. 620 (p. 12-13)
VOL. 11, NO. 4 | WINTER 2017
contents 3 convene
2018 Annual Meeting Preview & Information
9 industry voices
Craig Wolf, President & CEO, WSWA
4 leading
10-11 policy outlook
5 where we stand
12-13 policy outlook
Making Sense of 2017: A Year in Review
Supporting Those Who Truly Support You
6-7 legislative updates
Craft Beverage Modernization & Tax Reform Act; Direct-toConsumer Shipping; and Swipe Fee Reforms Anniversary
H.R. 3350: Transparency in Music Licensing & Ownership Act
H.R. 620: The ADA Education & Reform Act of 2017
14-15 state & industry update 16 associate & affiliate members
8 industry voices
Craig Purser, President & CEO, NBWA
industry calendar
January 2018
April 2018
Maryland State Licensed Beverage Association Members Meeting
NBWA Legislative Conference
January 10| Annapolis, MD January 16| Pierre, SD
SD Licensed Beverage Dealers & Gaming Association Annual Meeting
February 2018
February 17-20 | New Orleans, LA
Sociable City Summit: Learn How to Plan & Manage Nightlife in Your City
March 2018
March 11-13| New Orleans, LA 2018 ABL Annual Meeting
March 18-20 | Arlington, VA
NABCA 25th Annual Symposium on Alcohol Beverage Law & Regulation
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2018 RRForum National Conference
June 2018
ABL Summer Board Meeting
Alaska CHARR Legislative Summit
editor MATTHEW EVANS
April 30 - May 1 | Detroit, MI June 11-12 | Fairbanks, AK
January 30-31| Juneau, AK
Published by: American Beverage Licensees 5101 River Rd, Suite 108 Bethesda, MD 20816 (301) 656-1494 www.ablusa.org
April 22-25 | Washington, DC
See Your Events Here & Online If your association or company would like ABL to promote upcoming events in the ABL INSIDER and/or ABL WEEKLY, please send an email to info@ablusa.org.
Be Sure to Include:
Event Title | Event Date | Event Location ISSN# 2331-6594
(c) 2017 American Beverage Licensees. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher.
AMERICAN BEVERAGE LICENSEES
executive director JOHN BODNOVICH director, trade relations & operations SUSAN DUFFY communications manager MATTHEW EVANS
convene
REGISTRATION INFORMATION Registration for the 2018 ABL Annual Meeting is currently open. The registration fee is $299.00 and includes access to all annual meeting general sessions, activities and hospitality-related events. For more information or to register now, visit www.ablusa.org. TOP SHELF AWARD Mark Brown, President & CEO of Sazerac Company, Inc., will be recognized with the 2018 ABL Top Shelf Award at the ABL Honors Gala on Monday, March 12. Please Note: One (1) ticket for the ABL Honors Gala is included with your Annual Meeting registration. KEYNOTE ADDRESS The keynote address at the 2018 ABL Annual Meeting will be delivered by Tom Cole, President & CEO of Republic National Distributing Company, who will discuss the future wholesale distribution in the evolving marketplace. HOTEL INFORMATION The 2018 ABL Annual Meeting will be held at Harrah’s New Orleans Hotel & Casino. ABL has secured a block of rooms for annual meeting attendees at a nightly cost of $229.00 + $14.99 daily resort fee (Fri-Sat) and $179.00 + $14.99 daily resort fee (Sun-Tues). Please Note: The room block is currently scheduled to close on February, 9, 2018. ADDITIONAL INFORMATION For the latest updates and information on the 2018 ABL Annual Meeting, be sure to visit ABL Annual Meeting event site by visiting www.ablusa.org.
Annual Meeting Schedule Preview SATURDAY, MARCH 10th 4:00 - 6:00 p.m.: Executive Committee Meeting (Executive Committee & Invited Guests)
SUNDAY, MARCH 11th 4:30 - 6:00 p.m.: Registration Desk Open 8:00 - 9:00 a.m.: ABL Board of Directors Breakfast (ABL Board Members Only)
9:15 a.m. – 5:00 p.m.: ABL Board of Directors Meeting (ABL Board Members & Invited Guests)
4:00 - 5:00 p.m.: ABL Advisory Council Meeting (ABL Advisory Council & Invited Guests)
6:00 - 8:00 p.m.: Opening Night Welcome Reception (Sponsored by National Association of Beverage Importers)
MONDAY, MARCH 12th 8:00 a.m. - 2:00 p.m.: Registration Desk Open 8:00 - 9:00 a.m.: Attendee Breakfast (Sponsored by B4)
9:15 a.m. - 12:00 p.m.: General Session (I) – Speakers & Presentations 12:00 - 1:15 p.m.: Annual Luncheon (Sponsored by MillerCoors)
1:30 - 3:30 p.m.: General Session (II) – Speakers & Presentations 6:00 - 7:00 p.m.: Retailer of the Year Reception (By Invitation Only)
7:00 - 9:30 p.m.: ABL Honors Gala & Awards TUESDAY, MARCH 13th 9:15 - 11:00 a.m.: General Session (III) - State Alcohol Policy
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leading Making Sense of 2017: A Year in Review
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STEVE MORRIS President American Beverage Licensees
hile writing this column, I once again find myself asking “how have we already reached the end of the year?” I’m sure many of you reading this feel the same way too. Well, in trying to wrap my head around 2018 being right around the corner, I thought I would take this opportunity to provide a review of some of the major industry-related events that have developed over the past year. From a legislative prospective, we have not quite had the year that was expected. With Republican control of the House, Senate and White House, there were hopes from the small business community that we would see drastic changes to the business climate. There were promises of quick and substantial tax reforms – including passthrough tax rates and a repeal of the Estate Tax – which have not yet materialized. While the details of Republican tax plan are currently being worked-out, we remain cautiously optimistic that our members will see an improved business climate in the coming years. We have also seen a continuation of the trend whereby small brewers are acquired – either fully or in part – by larger ones. In the past two years alone, there have been more than 20 of these acquisitions, including Avery Brewing Company, Funky Buddha, Magnolia Brewing, Anchor Brewing, Short’s Brewing, Monkey Paw Brewing, Lagunitas, Wicked Weed; Deep Ellum Brewing, Victory Brewing, Brooklyn Brewery, Revolver Brewing, Terrapin Brewing Company, Hop & Valley, Independence Brewing, Moonlight Brewing, Southend Brewery, Devils Backbone Brewing, and Cigar City Brewing. When looking at these acquisitions on a larger scale, it is evidence that the beer industry is changing as “craft” and import beers grow and take share from traditional domestic brands, and big brewers move to grow market share by acquiring other brands to boost the bottom line of their portfolios. Also of note: when we look at how much total alcohol is being consumed, it hasn’t changed much. Instead of the pie growing, it is now being sliced into many more smaller pieces. Another major development that we witnessed this year was the announcement in late November that Republic National Distributing Company (RNDC) and Breakthru Beverage Group (Breakthru) are joining forces to create a $12 billion company with operations in 27 states and across Canada. The merger will also create the
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second-largest distributor in the United States behind Southern Glazer’s Wine & Spirits, and comes on the heels of the creation of Breakthru itself just over two years earlier, through a merger of Charmer Sunbelt and Wirtz Beverage that was announced in October 2015. With the merger having been just recently announced (and the deal not expected to close until mid-2018) it is too early to determine with any certainty what impact this will have on the retail tier. That being said, I can assure you that we will be keeping a close eye on developments and will work to keep ABL’s members up-to-date on what they can expect as a result. On the retail front, towards the end of August the retail marketplace felt a seismic shift when Amazon announced that it had acquired Whole Foods Market, thereby signaling its entrance into the traditional brick-and-mortar retail space. What does this mean for beverage retailers specifically – and the overall retail space generally? Well, it’s hard to say right now but almost immediately following Amazon’s announcement, the company announced that it was ending its Amazon wine shipping operations, likely in an effort to maintain the ~360 retail alcohol permits it is gaining through the acquisition of Whole Foods. This move has rippled through the industry, with the potential to dramatically alter the retail beverage alcohol landscape. Time and again, we have seen how Amazon upends traditional retail marketplaces – from bookstores and pet stores, to clothing stores and hardware stores. As you know, many of these businesses have been unable to survive these changes. ABL is closely monitoring the situation and working to ensure that, regardless of what changes lie ahead, a fair and level playing field is maintained for all actors. Lastly, I would like to remind everyone to register for the 2018 ABL Annual Meeting in New Orleans, March 11-13, 2018. With a theme of “Navigating the Future,” the meeting will provide beverage licensees – both on- and off-premise alike – with informative sessions and take-aways that can be applied directly to their businesses back home. We will also be honoring Sazerac President & CEO Mark Brown with the 2018 Top Shelf Award at the ABL Honors Gala, with admission included with your registration. For more information or to register, be sure to visit ABL online! |
where we stand Supporting Those Who Truly Support You
I JOHN BODNOVICH Executive Director American Beverage Licensees
f you’re like me, you probably receive more emails than you ever signed up for. Somewhere along the way, I entered my email address when ordering something online, or added it to a form that I was filling out, and now it has been shared (or sold) to marketers and salespeople who are unrepentant in contacting me about the latest and greatest must-have consumer product or service. Many of the solicitous emails I receive are from companies and brands in the beverage alcohol industry that are seeking an audience with ABL members. They rightfully view ABL members as “influencers” who can drive trends and brandgrowth in the beverage alcohol market. This is a reminder of something that can sometimes be taken for granted by those who may view the path to success only through a spreadsheet and with little regard to relationships. Relationships – with vendors, clients and customers – are something that brick-andmortar bars and package stores know a lot about. Ultimately, relationships are what give bar, tavern and restaurants owners the most leverage in the equation, even if they are the smallest businesses in the three-tier alcohol ecosystem. “How can this be?”, you may say. Well, these businesses are closest to the consumer. Retail licensees make the call on what products to feature and ultimately which products are profitable. Picking Products & Building Profit The beverage alcohol industry has experienced meaningful growth over the last decade. This has included the introduction of more beer, wine and spirits products into the marketplace than ever before. The refreshing of old brands and the development of new ones have proved an exciting mix for nearly any palate and the healthy normalization of responsible beer, wine and spirits enjoyment in a host of experiences.
With growth, however, have come some challenges for retail licensees, including finding the right product mix (“How many ‘local’ IPAs should I have on tap?”); meeting customer demand (“What do you mean you don’t have a case of <highly-allocated bourbon/wine/craft beer>?”); and competing with new industry entrants who treat alcohol as a loss leader (“Can I price this bottle of ‘grocery store’ chardonnay more than 25 cents over cost?”). But the very dynamic which created these challenges also presents real opportunity that more bars and package store owners can – and should – take advantage of if they want to assert themselves among others in the industry. By diversifying and supporting companies that will work with them to develop a brand and create a niche, the possibility for success is there. For the on-premise bar and tavern owners, this may mean developing a beer strategy that includes supporting brewers who want to work with you and not in direct competition against you. Big or small, global or local, is the supplier who expects you to promote and sell their products, supporting your business and the system that you invested in? Are they opening their own bar across the street, while still expecting you to sell their brands? Are there other suppliers that you can support who truly appreciate your role in the marketplace? Can you create relationships that will be mutually beneficial? Though I’m using beer as the example, the same sentiment applies to spirits and wine suppliers. Retailers can make the abundance of product choices work for them by supporting philosophically-aligned brands and businesses. This also applies to off-premise retailers. Corporate, multi-state retailers are applying business models for beverage alcohol that severely curb customer choice by strictly limiting the number of stock keeping units (SKUs) that they carry. Here’s an example, as explained by Tim Turner, Walgreen’s category manager for wine and spirits, in the August 22, 2017 edition of Shaken News Daily: “Walgreens runs a highly efficient beverage alcohol unit. It stocks just 150 SKUs for wine, 50 for spirits and 35 for beer. The buying must be absolutely targeted, with not a single underperforming brand, Turner says. On new products, Walgreens generally lets a label perform in independent channels first before stocking it.” Article Continues on Page 7
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legislative update Craft Beverage Modernization & Tax Reform Act; Direct-to-Consumer Shipping; and Swipe Fee Reforms Anniversary
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here Things Stand As of November 30, the Senate stands poised to pass a tax reform bill (The Senate Republican Tax Overhaul (S. 1)) in the first week of December. It would join the House in passing nonidentical tax bills that would either a) need to be reconciled in a conference committee; or b) approved without any changes by both chambers. Negotiations are ongoing in the Senate, whereas the House bill, The Tax Cut and Jobs Act (H.R. 1) sits awaiting further action. Craft Beverage Modernization & Tax Reform Act (CBMTRA) Though the House did not include this legislation as part of its bill, the Senate did include CBMTRA (S. 236) in the version of the bill that passed the Senate Finance Committee. The provisions would lower excise tax changes and thus benefit America’s brewers, distillers and wineries. It is supported by the American Craft Spirits Association, Beer Institute, Brewers Association, Distilled Spirits Council, WineAmerica and the Wine Institute.
Though it is included in the broader tax reform bill, which is a win for CBMTRA’s supporters by any measure, the tax cuts would sunset in two years on December 31, 2019. This stipulation was part of a compromise to include the excise tax breaks in the bill, and it is reasonable to expect that the alcohol supplier community will work hard over the next two years to make those cuts permanent. Death Tax The House tax bill calls for permanent repeal of the death tax effective Jan 1, 2024. The specific policy called for in the bill Immediately doubles the exemption
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to $11.2 million per individual and $22.4 million per couple; permanently repeals federal estate tax effective Jan 1, 2024; and maintains gift tax at current levels until Jan 1, 2024 then cuts the gift tax rate to 35% on gifts over roughly $12 million. This policy is the same that has been called for in the Death Tax Repeal Act of 2017 (H.R. 631, S. 205) that ABL supports.
The Senate bill does repeal the estate tax, but it does repealing the estate tax, but it would double the exemption levels – similar to what the House bill does (but without permanently repealing the tax after 5 years.) This would have the effect of exempting most of those affected by the tax. S-Corp A key point of debate in Senate has been how to treat the millions of companies organized as pass-through businesses fairly in relation to C corporations. Currently, pass-throughs pay taxes topping out at 39.6 percent while corporations pay 35 percent. While the initial framework for the bill was promising, the bill as-released abandoned any notion of equity for pass-through businesses. Much of the pass-through business
community and leading Senators have voiced reals concerns that while the bill’s 17.4 percent deduction in individual tax rates is a welcome effort, the provision is both temporary and too low. It also tries to prevent people from gaming the system through wage provisions and declaring those in certain industries ineligible for the tax break.
(Alternately, the House bill would cut the pass-through rate to 25 percent but declare that 30 percent of pass-through entity’s income be eligible for the passthrough rate, while the rest is subject to ordinary income taxes, in order to prevent wealthy people to present themselves as pass-throughs in order to qualify for lower rates.) USPS Alcohol Shipping Bill ReIntroduced On October 11, Rep. Jackie Speier (DCA) introduced the United States Postal Service Shipping Equity Act (H.R. 4024), a bill that would allow for the first time in its history, the U.S. Postal Service (USPS) to ship beverage alcohol via mail. Following the bill’s introduction, ABL joined the National Beer Wholesalers Association and the Wine & Spirits Wholesalers of America on a letter to Congress opposing the bill. The letter points out that “While the legislation is a well-intentioned effort to provide the United States Postal Service (USPS) with a potential new revenue stream, repealing the ban on the USPS shipment of beverage alcohol is flawed in many aspects.”
legislative update “Benefits of state regulation of alcohol would be undermined by the USPS delivering alcohol by: opening a channel of delivery through which potentially harmful foreign-sourced alcohol enters U.S. commerce; making minors’ access to alcohol easier through unregulated deliveries; diminishing the ability of states to collect excise and sales tax revenue; and preempting state laws with disregard of the 21st Amendment to the Constitution. The theoretical potential revenue for the USPS is clearly outweighed by these inherent risks,” the letter further states.
“Moreover, federal legislation creates a constitutional conflict with state laws. For example, various states have laws criminalizing or providing citations for those selling or providing alcohol to minors and those under the influence. States can and do suspend licenses of regulated businesses that violate these and other laws. That is why complicated issues of immunity and supremacy of state alcohol laws must be addressed. Will states be stripped of their powers to enforce alcohol laws because the postal
service is involved? The states, which are on the front lines of alcohol regulation, must be the force that drives changes in alcohol policy.” Six Years After Debit Swipe Fee Reform, $50 Billion in Savings & 225,000 Jobs Since it took effect six years ago, debitcard reform has saved consumers and small businesses nearly $50 billion and supported 225,000 jobs. Before reform started Oct. 1, 2011, just two giant companies – Visa and MasterCard –price-fixed the fees banks charged merchants when a customer swiped a debit card to pay for something.
reform saved consumers $34 billion and merchants almost $16 billion. Collectively, the increased sales those savings generated on Main Street supported 225,000 jobs over that time. Congress recently reaffirmed its bipartisan support for debit reform by defeating the banks’ attempt to repeal it. As merchants know from their own intensely competitive industry, competition makes companies efficient and innovative, keeps the market fair and ensures reasonable prices. Reform has brought those competitive market incentives to bear on debit swipe fees. Even banks, whose costs have dropped 40 percent since reform, are making more profits. |
According to a prominent economist, reform saved consumers almost $5.7 billion in its first full year and helped support 37,500 jobs. The reforms saved merchants another $2.6 billion. Projected over the last six years, the figures show
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The opportunity to seize upon what corporate competitors are NOT doing is the lesson from this quote. There is opportunity for independent retailers to stock and support other brands and generate excitement about a product, profit for the business and value for customers. Working with Friends > Fighting with Foes Retailers compete like crazy in the marketplace, but they come together to support shared beliefs about their industry trade associations. In keeping with that sentiment of working together, ABL members have always believed in collaborating with the industry partners who support their traditional role in the marketplace. Those in the hospitality industry would rather work with friends than fight with foes, and prefer being positive in their support of the great products the industry has to offer. Highlighting industry partners who share retailers’ support for a system that appreciates independent, locally-owned and operated business
and has created unparalleled customer choice and value isn’t something ABL members should shy away from. Want to get an idea of which organizations and companies support independent beverage retailers? Take a look at the roster of Associate Members on ABL’s website. These groups have joined ABL because they believe in ABL’s mission. They believe that a vibrant, independent and diverse retail alcohol marketplace is on in which customers and the public at large is best served. ABL members can also take a look at who their state associations partner with when it comes to finding groups that share the same values. And if you don’t see a name that you think should be on the roster of supporting members, ask the salespeople for those companies that come into your bar or store why they don’t support independent beverage retailers. They are, after all, asking you for a sale. There are tens of thousands of products and brands out there, and if there was ever a time when it’s appropriate to “support those who support you”, it is now. |
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industry voices Attempting to Legislate Increased Beer Sales Is Not the Right Path Forward ately, the trade press and hospitality media have been talking about beer category health L and flat beer sales. Although there has never been more consumer choice and brewer access to market, sluggish sales have been top of mind for brewers, distributors and retailers. Yet, there’s a shared interest in finding ways to jumpstart the category.
CRAIG PURSER President & CEO National Beer Wholesalers Association
Perhaps the best place to look first is to the brewers who are seeing growth in a flat market. Industry statistics show that there are a few brewers and importers who are experiencing double-digit growth in a challenging beer market. Their ability to reach the consumer, rise above the competition and provide a product, package and experience appealing to a broad audience is what everyone in the industry should try and emulate. Unfortunately, some parties have chosen to pursue growth by trying to legislate it. This is a method that will make some headlines and will put some strain on industry relationships, but it will likely not advance the needle on industry volumes. A quick glance at NBWA’s legislative tracking software shows that across the 50 states, more than 1,500 pieces of alcohol-related legislation have been signed into law since the start of 2012. Yet in those five years, total alcohol consumption across beer, wine and spirits has remained flat on a per capita basis, with only slight changes in consumer preference between the three products. For most of the last decade, craft beer has been a bright spot for beer industry growth, seeing annual double-digit gains across the country, and a rate of brewery openings that averages nearly three per day, year-over-year. Understandably craft beer has generated a great deal of excitement and states and localities have done all they can to try and keep the momentum going. But how states try to help is what sometimes becomes the issue.
Craft beer owes a great deal of its success to the open and independent distribution and retail system that exists in the United States. Independent distributors provide access to markets, as well as costly storage, sales, marketing and delivery services that most small brewers would not be able to afford. Independent retailers offer shelf and cooler space, tap lines and work to build brands in a manner that are simply not an option in many other consumer goods industries. And state and federal regulations prevent distributors and retailers from exclusivity and undue influence from suppliers, while ensuring choice and variety for consumers. Despite this successful regulatory system and the litany of success stories, some believe that craft beer has flourished in spite of the current regulatory system, and not because of it. In some cases, regulatory officials who are not familiar with the industry or don’t understand these laws are the ones calling for these changes. The rhetoric is often the same from those who want to bring change: Why can’t alcohol be a free market system? Why can’t a brewer operate in all three tiers? Why can’t I terminate a distributor without cause? Why can’t a brewery enjoy all the benefits retailers do? The simple answer to all of these questions is that without the very laws now being challenged there would never have been an opportunity for a new market entrant to get established or for craft beer to grow into what it is today. Laws keeping each tier of the industry independent and providing a level playing field for brewers of all sizes have worked so well that they’ve allowed a country with fewer than 50 breweries in 1983 to become a country of more than 5,000 breweries today. If there were a magic formula, or in this case a magic piece of legislation, which could spike industry volumes, all segments of the beer industry would quickly line up to offer their support. However, pursuing legislation that seeks to favor one tier, or segment of a tier, over the rest of the industry is bad policy that will adversely impact thousands of businesses and jobs across the country. Forcing legislators to pick industry winners and losers in a flat beer market is no solution at all. Instead of pursuing misguided policy changes that provide little to no industry benefit, brewers, distributors and retailers are going to have to put their heads together, roll up their sleeves and get to work. Together. And if that happens, we will see a new generation of beer consumers emerge and the beer start flowing again. Cheers! |
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industry voices Keeping Focus in a Disruptive Economy mazon’s recent purchase of Whole Foods has caused concern across the industry A because of the perceived potential for largescale disruption. Beyond the merger itself, the movement toward an “on-demand, local delivery” economy speeds forward. CRAIG WOLF President & CEO Wine & Spirits Wholesalers of America
For wholesalers and our local independent retailer partners, these changes are forcing the entire industry — especially retailers — to focus on innovative technology and novel approaches to marketing and local delivery. These changes, I believe, will help keep our partnership successful tomorrow and into the future.
at their fingertips – more than ever before. To reflect this changing customer engagement, many retailers have developed their own apps and mobile-friendly websites. Customers can order online, check inventory, and research products. And, as RFID and beacon technology come online and gain broader adoption, we’re going to see a new era of customer engagement. But one thing is clear: you need to engage now before your competitors move ahead of you!
The biggest change is the consumer shift to mobile platforms — technology we must all understand and embrace.
This need for engagement is essential in the area of on-demand, local delivery. Albertsons, Kroger and other retailers have partnered with Instacart and its competitors to bring on-demand to their customers.
Consider this: on Black Friday, 40 percent of all purchases were made from a phone or tablet. Last year, half of all online purchases were from phones. Even more impactful: a full 80 percent of in-store shoppers at some point during their visits utilize a mobile device to read reviews or comparison shop.
While Amazon pioneered on-demand delivery, the field is booming and crowded. For many customers, on-demand has the potential to put a world of products in a customer’s home in an hour – what they want, when they want it. This is a growth area and must be a key priority for wholesalers and retailers.
Combine this with voice services like Alexa, Siri and OK Google, and you can see how consumer information gathering and purchasing options are undergoing a rapid revolution.
While winery to consumer shipping is legal in almost all states, the enhanced selection, convenience and greater cost efficiencies of the three-tier system fit in well with a local retaileroriented on-demand model. It is for this reason that on-demand will be the wave of the future.
By now you’re probably aware of WSWA’s alliance with Drizly, the mobile app that provides convenient ordering in 70 U.S. cities and two in Canada. Drizly and its competitors are attracting new users every day. Customers are using their computers, phones and tablets more: seeking expert reviews, tasting notes, recommendations, recipes and inspiration — often while standing in your store!
While some may fear the changes occurring in the marketplace, wholesalers and retailers should look at this disruption as an opportunity to work more closely together to ensure that the consumer understands the value provided by the sophisticated, modern and consumer-focused three-tier system. |
Years ago, the adage was that an informed consumer was the best consumer. Now, every consumer has access to a world of information
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policy outlook H.R. 3350: The Transparency in Music Licensing & Ownership Act Background: •
Introduced on July 20, 2017;
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Bipartisan legislation sponsored by Rep. Jim Sensenbrenner (R-WI), with original co-sponsors Reps. Suzan DelBene (D-WA), Steve Chabot (R-OH) and Blake Farenthold (R-TX);
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Additional co-sponsors include Reps. Mike Gallagher (R-WI), Dan Newhouse (R-WI), Susan Brooks (R-IN), David Loebsack (D-IA), Kurt Schrader (D-OR), Neal Dunn (R FL), John Faso (R-NY), Mark Amodei (R-NV), Chris Collina (R-NY); and
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Rep. Jim Sensenbrenner (R) Wisconsin 5th Congressional District
Music Licensing Overview There are three (3) primary PROs that manage the overwhelming majority of musical copyrights: American Society of Composers, Authors & Publishers (ASCAP); Broadcast Music Inc. (BMI); and Society of European Stage Authors & Composers (SESAC).
The primary concern many beverage retailers have with the current state of music licensing is the overall lack of transparency.
The bill was referred to the House Judiciary Committee on July 20.
H.R. 3350 Would Require. . . •
A new database containing music licensing and ownership information, to be overseen by the U.S. Copyright Office;
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That information be made available in a machine-readable format;
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That end-users (bars, restaurants, taverns) be on steering committee overseeing the new database to ensure it meets the needs of the retail community; and
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Allowing courts to consider end-user reliance on the database in infringement cases brought before the court.
In addition to a lack of transparency, many retailers also feel that PROs are unscrupulous in their business practices, looking to entrap businesses rather than work with them on licensing.
What Does H.R. 3350 Mean for Retailers? •
Provides, for the first time ever, the ability to access reliable information regarding music licensing in a single, online location;
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Allows retailers to make informed, rational business decisions about which PRO best meets their music licensing needs; and
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While requiring due diligence on the part of business owners, an online database would increase transparency and reduce the need for businesses to have multiple licenses just to protect themselves.
How Can You Support H.R. 3350? •
Introduction of H.R. 3350 was a first step in bringing about transparency in the music licensing landscape – but the conversation is far from over;
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As expected, H.R. 3350 has been publicly opposed by members of the content creators community;
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Contact your members of Congress and urge them to defend small business owners by supporting the passage of H.R. 3350; and
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Talk to your fellow licensees, customers and media outlets about why this is such an important issue. |
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Retailers that do not qualify for the home style exemption are required to have a license to play music in their establishments but currently, there is no definitive resource(s) to tell them what copyrighted works are covered by a license.|
policy outlook The Transparency in Music Licensing & Ownership Act: Separating Facts from Fiction The Transparency in Music Licensing and Ownership Act (H.R. 3350) is a major step forward in creating a music licensing system that is open and accessible to those who both own and license music. This legislation creates for the first time a public database that provides all stakeholders in the music marketplace with access to an authoritative and fully searchable record of music ownership and licensing information, free-of-charge to users and updated in real time. Let’s separate fact from fiction, and examine the benefits this first-of-its kind database will have one the entire music economy. FICTION •
FACT
Private Sector Databases Already Exist That Provide Music Users, Including Venues,Broadcasters & Streaming Services Access with the Information Necessary to Make Licensing Decisions.
•
Despite explosive growth in access to information online, no comprehensive and actionable database of music copyright ownership and licensing exists today.
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Instead, there are a small number of proprietary databases that cover only some copyrighted works, like those maintained by the performing rights organizations (PROs) that license song performances.
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Those databases are not only not comprehensive or interoperable, they explicitly state that users cannot rely on the information to make licensing decisions. As a result, businesses that offer music have no ability to make rational decisions about which licenses best fit their music needs.
FICTION •
FACT •
Building and maintaining the database will require cooperation from copyright owners and licensor’s, including the PROs, and we fully expect them to follow the law once this legislation is signed.
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The uncertainty and huge risk of infringement claims under the current system are a far greater cost than setting up a comprehensive database that will benefit all participants.
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Venues are closing their doors to live music rather than risk potential liability due to lack of up-to-date and actionable licensing information. They are closing locations following expensive lawsuits stemming from a lack of music licensing transparency.
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This all leaves new and upcoming artists and musicians struggling to find a venue for their next show.
FICTION •
FACT •
•
There Should Be a Cost for Obtaining This Information.
FICTION
Venues and other music services already pay for licenses to play music. The ability to see what songs come with the license should be available to the public without a fee.
FACT
FACT
•
Building a Music Database Is a Monumental Task for the Copyright Office & Impossible to Maintain.
•
Creating a single, transparent music database is a necessary
•
The Transparency in Music Licensing Ownership Act also states that the Copyright Office can “hire employees and/or contractors to build, populate, and maintain the database.”
task in order for license holders to make informed decisions and avoid copyright infringement claims.
The Private Sector Should Be Responsible for Building a Database, Not the Copyright Office.
•
The House Judiciary Committee’s bi-partisan working group led by Chairman Bob Goodlatte (R-VA) & Ranking Member John Conyers (D-MI) spent years learning about the music marketplace from industry stakeholders through hearings, listening sessions and site visits.
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After significant stakeholder input, the Committee specifically recommended that the Copyright Office “maintain an up-to-date digital, searchable database of all copyrighted works and associated copyright ownership information.”
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The current PRO databases state in their database terms and conditions that they cannot ensure accuracy and lack the authority and information necessary for music users to avoid infringement claims. |
Access to the music covered by each license is necessary for any licensee to ensure they are buying the music license that best fits their needs.
FICTION •
Building Such A Database Is a Costly & TimeConsuming Endeavor for the Copyright Office.
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policy outlook H.R. 620: The ADA Education & Reform Act of 2017 Background: •
Introduced on January 24, 2017;
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Bipartisan legislation sponsored by Rep. Ted Poe (R-TX), with original co-sponsors include Reps. Scott Peters (D-CA), Ken Calvert (R-CA), Ami Bera (D-CA), Jackie Speier (D-CA) and Michael Conaway (R-TX);
•
87 additional co-sponsors from 28 states, including Representatives from 15 states where ABL has State Affiliate members (Alabama, Colorado, Florida, Georgia, Illinois, Kentucky, Maryland, New Jersey, New York, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia, and Wisconsin); and
•
Rep. Ted Poe (R) Texas 2nd Congressional District
Following a consideration and mark-up session on September 7, the bill was ordered to be reported by the Yeas & Nays (15-9)
H.R. 620 Would. . . •
Close loopholes in the federal law that have resulted in “drive-by” Americans with Disabilities Act (ADA) Title III lawsuits;
•
Add safeguards that incentivize the remedy of alleged violations (without taking away the right to pursue “bad actors” who ignore compliance); and
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Direct the Office of Justice Programs to develop a program to educate state and local governments and property owners on effective and efficient strategies for promoting access for persons with a disability and staying compliant with the ADA.
What Does H.R. 620 Mean for Retailers? •
Alleged ADA violations could be addressed in a quicker and more cost-effective manner by providing property owners with adequate notice and time frame to fix any alleged violations
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Patrons are better served when property owners are given notice of ADA infractions and provided with an opportunity to focus limited resources on improving access and facilities
•
Addresses the unintended consequence of the ADA that has been allowed to flourish over time, tarnishing an otherwise landmark, lifechanging law.
How Can You Support H.R. 620? •
Introduction of H.R. 620 was a big first step in bringing about reforms to the ADA – but the battle is far from over.
•
Contact your members of Congress and urge them to defend small business owners by supporting the passage of H.R. 620.
•
Submit Op-Eds and Letters to the Editor to your local or regional news outlets. |
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policy outlook Examining the Americans with Disabilities Act of 1990 The Americans with Disabilities Act of 1990 (ADA) is a civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public. The purpose of the law is to make sure that people with disabilities have the same rights and opportunities as everyone else. The ADA guarantees equal opportunity for individuals with disabilities in public accommodations, employment, transportation, state and local government services, and telecommunications. The ADA is divided into five titles (or sections) that relate to different areas of public life. For retailers - both on-premise and off-premise - the key pieces of the ADA that apply most directly to their business are those found in Title III: Public Accommodations. WHAT IS COVERED BY THE ADA? • Businesses that provide goods or services to the public are called “public accommodations” in the ADA.
•
Accordingly, when making accessibility improvements to your facility, you must also check requirements under your state or local law.
• Where state or local law is stricter or requires a higher The ADA establishes requirements for 12 categories degree of accessibility than Title III of the ADA, you of public accommodations, which include stores, must comply with the state or local requirement. restaurants, bars, service establishments, theaters, hotels, recreational facilities, private museums and schools, doctors’ and dentists’ offices, shopping malls, and other LEGAL ASPECTS OF COMPLIANCE businesses. • Whether facing a lawsuit or an enforcement action, the costs associated with defending yourself are likely to • Nearly all types of businesses that serve the public are vary based on a number of factors, including: number included in the 12 categories, regardless of the size of of alleged barriers to access, the overall nature of the business or the age of their buildings. the alleged violations, and the size and/or number properties involved. • Businesses covered by the ADA are required to modify their business policies and procedures when • These are in addition to costs you’re likely to incur for necessary to serve customers with disabilities and take attorney fees and court costs – but also potentially tenssteps to communicate effectively with customers with of-thousands of dollars it could cost to make requisite disabilities. improvements to be ADA compliant. • The ADA also requires businesses to remove • Furthermore, ADA violations could potentially result in architectural barriers in existing buildings and make sure the Department of Justice seeking various penalties and that newly built or altered facilities are constructed to be civil fines, ranging from $55,000 for an initial violation accessible to individuals with disabilities. to $110,000 for any subsequent violations. • “Grandfather Clauses” often found in local building • As the costs associated with defending yourself codes do not exempt businesses from their obligations against claims of under the ADA. ADA violations can quickly skyrocket – even if cleared STATE & LOCAL LAWS of any/all alleged • The ADA does not preempt or invalidate any state or violations – it is local laws that provide equal or greater protection for imperative the individuals with disabilities. business owners be proactive in • Many states and/or local jurisdictions have enacted laws working to mitigate that also prohibit discrimination based on disability becoming a target in places of public accommodation and/or adopted for such alleged building, health or safety codes that also contain violations. | requirements for accessibility. •
•
Most jurisdictions do not require accessibility modifications in existing facilities where no alterations are being made, but any alterations must comply with applicable state and local accessibility requirements in existence at the time they are made.
Please Note: The information provided here should not be taken as legal advice. Should you have questions or concerns regarding ADA compliance and/or pending ADA allegations, please consult an attorney.
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state & industry S
TATE Alaska: Taxes on Marijuana Approach Totals for Alcohol According to a recent budget report by the state’s Alcohol and Marijuana Control Office, Director Erika McConnell noted that through October 2017, the state has collected in excess of $1.5 million in tax revenue from marijuana operations – compared to $2.2 million collected from alcohol operations. With tax revenues from marijuana being collected at $50 per ounce, the state has collected more than $3.7 million since sales were legalized in 2016, while employing nearly 2000 people across the state. Montana: State Lawmakers Look to Alter Liquor Licensing Landscape Legislators in Wisconsin are debating increasing the number of liquor licenses issued by the state, while also looking to increase revenues by evaluating new methods for the issuing of licenses.
Currently, there are a set number of liquor licenses available in the state – with the issuance of a license determined, in part, by a quota system based on a city or town’s population. Under Senate Bill 5, however, an additional one liquor license per year would be available in areas seeing “cross-town growth – such as in Bozeman and Belgrade. Senate Bill 5 would also dramatically change the way in which liquor licenses are allocated, moving from the current quota-based system and moving to an auction-based system, thereby increasing revenues for the state. Based on fiscal analysis of the proposed bill, this change would generate around $3 million for the state annually. New York: State to Repeal Antiquated “Cabaret Law” For 91 years, the state of New York has required bars and clubs that offer their patrons dancing to first obtain a “cabaret license.” Originally enacted in 1926, the “cabaret law” was intended to prevent “musical entertainment, singing, dancing or other form of amusement” without a license, prohibiting dancing by “three or more
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ABL INSIDER
people in any room, place or space in the city… to which the public may gain admission.” The Dance Liberation Network, an organization which has worked to raise awareness of the arcane law and to fight for its repeal, “only 88 out of the city’s 25,000 drinking and eating establishments have a current cabaret license.” While the law has been on the books for nearly a century, it never clearly defined what constituted “dancing,” thereby causing confusion among bar and club owners across the city. Ohio: “Regulate Marijuana Like Alcohol” Ballot Initiative Slated for 2018 Efforts are underway in Ohio to legalize the sale and possession of marijuana for recreational use, with plans to add the issue as a ballot initiative in 2018. The initiative is being spearheaded by Jimmy Gould, CEO of CannAscend, an Ohio-based company which seeks to operate medicinal marijuana facilities in the state. “This will be on the ballot. We will get the signatures and we will spend whatever is necessary to spend to get this on the ballot,” said Gould. “We want everybody’s opinion, anybody who thinks that we should send it in.”
alcoholic beverage.’” While the bill may appeal to many in the state, it faces a difficult, uphill battle. For starters, it has been opposed by Robin Vos, the Republican Assembly Speaker, who plays a key role in determining which bills make it to the floor for a vote. Secondly, under current federal statutes, any state lowering the legal drinking age below 21 risks losing up to 8 percent of federal highway funding. For Wisconsin, this would result in a lost of nearly $54 million annually in highway funding.
I
NDUSTRY Examining the RNDC-Breakthru Merger In late November, it was reported that Republic National Distributing Co. (RNDC) and Breakthru Beverage Group (Breakthru) are combining forces, agreeing to a deal that will merge the nation’s second- and third-largest wine and spirits distributors with combined annual revenues of nearly $14 billion and more than 17,000 employees nationwide.
If passed, the “Regulate Marijuana Like Alcohol” amendment would also allow adults over the age of 21 years to cultivate, process, and dispense marijuana. It would also prohibit the smoking of marijuana in public places and on public transportation, while also keeping existing medicinal marijuana regulations in place.
As things currently stand, the merger is expected to close during the second quarter of 2018. In responding to news reports of the recently announced merger, Breakthru’s current President & CEO, Greg Baird, noted “Our objective is to provide the best resources in terms of people and processes to create a sustainable competitive advantage to grow brands,” that the new company intends to be “the most efficient wholesaler across the entire value chain and generate cash to reinvest for growth.”
Wisconsin: State Looks to Legally Permit 19 Year-Olds to Drink In early November, three Wisconsin state legislators introduced a bill that would lower the legal drinking age in the state from 21 to 19. One of the bill’s sponsors, state Rep. Adam Jarchow (R-Balsam Lake), argued that “at 19 years old, there are very few things that you cannot do. They are adults eligible for military service, but cannot ‘enjoy an
House Unanimously Passes Bill to Ease Rules for Owners of Small Businesses In early December, the U.S. House of Representatives voted unanimously to pass a bill aimed at simplifying regulations on the owners of small businesses seeking to merge or sell their businesses. H.R. 477, The Small Business Mergers, Acquisitions, Sales and Brokerage Simplification Act of 2017, streamlines
state & industry the securities registration system for mergers and acquisition brokers who transfer the ownership of small, privately held companies. This will reduce costs for small businesses.
“This commonsense regulatory reform promotes economic growth and development, strengthens job creation and preservation, and provides immediate and substantial relief for small business professionals,” Rep. Bill Huizenga (R-MI), the bill’s sponsor, said. “Business brokerage services are critically important to entrepreneurs who start, build, and eventually want to sell their private companies. In today’s divisive political environment, H.R. 477 demonstrates that Congress can act in a bipartisan manner to strengthen our economy and positively impact the lives of hardworking Americans.” Swipe Fee Reforms: Nearly $50 Billion Saved & 225,000 Jobs Supported Debit card swipe fee reforms, passed as part of the larger Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 (Dodd-Frank), appear to have
achieved their goals: the reforms have increased transparency and competition in a system which, historically, has lacked such consumer protections. For most retailers, swipe fees are often the second-highest business-related expense after labor costs. As a result of the reforms included in Dodd-Frank, however, retailers and consumers alike have saved in excess of $50 billion during this period. Additionally, due to the cost-savings for retailers, the retail industry has been able to save around 225,000 jobs that could have been in jeopardy due to increasing costs for business owners. Majority of Republicans Now Support Marijuana Legalization According to a recent survey conducted by Gallup, it appears that – for the first time ever – a majority of voting age Republicans in the United States now support the legalization of marijuana. The survey, release in late October, found that approximately 51 percent of Republicans surveyed now support marijuana legalization, an increase of 9 percent over the previous year. When taken as a whole – responses from both Democrats, Republicans and Independent voters – it is now estimated the 64 percent of American’s nationwide support legalization efforts.
“As efforts to legalize marijuana at the state level continue to yield successes,” the survey results note, “public opinion, too, has shifted toward greater support. As a result, the general opinion of legalized marijuana has increased positively among the major partisan groups identified by the pollsters.” House Bill Would Permit USPS to Ship Beverage Alcohol In early October, Rep. Jackie Speier (DCA) introduced H.R. 4024, the United States Postal Service Shipping Equity Act of 2017. Under the proposed act, the United States Postal Service (USPS) would be permitted to ship beverage alcohol from producers and retailers directly to consumers over the age of 21 in states which permit direct-toconsumer sales. The act has bipartisan support and currently includes 23 cosponsors from 14 states.
“It makes no sense to impose these restrictions, particularly since private shippers, such as UPS and FedEx, are exempt from this out-of-date rule. Congress needs to lift this ban for the benefit of wine manufacturers, consumers, and our struggling postal service,” said Rep. Speier. |
member spotlight
O
n September 28, following the Fall 2017 ABL Board Meeting in Arlington, VA, members of the Illinois Licensed Beverage Association (ILBA) visited Capitol Hill to meet with House members from Illinois to discuss a range of issues affecting ILBA members. Representing the ILBA, were ILBA President Jay Gesner and ILBA Executive Director Dan Clausner. During their Hill visit, Gesner and Clausner held individual meetings with five Members of Congress on their staffs: Reps. Rodney David (13th District), Randy Hultgren (14th District), John Shimkus (15th District), Adam Kinzinger (16th District), and Darin LaHood (18th District). |
Rep. Rodney David
(R-IL - 13th District) ILBA President Jay Gesner (L) ILBA Executive Director Dan Clausner (R)
Rep. Randy Hultgren
(R-IL - 14th District) ILBA Executive Director Dan Clausner (R) ILBA President Jay Gesner (L)
Rep. John Shimkus
(R-IL - 15th District) ILBA President Jay Gesner (L) ILBA Executive Director Dan Clausner (R)
Rep. Adam Kinzinger
(R-IL - 16th District) ILBA Executive Director Dan Clausner (R) ILBA President Jay Gesner (L)
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American Beverage Licensees 5101 River Rd, Suite 108 Bethesda, MD 20816 (888) 656-3241 www.ablusa.org info@ablusa.org
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American Beverage Licensees is the preeminent national trade association for retail alcohol beverage license holders across
the United States. Its members are comprised of on-premise and off-premise retailers who annually help infuse billions of dollars into the American economy. ABL represents the interests of American small business owners and a historical part of the American way of life. Many members are independent, family-owned operators who assure that beverage alcohol is sold and consumed responsibly by adults. | DIAMOND
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