Alcohol is under scrutiny from regulators, public health experts, and the media. If a house divided against itself cannot stand, it behooves the industry to band together to fend off attacks. So, is the industry in fact united across tiers and categories? Or is it at war with itself? On the broad message — that alcohol has a place in society, and that it can be consumed at safe levels — the industry largely agrees. But with increased competition for drinkers’ dollars, nearly everything else is a battleground.
Here’s the context that explains why: The proportion of American adults who consume alcohol — about two-thirds — has been broadly stable for 50 years. But those drinkers have more choice than ever, with entire categories that didn’t exist a decade ago (hard seltzer, premade gelatin shots, kegged cocktails, etc.) sucking up market share. Because U.S. consumers aren’t buying more alcohol in total, it makes most categories’ and companies’ slices smaller than they’ve been in the past. Analysts for the trade group Wine and Spirits Wholesalers of America put the reality bluntly in a year-end 2023 report: Whether in beer, wine, or spirits, “growth is anything but certain.”
Fierce jockeying for market share can happen in any sector, from tech to fashion, but what makes alcohol different is its highly regulated nature, undergirded by the legally imposed three-tier system of suppliers, distributors, and retailers. The structure of the industry itself guarantees a degree of tribalism, even as the diversity of products and brands explodes. When wins for one entity come at the expense of another, competition breeds defensiveness. Categories and tiers retreat behind their barricades, fretting about the future and guarding their precious turf. Earlier this year, two of the most important alcohol companies in the U.S. — Anheuser-Busch InBev and Constellation Brands — tussled in court over a hard seltzer at the same time beer and spirits trade groups were accusing each other of spreading disinformation and exploiting tax loopholes.
It’s hardly one big happy family, and some in the trade press have asked whether this hampers the industry’s response to critics. In an April 2 edition of Alcohol Issues Insights, editor Christopher Shepard asked the question outright: “With anti-alcohol rhetoric ratcheting up on the daily, is the industry closer to or farther from finding an effective, unified response?”
Currently, beer and spirits are the two categories with the biggest beef. Wine has historically enjoyed a health halo, and is lately content to be an onlooker to industry drama. But it’s dealing with its own issues as well: namely, declining sales combined with a struggle to win younger legal-drinking-age consumers, neither of which is helped by general anti-alcohol messaging.
Still, no one in beer, wine, or spirits leadership wants to see the infighting get out of hand. They’d like it to remain mostly behind legislative chambers’ closed doors, or relegated to PowerPoint slides at conferences. There’s a danger that all-out war could ruin the chance for cooperation on core policy issues, such as revision of the U.S. dietary guidelines or federal changes to alcohol labeling.
“Yes, there is fighting and yes, it’s different from the recent past,” says Jim Watson, senior analyst for beverages at Rabobank. “But I do think there’s still an overarching desire for that fight to stay as contained as possible.”
What alcohol has, then, are internal fractures that exist almost entirely outside of public view. Battle lines form around abstruse issues like excise taxes, interstate commerce, and franchise law, with trade groups firing shots in comments made to regulatory agencies. From the point of view of the average drinker, it’s hardly compelling. So why does it matter at all?
All for One
Collaboration has material benefits. It’s why U.S. alcohol has, in rare instances, been able to corral its warring factions, even on a national level. The Craft Beverage Modernization and Tax Reform Act (CBMTRA), signed into law in late 2020, was the culmination of years of compromise between tiers and categories. In the end, CBMTRA cut excise taxes for the vast majority of alcohol producers in the U.S., and was praised by beer, wine, and spirits groups alike. Its hard-fought passage saved alcohol companies millions of dollars, and marked a fleeting moment of kumbaya that hasn’t been recaptured since.
“One reason that CBMTRA passed in such a broad and bipartisan fashion was that the legislation became a unifier for the industry,” says Joe Heaton, of counsel at Ice Miller LLP. (In his former role as the senior director of federal affairs at the Beer Institute [BI], a trade group representing beer companies, Heaton helped secure CBMTRA’s passage.) “Absent that kind of unifying legislation or issue, I anticipate we will continue to see turf fights between industry players,” he says.
“There is no doubt that the beer, wine, and spirits sectors are strong competitors in the marketplace and, even at times, in the legislative arena. We have a shared interest, however, in ensuring that the U.S. federal guidance on alcohol is based on the preponderance of scientific evidence, not ideology.”
In simplest terms, CBMTRA passed because no industry segment likes taxes — it’s one point all groups can agree on. But those galvanizing issues come along only so often. The U.S. dietary guidelines offer another rare opportunity to rally the troops, lest the government agencies in charge of writing them decide to reduce the number of drinks that constitute “moderate” consumption. Under current guidelines, that level is one drink or fewer per day for women and two or fewer for men. These guidelines are merely suggestions, of course, and have no direct regulatory consequences. Their actual effect on Americans’ consumption is also an open question. (How many people actually eat based on the MyPlate schematic?) But it would deal a cultural blow to the industry if the new guidelines were to declare, as the World Health Organization has, that there is no safe level of alcohol consumption.
The U.S. Department of Agriculture and the U.S. Department of Health and Human Services will review the dietary guidelines again in 2025, as they do every five years. But there’s a new — and, to some industry observers, concerning — twist this time around. Next year, recommendations regarding alcohol consumption will not fall under the purview of the 2025 Dietary Guidelines Advisory Committee. Instead, they will be considered by a separate body, details of which are still scarce. Spirits’ most influential trade organization, the Distilled Spirits Council of the U.S. (DISCUS), is already undertaking a public information campaign designed to counter anti-alcohol messaging that it fears could sway the group’s recommendations. Beer and wine groups are likely to join the chorus, as they have in the past, realizing that unity on this issue is critical.
“There is no doubt that the beer, wine, and spirits sectors are strong competitors in the marketplace and, even at times, in the legislative arena. We have a shared interest, however, in ensuring that the U.S. federal guidance on alcohol is based on the preponderance of scientific evidence, not ideology,” DISCUS president & CEO Chris Swonger said in a statement.
Like lowering taxes, countering the idea that there is no safe level of alcohol consumption is a broad call to arms — until the thornier question arises of how, exactly, to promote moderation.
What’s the Difference?
Whether beer and spirits are fundamentally different in terms of their effects on the body is central to the intensifying clash between the two. What seems like a simple question has implications for excise tax policy, for retail availability of beer versus spirits, for public health, and more. And the debate is heating up.
In essence, beer continues to assert its long-standing position that it is “the drink of moderation,” a generally lower-ABV type of alcohol than distilled liquor and therefore, it should be regulated and taxed differently from spirits. Historically, governmental powers have agreed. In contrast, spirits groups — notably DISCUS — have in the past three years scored some regulatory victories stemming from their position that it’s not the type of alcohol that matters, but the alcohol content itself. In their view, sometimes referred to as “equivalency,” “there is no drink of moderation, but only the practice of moderation.”
“If the beer guys were to tell you that spirits were harmful, that would probably affect your overall view on alcohol.”
Within the last year, DISCUS and the BI have taken their fight to the people. Both have launched websites to educate the public about their respective stances, in addition to advocating at the state and federal levels. It might seem curious that these groups are drawing harder lines in the sand at the same time that alcohol companies are diversifying the types of products they make: Traditional beer companies now sell spirits-based beverages and spirits brands now sell malt-based versions of popular cocktails. That diversification could make companies less rigid over time — but it’s still a long way off compared to the competitive threats these companies perceive today.
“Despite product innovations, the producers at their cores are either brewers, winemakers, or distillers,” Heaton says. “Only a few producers are doing all three in a measurably significant manner that would cause them to shift positions away from their core products.”
Though the average drinker isn’t privy to much of the debate over moderation and equivalency, the squabbling could still have unintended consequences. Watson says there’s a risk that, in arguing against beer or spirits, the opposing category makes a public health argument that harms alcohol broadly.
“If the beer guys were to tell you that spirits were harmful, that would probably affect your overall view on alcohol,” he says.
And then there’s the simple question of limited resources. Time and money spent fighting another alcohol company are time and money not spent fighting external threats. Right now, trade groups are trying to do both. But there may come a time when they have to more clearly pick their battles.
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