To-Go Cocktail Sales Face a New Obstacle

Restaurants and bars seeking relief with to-go cocktail sales find an unexpected enemy in the beer industry.

Source: https://www.liquor.com/

by Brad Japhe

07/28/20

As the coronavirus pandemic continues to surge in many parts of the country, countless bars and restaurants have been shuttered. For those struggling to stay afloat, the sale of to-go cocktails has emerged as a vital lifeline. The novel revenue stream materialized only after local officials, from Maine to California, lifted restrictions, allowing for takeaway purchases in 30 states in which they previously had been banned. It didn’t take the new model long to proliferate, proving itself safe and successful-so much so, in fact, that several states have already considered making the changes permanent.

At the end of June, Iowa became the first to take the plunge. A bill to extend similar measures through the remainder of the year was ratified in July in Massachusetts. Shortly after that, the Ohio House passed its own version of the legislation by a wide margin. And comments by governors in Texas and Florida suggest that their states might be next to follow suit.

An Unexpected Opponent

As with any movement to ease alcohol regulations, there’s a pushback mounting. But the opposition here is coming from an unlikely source: within the drinks community itself-specifically, beer wholesalers. In June, the Center for Alcohol Policy published a report titled “Crisis De-Regulations: Should They Stay or Should They Go?” It argues that the problems facing on-premise businesses (bars and restaurants) are a result of the virus and not state alcohol laws and goes on to state that any permanent overhaul to current laws could have dire effects on public health.

This isn’t just some incidental release of information. It’s the sort of stuff that’s widely disseminated among statehouses across the nation, explicitly written as an appeal to policymakers.

An eyebrow-raising reality, however, is that the Center for Alcohol Policy (CAP) was founded, and is primarily funded, by the National Beer Wholesalers Association. The disclosure is made clear on CAP’s website but is nowhere to be seen on its policy memo currently making the rounds across state capitals.

While refusing to comment directly on what could be perceived as a conflict of interests, CAP did have much to say about its concerns regarding the potential for legislative overhauls. “At the outset of the COVID pandemic, the Center took note of the many proposals for changes to alcohol regulation-changes that continue to be discussed today,” says Kelly Roberson, the executive director of CAP. “We identified the need for a report that provides context and information about some of the basics of alcohol regulation. Among others, we still need to check IDs.”

Manufactured Concerns

To some experts, the report raises a lot of questions while ignoring obvious answers that already exist. “My general view is that it does not really produce any evidence that the recent push to allow to-go or delivery alcohol as a result of COVID-19 is causing widespread negative effects,” says Jarrett Dieterle, an attorney specializing in alcohol policy and regulatory affairs at R Street Institute, a public policy research organization.

“To the extent it does try to raise specific concerns, it suggests that counterfeit alcohol might be more widespread with alcohol delivery,” says Dieterle. “But how? Are they suggesting that delivery drivers might swap in counterfeit booze on the way to a customer’s door? Is there any evidence from anywhere in the U.S. that this has actually happened?

“The main other concern it pushes is the potential for more underage access to alcohol if alcohol delivery grows,” says Dieterlie. “But basic technology, such as ID scans, can help prevent this, and delivery companies are already adopting that technology. In some ways, this can be a more rigorous ID verification process than takes place at the local gas station or convenience store, where oftentimes store clerks don’t even ask customers to check their ID.”

Roberson stresses that her organization is determined to bring a range of voices to the discussion as a prerequisite to any permanent alterations to alcohol policy. And this goes far beyond just the realm of takeaway drinks. “The recent paper isn’t solely focused on the ‘drinks to-go’ issue; rather, it’s a broader review of some of the issues in the current landscape,” she says. “It does point out that any change to alcohol law needs a diverse set of stakeholders at the table. The on-premise community is one of those important stakeholders, for sure.”

Those particular stakeholders are fairly unanimous in their pleas. “With constantly changing regulations, it’s hard to keep staff working; it has been week-to-week deciding who will be able to work,” says Frank Howell, the owner and operator of The Burbank Pub in Southern California. “Cocktails to-go have been the best thing to come out of quarantine. Financially, it has helped us be able to stay afloat. I really hope it stays around. I think it will also help curb drunk driving.”

The Beer Industry’s New Enemy

The idea that takeaway tipples might make communities more safe is certainly at odds with the concerns put forth in the CAP report. Given the lack of transparency regarding its funding source, some will choose to read the report more as a lobbying effort rather than an earnest appeal for public safety.

To be sure, lobbying the government is as American as apple pie. There’s nothing at all shocking about the practice. The disheartening aspect for any beverage enthusiast, instead, should be that separate factions of the drink industry aim to harm each others’ business during these challenging times.

The author of the CAP report acknowledges this very fact in the paper itself. “There are long-standing policy fights between industry members that legislators, regulators and the public must be mindful of as they try to assist one part of the industry,” writes Patrick Mahoney.

What Are They Afraid Of?

The beer industry, for its part, is undoubtedly, and possibly rightfully, concerned with the meteoric rise of ready-to-drink beverages. Canned cocktails have been cutting into the beer industry’s market share for several years now. To wit, sales of domestic beer fell 4.6% between October 2018 and October 2019, according to Nielsen. And the industry likely expects to-go cocktails to accelerate this trend.

But current circumstances don’t bear this out. Since the pandemic, alcohol sales are up across the board. Off-premise sales of adult beverages have risen 27% compared with the same three-month stretch in 2019, and beer sales have increased by 17%, even though Americans have gained more access to takeaway cocktails and direct-to-consumer spirits than ever before.

A big reason for this is that the segments don’t actually overlap as much as they might seem. A typical beer drinker or hard seltzer fan isn’t really interested in a craft cocktail, and vice versa. WhistlePig, for example, wasn’t after gaining market share but simply with pleasing restaurant-goers when the small craft whiskey brand pivoted quickly during the pandemic by speeding a trio of prebatched Old Fashioneds to be sold by restaurants and bars. “It’s exhausting to stay ahead of ever-changing laws,” says Jeff Kozak, the company’s CEO. “But we realize that for high-end restaurants with takeout and/or delivery, their customers want a cocktail to match that experience-not a White Claw but a quality rye Old Fashioned to-go.”

Ever since the repeal of Prohibition, beer, wine and spirits have each been subject to their own respective regulatory restrictions. Separate sets of laws exist for each category. In a more perfect world, the three prongs would all be unified, fighting a singular battle against archaic and byzantine legislation that continues to hamper access to responsible adult consumption of alcohol. Now more than ever, a concerted effort from all fronts could spell the difference between the success and failure of so many small businesses across the country.

The Center for Alcohol Policy, however, as evidenced by its most recent policy recommendations, seems content with the status quo. “Ultimately, the report spots some potential issues on the horizon, urges deliberation and encourages states to take a metered and holistic approach to the conversation,” says Roberson. “Festina lente-make haste slowly.”

It might make for good messaging, but it’s hardly helpful to the thousands of bars and restaurants in need of rapid relief right now.

https://www.liquor.com/beer-versus-bars-during-pandemic-5072676