Side with the little guy in Cider Fight

By Bart Taylor | Apr 08, 2014

Who best represents the interests of industry, upstart entrepreneurs who innovate and force change but often flame out, or established voices who’ve paved the way for those to follow?

The question frames not only the dust up between Tesla and the powerful dealer network that control auto sales in the U.S. (read Jeff Rundles overview from last week), but the fight that’s brewing locally between craft cider makers and national beer brands who see opportunity in the fast-growing, hip new beverage sector.

I’ll leave it to Ed Sealover of the Denver Business Journal to report the details, but the upshot of the cider kerfuffle is this: MillerCoors and Anheuser Busch have convinced two state representatives, Dan Pabon (D, Denver) and Frank McNulty (R, Highlands Ranch), to introduce legislation to eliminate a regulatory step that as a practical matter would lower the price consumers pay for MillerCoors and AB cider. Local makers would be strapped to meet the price break. Quoted in the DBJ, Brad Page of Colorado Cider (read the CompanyWeek profile here) sees it as a death-knell for small producers in the sector.

The Tesla situation is relevant and instructive here. Influencers from the powerful established auto dealer network are forcing Tesla, the most innovative, disruptive U.S. automaker in decades, to conform to a decades-old sales methodology, against its will. On the surface it seems self-defeating for an industry seeking to improve its global competitiveness to undermine a smaller, more innovative operator. Tesla strengthens America’s global auto brand.

Fortunately it looks like the sides are working toward a resolution. No surprise, Tesla may be leading the way. In New York, the automaker’s agreed that in the in future, dealerships will be the point of sale. And states who’ve been convinced to tell Tesla how to run its business, like New Jersey, seem to be coming to their senses.

Or more accurately, lawmakers lobbied into action may be coming to their senses. Those who would intervene on behalf of Coors and Anheuser Busch to the detriment of the small guy should think long and hard about the impacts. The craft beverage sector is a proven winner for Colorado and the region. If the bill hurts growth companies in the space, it’s bad policy.

The premise for reform is not without merit. Colorado’s liquor laws are outdated. Reforming the way beer, wine, cider (and the next beverage) are distributed and sold seems a worthy endeavor.

But as with craft beer, this fledgling maker sector can do great things for the economy if nurtured. So many positive things happen as a result of successful risk-taking and entrepreneurship in the maker economy - jobs, innovation, branding for the state, wealth-building - that it’s critical to support, not undermine, promising businesses like Colorado Cider. Or Tesla.

MillerCoors and AB might argue the point. The regulation may be onerous. There’s a good case to be made for regulatory reform.

But did Colorado state representatives Pabon and McNulty wake up one morning and decide that providing MillerCoors and Anheuser Busch regulatory relief to help them sell more cider should be a legislative priority? Of course not.

Colorado’s business community must rally around the little guys at a time when the economy really needs them. Colorado legislators should slough off intervention and scuttle narrow reform in favor a well-planned and fully-vetted regulatory rework. Let’s send the right message at a pivotal time. Support new makers and manufacturers. Support the little guy.