Guinness’ Arrival in Maryland Sparks Three-Way Beer Fight

Austin Ray

THE GIST
Diageo’s plan to build a Guinness brewery in Maryland has set off a three-way bar brawl between the multinational liquor giant, the state’s craft breweries, and its alcohol retailers, all over one simple question: How much beer should the state allow breweries to sell for on-site consumption?

At the heart of the conflict, Diageo—which announced it would build a destination brewery in Baltimore County early this month—is seeking a carve-out that would essentially help only itself. Breweries, meanwhile, are fighting for a statewide overhaul to lift the industry at large. And retailers, having lost ground with legislators in recent years, are striving to preserve the status quo.

And now, the Baltimore Sun reports, lawmakers find themselves in the un-enviable position of playing referee as they consider a trio of competing bills propped up by all three sides.

WHY IT MATTERS
First, the hard numbers:

* Maryland breweries are currently only permitted to sell 500 barrels of beer annually to be enjoyed on-premise.

* Diageo’s bill would require Baltimore County to create a new permit enabling it to sell 5,000 barrels per year (since the bill only applies to breweries located within the one county, it’s effectively a Guinness exemption bill).

* A second bill would enable breweries to sell up to 4,000 barrels annually for on-site consumption. The lifted cap would apply to every brewery in the state, which the Brewers Association of Maryland is in favor of.

* The Maryland State Licensed Beverage Association (MSLBA), meanwhile, seeks to “limit the ability of breweries to sell directly to consumers,” per the Sun. The MSLBA was not available as of press time to confirm which specific bill they’re in support of, but SB 801 reaffirms the 500-barrel cap already in place.

To Diageo’s credit, the company has said it doesn’t oppose the bill that would cover every brewery in the state, and isn't hellbent on helping just the new Guinness operation. Dwayne Kratt, senior director of state government affairs with Diageo, told the Baltimore Sun that it’s “very crucial” that one of the two bills passes. Rather, the company took a more myopic view with its own bill, he said, because a statewide effort comes with a smaller chance of passing. As such, the company is hoping its promise to invest $50 million and create 70 new jobs will endear it to lawmakers enough for some special treatment.

Of course, that’s a nonstarter for other industry stakeholders. “I am completely opposed to legislation that favors any one of the 70 [Maryland breweries],” Flying Dog chief Jim Caruso told the Sun. Added Hugh Sisson, founder of Heavy Seas, who welcomes Diageo: “[W]e don’t want to pass another carve-out bill and have a large, international conglomerate have privileges that home-grown businesses don’t have.”

On the other side, retailers are filling the role of wholesale antagonist to both efforts a carve-out and a broader effort to lift the cap.

In a letter to members previewing the 2017 General Assembly, MSLBA lobbyist and legal counsel Steve Wise warned that, with the arrival of Diageo, such attempts to lift the cap “don’t just blur the lines between the 3-tiers, they eviscerate it.”

“The brewers pressed for more barrels in 2016,” Wise wrote, referring to last year’s ultimately unsuccessful push for change. “Expect a similar effort in 2017, but this time with the added dimension that Diageo has announced plans to refurbish its brewery in Relay…We now have an international manufacturer wanting a retail presence. This is a tied house, plain and simple.”

From the outside, it seems the Diageo bill—which is opposed by both brewers and retailers—would be most caustic to how Maryland’s lawmakers are perceived by the stakeholders involved. That said, no matter what happens, they’re likely to wind up on someone's shit list. And if Guinness wins out over the interests of the breweries that put the state on the map, expect the battle to intensify tenfold in the coming years.

—Dave Eisenberg

READ MORE
Guinness enters Maryland lawmakers’ beer debate [Baltimore Sun]