Trouble Brewing? Brewer and Wholesaler Laws Restrict Craft Breweries

Over the past 35 years, the number of breweries operating in the United States increased from 92 in 1980 to an all-time high of 4,144 in 2015. This growth in the number and variety of breweries has been driven by the craft brewing industry and has provided consumers with a vastly increased array of choices. The growth in the craft beer industry has not been proportional across all states, however. While many factors influence the growth of craft breweries, regulations that restrict how brewers can sell their own beer have inhibited growth in many states and have limited consumer choices on the shelf and at the tap.

This essay describes how self-distribution laws and beer franchise laws have impacted the growth of the craft brewing industry. Many states’ distribution laws do not allow brewers to self-distribute and deliver their beer directly to a retailer, but mandate that brewers sell through independent wholesalers. On top of this, beer franchise laws limit when brewers can terminate contracts with wholesalers. These laws have significant effects on the number of brewers and amount of craft beer produced. States that allow self-distribution and do not enact beer franchise laws consistently have more breweries, creating more choices for consumers.

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