Awash in surplus

Bill Taylor

It seems to me that the results of responses to the current virus crisis vary considerably.

There are well known already existing shortages in some areas with even more, such as in the meat supply, looming on the horizon. On the other hand, there is an overabundance of gasoline as folks are staying home and thus driving very little. As a result we are seeing the lowest prices at the pump we have enjoyed for many years. Yep, the old supply and demand principle of economics has come into play with a vengeance.

Bad for the oil companies, but good for us consumers. There is another huge surplus of a common commodity as a result of the restrictions imposed on us in response to the virus crisis. It’s beer! Closing bars, restaurants, canceling sports events and traditional beer-drinking festivities such as Saint Patrick’s Day has left beer companies with millions of gallons of beer with no one to drink them. Unfortunately, beer, unlike most wines and distilled alcoholic beverages, doesn’t “age” well. In fact, “stale” beer is unpalatable to say the least. Note: draft beer typically stays “fresh” for two to six months but that includes time in the breweries, warehouses, and distributors where stockpiles are rapidly aging, as well as the time in already closed bars, restaurants, and such.

So what is to be done with all this surplus beer? One answer might be to allow the “supply and demand” principle to kick in and lower the price of beer. After all, we still have the same number of beer consumers who might well drink their usual quantity of their favorite beverage if it were available at a reduced price. Unfortunately, this partial solution immediately encounters major difficulties. Ever notice signs that read something like, “Beer sold at state minimum price” or words to that effect? Well that’s because our state has regulations on how much beer can be sold for. The Ohio Administrative Code 4301:1-1-72 “Minimum markup on beer” “ … rule reflects the policy and intent of the commission to maintain effective control over the sale and distribution of beer … and to prevent abuses caused by the disorderly and unregulated sale of beer.”

It imposes “mandatory price markups [to] prevent aggressive sales practices that improperly stimulate purchase and consumption … discourage(s) intemperate, consumption of alcoholic beverages, eliminate(s) discriminatory sales practices that threaten the survival of wholesale distributors and retail permit holders, preserve(s) orderly competition, ensure(s) fair prices over the long term, [and] assures adequate consumer choice” So how is this done? Well it’s a bit complicated because the mandatory price markups are governed by three separate rules.

Here’s the gist of them: To begin with, manufacturers — the breweries — have to mark up the price 25 percent when they sell to a customer. Then, the second rule decrees a 25 percent markup for when a customer buys directly from a distributor. Care to guess the third rule? You’re right. The retail stores have to add a markup of 25 percent when customers buy beer from them. Complicated, especially when the base price for each “mark-up” isn’t clear. What is clear is that we likely won’t see any “markdown” beer prices with this scheme.

OK, back to the crisis of surplus suds.

Excess and overage beer can’t simply be poured down drains, into watercourses or other bodies of water. Nope, environmental concerns prohibit such immense quantities of brew from being dumped into our water supply — although some brewers are experimenting with ways to “treat’ beer to make it acceptable for release into waterways. Other brewers are reportedly working to produce hand sanitizers. There’s even more to this dilemma. The containers, such as kegs, in which this beer is stored are valuable in themselves — estimated at over $100 each. With the number of these kegs in the millions, that’s a lot of money tied up. Well, things may straighten out in time for the summer beer drinking season even if it is shortened. But I doubt if we’ll ever catch up despite the determined efforts of dedicated beer drinkers to help relieve the crisis.

You know, I still kinda think we might come up with something like a national “beer bash” weekend in which the price of beer would be set at a giveaway level so the beer industry could reduce its inventory while emptying and retrieving its valuable kegs. After all, we would be doing our patriotic duty in helping a major industry weather this storm and having a blast while doing so.

At least that’s how it seems to me.

Bill Taylor

Bill Taylor, a regular contributing columnist and local area resident, may be contacted at [email protected]

Bill Taylor, a regular contributing columnist and local area resident, may be contacted at [email protected]