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Judging Beers by Sam Fitz Vol. 14 – Best Beer City! And The Gray Market

by Prince Of Petworth February 24, 2012 at 12:30 pm 18 Comments

Sam Fitz is a Certified Cicerone® and the Beer Director at Meridian Pint and Smoke & Barrel.

The DC beer community got a loud shout-out from the staff at Maxim magazine, who named the nation’s capital “Beer City of the Year” in their most recent edition. While the rapid rate of growth of our local beer scene is undeniable, cities like Philadelphia, Asheville, Chicago, San Francisco and San Diego have long had a hold on such accolades. Maxim catapulted DC to the front of the pack and cited its bars, breweries, and “gray market” as the primary factors. Bars and breweries? Obviously. The “gray market”? It may be what sets us apart from other US markets, but it is certainly not what makes DC such a great beer city.

The structure by which beer is sold in this country was born out of the failure of Prohibition. To keep brewers distanced from their consumers, beer must be sold first to a distributor and then to a retailer. This simple principle, the three-tier system, operates from coast to coast with few exceptions. The “gray market” in DC is one of them, and it is created by a provision in DC’s legal code:

An importation permit shall authorize the licensee to import, transport, or cause to be imported or transported, alcoholic beverages into the District. An importation permit shall be issued to the licensee under a retailer’s license, class A, B, C, or D, and a pool buying agent if the Board is satisfied that the alcoholic beverages bearing the same brand or trade name are not obtainable by the licensee from a licensed manufacturer or wholesaler in the District in sufficient quantity to reasonably satisfy the immediate needs of the licensee and when the licensee has paid the appropriate taxes.

What this essentially means is that if you have a restaurant in DC and desire to carry an alcoholic product not adequately supplied by the three-tier system, then you can procure it yourself, provided you give you the District its share in the form of taxes. The origins of this provision as well as its age are unknown to this author, but more than likely it was not enacted with craft beer in mind. Regardless of the reason, restauranteurs in DC are exercising their right to bring in products never before seen in our market.

Continues after the jump.

Outside the District, none of this is legal. If a distributor doesn’t carry a product you want, there is little recourse. Historically, mega-breweries found ways to control local distributorships and kept other brands out of the market simply by not providing them. This was one of the major initial obstacles to the growth of craft beer, and the pioneers of the craft movement had to fight hard to make their product available to the consumer. Stone Brewing Company in San Diego and Two Brothers Brewing Company outside Chicago both were able to establish their own distributorships that championed not only their fine ales but those of their compatriots.

Times have changed and craft beer is becoming big money. While national sales of American light lagers are stagnant, craft beer is growing every year. It didn’t take long for distributors, old and new, to change course and start slinging the suds of the smaller guys. The DC gray market is fun, but its contribution to our beer community pales in comparison to that made by the wide array of craft beers sold everyday through our many distributors.

DC gets a lot of beer. Unlike some other markets with only a few distributors, we have nearly a dozen, and the best way for them to distance themselves from the pack is to pick-up more and more craft brands. DC is also an attractive market to brewers themselves who want their beer sold in the nation’s capital. Many of them are involved in beer politics and travel here frequently for meetings and conventions. When they come, they want to drink and support their beer, and many have established distribution in DC after visits. Schlafly beers are only available in a 200-mile radius from St. Louis, and of course in the District (Dan Kopman, co-founder of Schlafly, is the head lobbyist for the Brewers Association and visits often). Travel 40 miles up the road to Baltimore and you won’t find many of the brands common in our marketplace, like Bells and Founders. Take a moment to appreciate the vast number of beers you are exposed to in DC.

Flooding a market with a myriad of brews is one thing, but consumers actually drinking and supporting all of them is quite another. The best thing about beer in DC is the public’s willingness and desire to drink widely, try new products, and keep up on what is available. There is always an interest in what is new, whether it’s restaurants, bars, or beers, and DC residents follow social media all over the city for new experiences. Trying new things is cool these days, and it certainly is helping craft beer explode in this city. DC is also a geographically diverse community and sometimes it is as simple as people enjoying the beers of their home state. No matter the rationale, Washingtonians’ ability and willingness to support the myriad craft beer brands distributed here is the biggest asset to the DC beer community.

Gray market beers surely make up much less than 1% of DC craft beer sales and are really more of a novelty than anything else. New, small breweries like Hill Farmstead in Vermont or Oxbow in Maine find that the gray market allows them to access new consumers from time to time without dealing with sometimes prohibitive distributor contracts, and both have sent beer when they have the ability to do so. Bigger breweries that simply do not have the excess capacity to adequately supply the DC market will occasionally send beer through the gray market to support events their brewers are holding at our fine beer establishments. And finally, restauranteurs who wish to stand out in a sea of great beer will take importation upon themselves to do something different, new, and fun. (Guilty as charged).

DC’s gray market for beer is a peculiar benefit of drinking in the District, and perhaps it is what distances us just a bit from other great beer cities like Philadelphia, but it certainly is not what makes DC such a great place to drink well. The national praise is awesome, but let’s appreciate what we really have: a blossoming community eagerly supporting an impressive array of craft beers.

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