NBWA RESPONDS TO 7-ELEVEN CENTRAL WAREHOUSE TEST: "SIGNIFICANT CHALLENGES"

NBWA chief Craig Purser minced no words in a letter to 7-Eleven chief Joe DePinto earlier this week regarding the c-store chain's plans for a central warehousing test for heavy liquids with a third party vendor. First, Craig dispelled the myth that 7-Eleven's attorney had ever contacted the NBWA about the test, as was apparently put forth in a letter from 7-Eleven's counsel John Hinman to the California ABC of October 28, 2008. "Since we have not been involved in your concept at any stage, the information we have ascertained obviously is from media accounts and others in the industry and we welcome your correction of anything that is incorrect."

Craig then goes on to chronicle the many challenges such a test would face, including the most glaring fact that 7-Eleven's test only serves the one chain. "We are concerned that your plan assumes 7-Eleven is the only beer retailer. There are over 575,000 licensed retail accounts across the country, including 60,000 in California." Distributors sell to accounts "in a logical sequence" that is "efficient" without adding a fourth tier as 7-Eleven suggests.

But regardless, there's the issue of state-based and federal alcohol regulation. While this proposed solution may be beneficial to 7-Eleven, "beer suppliers and distributors must be mindful of the Federal Alcohol Administration Act...which suppliers and distributors must follow as a condition of their basic permit." Things like providing an "item of value" to one retailer. Not to mention the state laws to consider. "Today's distribution system is neither fragmented nor inefficient," writes Craig. "I believe you are aware that beverage alcohol is not the same as soft drinks. Alcohol is the only product that is the subject of two separate constitutional amendments. Your concept may in theory work with chips, gum, soda-pop, or other products, but you must recognize that beer is different and is regulated differently."

Craig also sent a letter to California ABC attorney Matt Botting making sure he was aware that the NBWA did not in fact have the pleasure of viewing the PowerPoint regarding the test.

OUR TAKE. It remains the same: this test is illegal, inefficient, and it undermines the regulatory structure of accountability that our industry has based itself on for 75 years. It's bad brewers too, because it turns control of the product to an unlicensed third party logistics provider over which the brewer has no control or leverage. But the brewers can't play the bad guy in front of such a big retailer. Even so, their silence on this issue has been disappointing to say the least.

What happens in California is anybody's guess. For its part, 7-Eleven doesn't even believe it requires the California ABC's approval to run the test, because it's been doing it for wine and FMBs for five years. But 7-Eleven said it would be "more comfortable if you reviewed it and let us know if you have any problems or concerns with it."