Dirty Lines, Not So Dirt Cheap

Alex Fossi, October 22, 2014

Whenever people ask about good beer bars to visit in Boston, I always recommend Sunset Grill & Tap. The reasons begin and end with the fact that it has 112 taps. I've never had trouble finding one or several things worth drinking there. I was discussing this with some folks on Twitter recently and one person countered that it has a pretty mediocre atmosphere. While I'd certainly compare the menu and clientele favorably against an average chain bar & grill, I couldn't really disagree that the atmosphere wasn't ideal.

Nonetheless, I still think it'd be my #1 recommendation in Boston, because for beer fans, it's all about the taps. Do some parts of of Sunset Grill & Tap look like an abandoned Bennigan's? Sure. Is the food great? The nachos are solid, the portions are good, but all in all, it's pretty average. All of this is largely irrelevant to me, though. If I'm looking for beers to try, then the rest of it is window dressing.

This isn't to diminish the value of a good neighborhood bar, but if I'm recommending a place for a beer tourist to stop, it's going to be the place that has all the beers. With that many taps, you're guaranteed a selection of local options, rarer imports, and old standbys -- no matter what you're looking for, it's pretty likely that they have it. If you're a brewery, bars like this are a dream come true. As long as you're making something worth drinking, it shouldn't be too tough to get it on tap at Sunset.

Of course, not every bar has 112 taps. Most bars have fifteen or so. With just a few taps, it can be a lot harder to satisfy everyone. Like it or not, plenty of people are still going to want Budweiser, Coors, or Miller Lite The Original Lite Beer With Kind Of Weird Commercials Taking Credit For Your Conception. In a typical bar, macros will occupy as many as half of the available taps, with yet more taps going to craft* beers like Blue Moon, Batch 19, and so forth. After accounting for all of these, we might be down to just a few rotating taps. How do bars allocate those?

The obvious answer is that they pick beers that are in demand. The problem with that answer, though, is that not everyone picks a bar based on the beer list. Sure, that's the first (and often only) thing I consider. It's important to remember, though, that the community that seeks out and is willing to go to great lengths to obtain certain beers isn't the majority.

Most people that walk into a bar and order a beer would likely be there anyway. Yeah, they might notice a bar advertising "112 beers on tap!", but they aren't driving out to the suburbs for dinner just because some place with ten taps half an hour away has Enjoy By. I'm sure bars get a slight advantage from making sure they have the best beer list possible, but I'm not sure that it amounts to much.

Of course, if attracting more customers were the only way to increase profit from a tap line, that's what bar owners would focus on. However, it's a little more complicated than that, because customers aren't the only ones who care about what's on tap. For up-and-coming breweries, getting their beers on tap is how they get their name out there.

On the other hand, established brewers need tap lines to cement their reputation. Think about the dispute between Lagunitas and Boston Beer Company (Sam Adams) from earlier this year. Sam Adams wanted to get their new Rebel IPA to as many taps as possible; Tony Magee of Lagunitas asserted that Sam Adams was not just trying to obtain tap space, but specifically trying to take tap space that had been occupied by Lagunitas IPA. Jim Koch of Sam Adams denied that there was any targeting, but the goal for both is clear. Both sides wanted their IPA to be the IPA that someone could find anywhere on tap.

The value of familiarity can't be overstated -- when someone who knows they like IPAs but isn't familiar with a wide variety goes to buy a sixer, they're much more likely to buy the one they've seen and tried on tap. Most drinkers aren't reading through pages of reviews when they make their buying decisions.

As you may have surmised, the reason I'm talking about this now is that Pretty Things in Boston recently alleged that a number of bars and/or distributors were engaging in pay-to-play for tap lines in Boston. I won't go through all of the details of the story (if you aren't familiar, other writers have already done a fine job of that here and here), but to summarize: Pretty Things brewer Dann sent a series of tweets regarding "dirty lines", specifically mentioning Bukowski Tavern and Lower Depths.

Essentially, he's accusing them and others of accepting incentives and/or discounts for putting certain beers on tap, a practice that is illegal in Massachusetts. The owner of the group that owns both bars responded with a strongly worded letter that laid out an argument for why Pretty Things wasn't being served at his establishments, though he declined to directly refute the allegations of pay-to-play. At this point, authorities are investigating if anything illegal has gone on. If anyone is punished, it would be the first case of this in almost 20 years.

Thus far, the responses to this have been several -- you can find quite the variety in this long BeerAdvocate thread. A Boston Magazine article interviewed brewers and bar owners as well, if you'd rather read about what people involved in the industry think of the practice.

One group of people is understandably upset that anyone would take steps to shut certain brewers or distributors out of tap lines. Another group points out that while "pay-to-play" sounds bad, the same thing goes on in many industries under other names and no one bats an eye. Others take a more pragmatic view, noting that bar owners can hardly be expected to decline incentives if nothing explicitly illegal is going on (distributors are allowed to offer discounts, but they can't be targeted -- the same discounts have to be offered to every establishment. It's unclear if a bar owner could reasonably be expected to know if they were getting an offer that another owner wasn't). This assumes, of course, that the distributor is offering an incentive, as opposed to the bar owner demanding one, which is what Pretty Things and other breweries are suggesting. Some believe that the laws are simply outdated, and that we should deregulate the market and just allow this sort of incentivization. After all, the line between illegal incentives and simple negotiation is mighty fine. Paying to get your product in front of customers is nothing more than a cost of doing business in many industries.

Yet others blame distributors -- the distributor that Pretty Things works with actually has none of their beers featured at the two bars mentioned earlier. This could be a case of a distributor refusing to give in to extortion from proprietors, or it could be as simple as a personal disagreement. Bars, after all, have no obligation to work with any distributor or brewer if they don't want to, and it's very difficult to prove a motive without evidence of money or beer illegally changing hands.

Overall, the responses to Pretty Things have been equivalent to a sympathetic shrug -- sure, it sucks if that's happening, but what're you gonna do? We can't say for sure who's in the wrong here. Such is life.

One question that springs from this is whether consumers should be worried at all about how this affects them. There's a useful parallel to this situation in Chicago, where disputes over tap lines have been ongoing for at least fifteen years.

Budweiser and MillerCoors compete for taps through their local distributors, offering increasing incentives (solely legal ones, according to their distributors; others disagree) to bar owners to try and control the market. Those alleging illegal activity say that prices for tap lines are as much as $10,000 for six months. Distributors for A-B and MillerCoors say that they simply set the prices based on what makes most sense in the market, and that any discount offered is wholly aboveboard.

Regardless, this competition is arguably beneficial to drinkers, as it drives beer prices in Chicago down -- bar owners do, to some extent, pass their discounts on to customers. However, this also squeezes out local and craft brewers. Without the financial resources needed to offer the same incentives as the macros, breweries such as New Glarus and Three Floyds have had trouble securing tap lines.

These difficulties are only compounded by the fact that Chicago distributors historically haven't been as interested in representing smaller breweries, because those breweries can't give them incentives that could be passed along to bar owners. This led the founders of Two Brothers Brewing to create Windy City Distribution in 1999 -- if they couldn't offer discounts, at least they could have a distribution company that would represent them to bar owners. Jason Ebel (one of the founders) said that when they first founded Windy City, he found that many bar owners liked his beer, but also would ask what kind of giveaways they'd get in return. If he wasn't prepared to give them free cases or kegs, they weren't prepared to carry his product.

Windy City persisted nonetheless, and while the central problem was far from solved, it did succeed in securing a foothold for many smaller breweries in Chicago. It wasn't just smaller breweries that are affected, though. If you live in the U.S., you've undoubtedly come across Stone's beer; they distribute to every major market and almost every state in the U.S.

However, they didn't arrive in Chicago until April 2010, when they began distributing through none other than Windy City. Why the delay? In CEO Greg Koch's words: "We waited for several years to go to Chicago because we knew if we didn't want to pay to play, we would have to wait until our reputation was strong enough to avoid it". It wasn't that the problem of pay-to-play had been solved, but that one of the largest craft breweries in the U.S. wasn't confident that even their brand was strong enough to survive the problems plaguing Chicago's tap lines.

Bar owners and distributors do well, and consumers might save some money on their beer purchases, but the variety of beer available suffers as local and national craft breweries struggle to compete. It's all well and good to tell customers to vote with their wallets, but that only works if the brewery they'd vote for can even find a bar that'll serve it without demanding a discount. As of 2010, craft beer held just 5.3% of the beer market in Chicago, below the national average of 6.3% and well below the percentage in most major cities.

From what I can tell, the situation in Boston isn't as severe as Chicago. However, it is illustrative of the problems that pay-to-play practices can pose for the consumer. If a brewery as influential as Stone hesitates to distribute to a city as big as Chicago because they don't want to pay for taps, imagine how much more difficult it is for a smaller local brewery like Pretty Things. Some have pointed out that Pretty Things may just be shooting themselves in the foot by calling attention to the situation, and that's possible. Distributors and bar owners might not be all that excited to work with someone who's demonstrated that they'll blow the whistle on legally dubious activities.

I can't say for sure how this will work out for Pretty Things in particular, but more awareness of shady beer dealings is something that's good for small brewers as a whole. I'd love to see more breweries come out and talk about their experiences, and in particular talk about bars where they can't get a tap line without offering a handout.

As consumers, there's not much we can do beyond being aware of the situation and doing our best to patronize establishments that don't engage in pay-to-play. At the moment, it's difficult to disentangle the allegations being thrown back and forth, but the more breweries speak about this, the clearer the picture becomes. I was skeptical of the accusations Pretty Things made at first, but the BeerAdvocate thread I mentioned earlier featured many local breweries corroborating their story. There was some opposition, but it was mostly of the "well, that's just the way business works" variety and not so much of the "nothing illegal is going on" variety.

It remains to be seen if there will be any legal repercussions in Boston. In the meantime, the best advice I can give beer drinkers is this: let's do what we can to make this not be the way business works. Yes, we need to take allegations from any side with a grain of salt -- it's always possible that a brewer is just frustrated with poor sales and wants to blame outside parties.

However, when every brewer that speaks up is citing the same problems at the same places, that's an issue we should take note of. Keep an eye on the taps at your favorite bars and talk to the bartenders and bar owners about how they choose what to serve. Read what brewers have to say about your local establishments, or speak to the brewers directly if you have an opportunity.

Even if all we can really do is be aware of the situation and do our best to frequent establishments that do right by craft brewers, it's a start. If more breweries, distributors, and bar owners are willing to step up and talk about their experiences and practices, all the better. The more we know, the better able we are to avoid supporting establishments and distributors that engage in illegal practices to the detriment of both brewers and drinkers.

You can find Alex on Twitter @AlexanderFossi.