Distilled Spirits Council of the United States

[CFry]

Has anyone joined or thought about joining the association?

Their cause seems supportable, however, its makeup of only relatively major players draws some caution.

http://www.discus.org/

CFry

[will]

Nope.

(wait 'till you hear the price!)

Guessing you won't join either.

Will

[scohar]

How much? I couldn't find a price on their website, and I don't really feel like calling them.

[Ralph at Tuthilltown]

DISCUS members comprise the top 8 or 10 top alcohol companies. Till recently membership fee was $100,000 a year, needless to say this is not a welcome playground for the small distiller. When I pointed out the high cost of membership is prohibitive for the small distiller to one DISCUS representative at the last ADI gathering, his response "Oh, we just lowered membership fees to help with that." I asked the new and attractive membership fee for small producers, "$75,000."

We may, as distillers and alcohol makers, be producing similar products to Big Alcohol producers, we are not the same industry. I commented to DISCUS rep and in a subsequent letter to DISCUS, noting the suggestion this reduction in annual membership fee to $75,000 is the clearest indication the DISCUS membership and Board are oblivious.

Better off focusing on ADI development, join ADI and work with other small producers to address the problems unique to us little guys.

The National movement to increase alcohol excise taxes is about to roll over the industry, some speculate increases nearly doubling Fed taxes. THAT is the reason for DISCUS interest in the growing small distillery movement. Craft distillers put a "face" to the cold hard Big Alcohol industry. We are small business, family business and agricultural in nature.

DISCUS sees the writing on the wall having watched over the last twenty years as the micro-brewers have expanded their footprint on the beer market. But their (DISCUS members) struggle is not our struggle. Beer and Wine makers enjoy a significantly lower Fed and State excise tax than their big cousins. Micro brewers pay an excise tax rate which is 20% of that paid by big brewers. That is also the goal for the small producers, parity with small brewers and wineries.

DISCUS wants small producers to join THEIR fight. But the best for small producers is to band together and strengthen the organization that represents the best interests of the micro/craft/small producers, ADI. Check Melkon's string on this forum about the proposal for reduced rate of taxes similar to that enjoyed by the micro brewers and small wineries.

Remember, DISCUS views the small distillers as the "camel's nose in the tent", we are stealing an increasing amount of the market share they have had locked down for decades. We all should be thankful for their help if it is offered. But as an old climbing buddy of mine used to tell me "When you sup with the devil, best to use a very long handled spoon." Big Alcohol is about one thing: Money. Of course any business needs to be profitable so money is a concern for all of us. Remember one of the three big lies: "We're from the government, we're here to help you." DISCUS does alot of good work, for Big Alcohol; but believe me, they would prefer we all go away, I have not seen or heard any evidence to the contrary.

Perhaps DISCUS will have one of their officers respond to this string and present DISCUS' case why small producers should sit down for a meal with Big Alcohol.

[grehorst]

Ralph makes a number of good points. While not dining with the devil is sage advice, there are times when the little guy cannot effect change on his own... at least not in his own lifetime.

I love the grass roots good feeling and camaraderie I get from fellow ADI members, but unfortunately I think as a trade organization ADI lacks tremendously in two areas-

1. Support in government issues.

2. Help in marketing it's members.

Now, ADI membership is very reasonable and I know it isn't high enough to support a staff lobbyist, or a marketing staff. (Of course marketing is a whole other issue and I won't even get started on that- we could create a new thread to discuss that area in another forum...) But, ADI is a great organization for those starting up new distilleries and for small distillers to network with others.

What I will say here is that we've had a couple situations just this last year where had we not enlisted the help of those some may consider the enemy, we would have a very different picture of distilling in Wisconsin. A couple of examples;

Until July 2009 a distiller in Wisconsin could not pour samples of their own product in their distillery nor sell their product from the distillery. For the last five years there were attempts to change this but they failed. What finally got it changed was having a dialog with the distributors by way of their gov't liaison and demonstrating that they would benefit from the marketing power of allowing some of their small brands to do these things. Don't get me wrong, they didn't offer their support, but for the first time they didn't fight against it. The law was changed within about 5 months after that discussion. I should add that this was at a time when legislators were getting a lot of heat from the state media (and consequently public opinion) regarding any laws having to do with a loosening (or perceived loosening) in alcohol regulation.

In 2009 Wisconsin was facing an excise increase of 58%. Obviously this hurts a small producer like us tremendously. It also hurts the big guys and the distributors. There was a lot of common ground in this issue. I know the media attention we craft distillers were able to garner because we were small businesses helped draw public disdain for the increase. While I can't say the four small distilleries in the state alone were successful at stopping this I know the help we gave and received from DISCUS helped us to defeat it together. DISCUS likely would have been successful without our help, but I'm certain we would not have been successful without their help.

Most small distillers are busy trying to grow their businesses and don't have a lot of time to spend chasing down and educating government officials. I say get help when it's offered whether it's DISCUS or your distributor lobby- you may not agree with them on every topic, but you just might get some things done together.

[cowdery]

Many but not all of the players in Big Alcohol view micro-distilleries as a good thing, because they attract consumer interest to the distilled spirits category generally. Because some take a contrary view, it behooves micro-distillers to be involved with the macro-distillery interests just enough to keep those who regard you positively to keep thinking that way.

You might be interested to know that even Heaven Hill, a giant by micro-distillery standards, considers itself too small to justify the cost of DISCUS membership.

Never forget that DISCUS is a membership organization that works for the interests of its members. It only works for the interests of the industry as a whole when that interest coincides with the interests of its members, but if they ever conflict the interests of its members comes first.

[Ralph at Tuthilltown]

Good points all. Thanks for the comments. We have not experienced any direct benefit but it is a good point that many of DISCUS undertakings have benefited all. It does seem to me at this point DISCUS does not know what to do with us.

It is unlikely any new distillers could afford the price of membership in that elite club, and the notion of a tiered membership is debatable (creation of second-class citizens and all that stuff) for a variety of reasons.

That said, it is mostly easier to effect change working together, and especially at this level of industry. I hope DISCUS will find a way to include the new small distilleries without assigning us to the kiddie table. I do agree that ADI is good for what it is, but as a fully effective National governing body, it is not ready to represent distillers at the National political and industry levels. There is a middle ground. The question is: will the craft/micro distillers be taken seriously and will Big Alcohol nourish and help the small distillers? First step is to open a serious dialog and aggressively explore the various ways all of us can benefit from each other's resources.

Thanks Chuck for your comments, and congratulations on your recent recognition and award.

R

[will]

My how things can change in only a few weeks...

The story continues here: http://adiforums.com/index.php?showtopic=880

(at $500 per year)

Will

[delaware_phoenix]

will Big Alcohol nourish and help the small distillers?

I personally see no reason why they'd want to do that. Unless they feel that they help a small distillery and then buy them out.

[cowdery]

DISCUS is an interest group and it just got more interesting.

[Ralph at Tuthilltown]

Yes Chuck, seems so. It is a toe in the door for the moment. But it does not preclude the continued organization of micro distillery owners as an autonomous group looking after their own. The comparison I usually make is that of the local patisserie and the Wonder Bread factory; both making bread, but not at all in the same business. That said, Wonder Bread has alot more clout in the world than Bill the Baker on the corner. So we should not dismiss the opportunity to participate and make our voices heard; AND continue to focus on the issues of running a micro operation among our contemporaries.

[Ralph at Tuthilltown]

There is discussion on the DISCUS MICRO DISTILLING ADVISORY COUNCIL going on right now among many of the leaders in the micro distilling movement. It seems Fritz Maytag, after selling his brewery and distillery, has been appointed the Chair of this Council, appointed by whom I cannot say. I have to wonder also who selected the members of the Council. Not that I'm vying for a seat amongst them. More that I'm trying to figure out how DISCUS received a mandate to name a Council to represent the micro distillers (the majority of whom cannot afford the price of admission) and most of the distillers found out about it after the fact.

This Council is a body of DISCUS. It is a good thing for DISCUS members who want to keep their finger on the pulse of whiskey making in America. It may have some benefit to the country's micro distillers, but make no mistake it is not THE representative body of the micro distillers. Perhaps it is DISCUS' attempt to impose some structure on what up till now has been an unorganized association. The intent may be positive, but the execution is inappropriate.

At the annual convocation of micro distillers next week we will bump into some of the Cousins from big alcohol. DISCUS is sponsoring a shindig with Brown and Forman. The movement is now officially on the radar of the large alcohol companies (not all of them "producers"). It will be an opportunity for ADI members to decide if they want to determine their own future and sit at the Adult's table or mind our p's and q's and sit at a table set by the Adults, eating a meal decided for us.

It seems the discussions this week raise the lingering issue of ADI organization. Those discussions include appreciation for the work Bill Owen and his crew have done getting us all together, a difficult time consuming and usually thankless job. I for one applaud their work.

This is about the maturing of an industry. In order for ADI to be THE voice of micro distilling in the US and ultimately worldwide, it must reorganize, elect a Board of Member Directors and set an agenda. No harm in remaining a nice friendly social club. But if we don't set the agenda for ourselves it will be set for us by people we did not choose.

See you all next week.

[Guest Liberty Bar - Seattle]

DISCUS is an interest group and it just got more interesting.

The problem with them (as I understand it) is that in some markets, DISCUS won't rocke the boat. Here in Washington, we're looking at two initiatives that are working to effect a change from being a control state to open... And, the word is that DISCUS won't take any steps publicly because they are afraid to get on the bad side of the state LCB. Now...this is their job, right? I suppose that if there were WA distillers as members, they'd be forced to take steps, but since the majors sell alcohol here...why do they not do anything?

There are many conspiracy theories, one is that (shocking!!!) there's some payoffs going on to get shelfspace so the larger companies who are able to somehow effectively get their products on as 'standard' items don't want to rock that boat.

If anyone has been part of a large organization as a smaller memberclass, they know that their interests get left behind more often than not.

My suggestion is that there forms a trade group for specifically smaller distilleries. While this group would not be able to affect legislative chance as well as a group like DISCUS, success will breed success and individual distilleries and states can learn from other distilleries and other states.

Frankly, DISCUS won't do anything for $500 for a small distiller besides perhaps being a point of information - which would be worth it depending on what kind of info they have available, but I'd like to hear what $500 would reflect.

[Guest Liberty Bar - Seattle]

I have to wonder also who selected the members of the Council. Not that I'm vying for a seat amongst them. More that I'm trying to figure out how DISCUS received a mandate to name a Council to represent the micro distillers

Ralph, I believe you were being tongue in cheek there, because of course they just did it. They are a largish organization in our industry and they chose to become the leader because...well, because they DID it.

Perhaps it is DISCUS' attempt to impose some structure on what up till now has been an unorganized association. The intent may be positive, but the execution is inappropriate.

Well, don't yet give them any credit for their intent. Smaller distilleries are picking at the profits of the larger corps, and I know that they notice this because I hear about it all the time from the reps. While the numbers from smaller distilleries are not large compared to the how much Southern distributes, you know that it's going to rise dramatically in the next five years, one market at a time. Will DISCUS support the micro/craft-distillery over the larger companies...? I'd not bet so.

This is about the maturing of an industry. In order for ADI to be THE voice of micro distilling in the US and ultimately worldwide, it must reorganize, elect a Board of Member Directors and set an agenda. No harm in remaining a nice friendly social club. But if we don't set the agenda for ourselves it will be set for us by people we did not choose.

Yep, but how to do this? Who will take the many hours to form this organization? I mean...there's money in it. Most of us would buy in at the same $500 that DISCUS is asking for, right? If 50 distilleries paid $500, that's $25K, and that would buy someone's time to organize... I started the Washington State Bartender's Guild here in Seattle, and that alone caused a change in how the reps see not just the membership's individual bars but how they react to the whole state (mostly Seattle, but...). A craft distiller's organization would be a meaningful group within a few years, to be sure. Think about how pricing could be manages on things like glass and stills...

[Ralph at Tuthilltown]

The effort is being undertaken now among some of the leading micro distillers to move ADI from a private venture to a member managed industry association. It will cost some money. Some of us have already agreed to put up some of the starting funding; others should consider a contribution as well.

DISCUS is what it is, and the "Council" is their baby. I wish them luck. We will join the Council as well. We all need to work with DISCUS and get the most of their resources. But I stand upon my belief, the micro distillers of the US need an independent Industry Association that will represent our needs first if even at the risk of internecine clashes with our Big Alcohol cousins.

R

[JohninWV]

I'm down with it being a fee based member association. Sounds good to me!

[Jonathan Forester]

For those of you who are joining the council as artisanal distillers. Get in touch with Danielle Eddy. She is the Director of Public Relations and a good friend of mine. She told me that the artisanal distillers aren't taking advantage of the fact that she has a marketing budget to work with the artisanal distillers. She is in Asia right now, but will be back at the end of May. When she is back I will have her post info here as well.

JMF