Brewers' Association gathers in Baltimore.

The Brewers' Association of America held its 59th annual convention in Baltimore, Maryland last week. BAA president Daniel Bradford brought together a sometimes esoteric but successful program. Speakers included off-beat personalities like Ben Cohen, founder of Ben & Jerry's Ice Cream, and Chris Martin, president of C.F. Martin Guitar. Of course, there were also numerous beer industry experts on the docket, including Marc Sorini, general counsel of the BAA; e-commerce consultant Harry Schuhmacher and Robert Weinberg of the Office of R. S. Weinberg.

This year's event was one of the most ambitious BAA meetings in years, with events spread over four days. Although some complained at the dose schduling proximity to the Great American Beer Festival (held later in the same week) America's small brewers turned out in force for the convention. The enthusiasm and dynamism on display at the convention only served to confirm the return of the BAA to a position of importance in representing of the U.S. brewing industry. This renaissance was ably begun by former directors Henry King and Gary Galanis, and has continued under Daniel Bradford.

In Association business, Mr. Bradford announced the departure of three brewers from the association board. F.X. Matt of the Matt Brewing Co., George Hancock of Pyramid Ales and John McDonald of the Boulevard Brewing Co. all announced their departure from the board, but all three said they would continue on as consultants to the board.

The BAA board now includes Fritz Maytag of the Anchor Brewing Co.; John Hall of the Goose Island Brewing Co.; Ted Marti of the August Schell Brewing Co.; Fred Bowman of the Portland Brewing Co.; Steve Hindy of the Brooklyn Brewing Co.; Gary Fish of the Deschutes Brewery; Ken Grossman of Sierra Nevada; Irene Firmat of the Full Sail Brewing Co.; and Mark Stutrud of the Summit Brewing Co.

Chris Martin of the C.F. Martin Guitar Co. was perhaps the most praised speaker of the event. BAA president Daniel Bradford had heard him speaking on National Public Radio, and was so impressed that he invited him to address the BAA. His luncheon address went an hour over schedule, as brewers peppered him with questions.

Jeff Becker, president of the Beer Institute, and David Rehr, president of the National Beer Wholesalers Association, both took time to travel up from Washington, D.C., where they have been avidly lobbying against the inclusion of .08 blood alcohol level mandates in a larger bill. Both rushed back to the District of Columbia at the conclusion of their speeches to lend their weight to the battle against .08.

To conclude the first general session, Dr. Robert Weinberg gave his annual statistical presentation. "The malt beverage system as it exists today cannot move smaller independent brands through the market efficiently," Dr. Weinberg asserted. "The internal economies of the distribution system that has evolved since the end of Prohibition reflects the scale economies associated with the evolution of the megabrands of the first-tier brewers. Throughout the years, economies of scale have made it increasingly difficult for smaller brewers to achieve a broad distribution in the market. Therefore it is more and more important that the conventional wisdom is challenged and that the distribution system be modified to create an efficient sub-system capable of handling smaller, independent brands efficiently. The inertia, which makes it difficult to change the existing system is a prime example of the QWERTY problem."

Mr. Weinberg refers to the first six letters on a standard typewriter keyboard: Q-W-E-R-T-Y. Although more efficient typewriter keyboards have been designed in the 127 years since QWERTY keyboards made their debut, the physical investment in keyboards and the intellectual investment in people familiar with typing on them has prevented the adoption of a more efficient keyboard. The U.S. Navy conducted a study during World War II, and concluded that typists using the Dvorak Simplified Keyboard (DSK) would amortize the costs of switching within the first ten days, by virtue of the 20-40% increased typing speed offered by the DSK. "QWERTY has become a metaphor to describe the failure of the economy to adapt to an opportunity made available as a result of a technological or structural change," Mr. Weinberg noted.

Mr. Weinberg said that this metaphor is an apt one for the beer industry. "Given an acceptable quality product and the ability to produce this product in the quantities required for meeting demand, the only major obstacle to success is the inability of the present three-tier distribution system to accommodate many relatively small transactions in the shadow of relatively few large transactions," Dr. Weinberg posited. "Any third tier brewer who wants to operate beyond a narrow geographic area which can be serviced by some kind of "city delivery" system is faced with the problem of overcoming many difficult problems associated with the economies of scale in distribution."

Editor's Note: We will include a full presentation of Mr. Weinberg's address in a future magazine issue, complete with associated charts.)

During the second general session, noted e-commerce consultant Harry Schuhmacher held forth for over an hour on the various e-commerce models now arising. Mr. Schuhmacher explicated the various B2C and B2B models and explained their costs and benefits. At the close of Mr. Schuhmacher's presentation, one attendee was heard to remark, "This may be the most important information that has been provided at this conference." (Editor's Note: We plan full coverage of Mr. Schuhmacher's presentation in a coming issue).

During the lunch break of the second general session, Ben Cohen, cofounder of Ben & Jerry's, used his time at the mike to encourage socially-responsible business practices and to deplore large U.S. expenditures on military hardware. Mr. Cohen brought several props to the stage, including a large stack of Oreo cookies. He proceeded to build a tall stack of Oreos, with each cookie intended to represent $10 billion of U.S. spending on arms. He then compared U.S. spending on arms with that of Russia, China and the world's rogue states, noting that our spending surpasses those of our potential enemies by a wide margin. Mr. Cohen asserted that a modest transfer of funding from military programs would allow the U.S. to dramatically increase educational funding and fully fund the Head Start program.

Mr. Cohen then brought ajar with 10,000 BBs to the podium. He asked the audience to think of each BB as symbolizing one Hiroshima-size nuclear weapon. He then poured the BBs into a large metal canister. This took some time. Mr. Cohen said that this demonstration was intended to show that the United States possesses many nuclear weapons, far too many in Mr. Cohen's opinion. While Mr. Cohen was applauded for his effective presentation, some in the audience were bemused by the chosen subject.

The afternoon concluded with a panel discussion on managing growth. Panelists included Kim Jordan of the New Belgium Brewing Co.; Ken Grossman of the Sierra Nevada Brewing Co.; Rich Doyle of the Mass. Bay Brewing Co. and Gary Fish of the Deschutes Brewery. We will publish a full transcript of this panel discussion in an upcoming issue.

The convention concluded on the evening of October 3rd with the annual Brewer's Banquet and Award ceremony. Results of the awards ceremony were not available at press-time.