The deal is also purported to involve Rams Head Tavern, the Baltimore-based regional brewpub chain affiliated with Fordham Brewing Co. Perhaps Rams Head will operate the pub restaurant at Old Dominion while A-B does the brewing? Or maybe Rams Head/Fordham will operate both the pub as well as the brewing and A-B will manage marketing? It’s impossible to know for sure until the deal is made public, but one thing I do know is that an A-B takeover is bad news for democracy.
What will happen if America’s largest beer company takes over a thriving regional craft brewer like Old Dominion? One result, and perhaps the only good thing about the deal, may be that Old Dominion products will be better distributed. This is due to the arcane three-tier beer distribution system, which was mandated at the national level by the 21st Amendment that repealed Prohibition in 1933. The system was intended to prevent vertical monoplies by legally seperating brewing, distribution and retailing.
But today distributors are virtual extensions of the companies that grant them exclusive contracts, namely A-B, Molson-Coors, and SABMiller. In a bitter twist of irony, today this system hampers small brewers from reaching customers because distributors are reluctant to promote small-time beers when one big company’s products account for nearly all of their sales. Yet the system prohibits small brewers from fending for themselves and marketing to retailers directly, though this is slowly changing state-by-state. Thus, if A-B buys Old Dominion, distributors who hold exclusive rights with A-B will have new cause to expand sales of Old Dominion products.
So what’s the potential downside? The first and most obvious is the growth of the A-B monopoly itself. Moreover, studies show that global corporations spend less on staff than locally-owned businesses and they pump profits out of the community by spending less on local procurement. Plus, Old Dominion customers are already concerned that there will be a reduction in the number of beer styles on offer. All of this is bad for democracy because it consolidates power in the hands of one giant corporate beerhemoth that is legally required to act in the interests of profits above all else. This legal prioritizing of money over everything else is what makes life commercial and cheap, the very things the craft beer movement was created to fight against.
In my view, the day Old Dominion is sold to A-B will be a sad day for beer drinkers.