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The view from the hill.

The View From The Hill

Jack Lewis, the NBWA's vice-president for legislative affairs, offers a perspective from Washington, D.C. Modern Brewery Age recently spoke with Jack Lewis, vice president--legislative affairs for the National Beer Wholesalers Association. Lewis serves as point man for NBWA's lobbying efforts in Washington, D.C. As such, he was at the forefront in the recent tax battle. Before joining the NBWA four years ago, Lewis had already served on Capitol Hill for 22 years, including a 14-year stint as legislative director for Senator Tom Eagleton (D-Missouri).

MBA: Mr. Lewis, how would you define your responsibilities with the NBWA? JL: I'd say it's a mixture of lobbying and public relations. I don't draw lines between the two because I think they both work to the same end. Public relations, in my view, is a way of wholesaling an attitude or an idea. A change in attitude can be of tremendous assistance to me when I walk into a Senate office as it is. Too many times, we, and other representatives of the alcohol beverage industry, walk into those offices, and we can feel the resistance. Too often, there is not a great willingness to work with us openly. That's not just bothersome, it's damaging. It makes us easy targets for a whole range of punitive bills and tax increases.

That has to change, and there's only one way I can see to change it. That is through a far better, more intelligent, more calculated PR program. We've got to get our message out and counter the poisonous message the other side is giving our legislators.

My main job, of course, is to see that our legislative program is addressed in the most effective way we can, whatever it takes to do that, whether it's PAC contributions, whether it's one-on-one lobbying, whether it's working with others in the industry. That might be the state execs, the Beer Institute, or the Licensed Beverage Information Council. We are all aiming at the same audience, with the same objective in mind.

MBA: In retrospect, do you view the tax battle as a holding action or as a clear victory for the industry? JL: I think we're lucky to have escaped equalization--damn lucky. That battle told me more than anything else I've experienced what problems this industry has on the PR front, thanks to the efforts of some strident anti-alcohol types. That makes it difficult to communicate our message and get things done. I hate to say that, because we had some good stalwart representatives and senators who stood up for our interests, but they are few and far between. To give you one example, the speaker at a breakfast we're giving soon is Jim Sasser, chairman of the Senate budget committee. He is a strong friend of the industry, but unfortunately there are not a whole lot in this Congress. People who not only stood up for us, but more important, stood up for our membership--the small businessmen of this industry.

Without a guy like Sasser, we would have been in very poor shape. We don't have enough friends like that. We've got too many who tell us |Gee, we'd like to help, but you know, uh, uh uh....' I hear that a lot, and that means we've got some work to do.

I think most people in this industry got the same message from this tax fight. We're all feeling, |phew, this time we got away with it, but boy it could have been bloody, and we better do something.'

I think there is a realization that this negative perception problem is not going to go away unless we do something about it. This session, we're working on a couple of projects designed to get our message through, the message that we're responsible corporate citizens.

The negative attitude about our industry is directly related to the broader question of access. Recently, Ron Sarasin was instrumental in getting us an invitation to meet with Jim Curry, the new administrator of the National Highway Traffic and Safety Administration (NHTSA). We went in to speak with Curry about his priorities on drunk driving and safe driving initiatives, and discuss with him how our industry is prepared to help him meet his goal. He wants a 10-percent reduction in drunk driving deaths within the next two years. He was very straightforward. He said, |Here's what I'm proposing. What can you do to help me?' Curry told us that some people in his department were opposed to his even speaking with us. Nonetheless, he told us, |I'll take help from anyone who's willing to give it, because it helps me meet my objective.' That's not the kind of attitude we've seen before.

Sarasin, to his great credit, helped get the door at NHTSA open. We have some potential friends in the administration for the first time in my four years here.

You remember our last surgeon general?

MBA: Mr. Koop? JL: Yes, Mr. Koop. During his tenure, anyone could come in and speak with him, just as long as they didn't have anything to do with alcohol. That hasn't changed. We're still treated as a pariah. At the Department of Education, we get the same treatment. The result is that there are a lot of people considering iniatives or regulations that affect this industry in a vital way, and we're asked to stand out in the hall and read about it later. That is another measure of the problem we have in our industry with our image.

What I'm saying is that you can go at issues one at a time, as we do, but there's this broader image question. With the industry's image as it is, we can't get the access we need to decision-makers. As a result, damaging iniatives are on their way to becoming legislation before we can do anything about it.

MBA: Is the NBWA large enough to have an impact in Washington? JL: Yes, but as one of the little guys in this industry, we have to use all the resources we have to push in there and hope to carry the rest of the industry with us. I was delighted to see at that NHTSA meeting, everybody in the industry, and I don't mean just the beer industry, the whole alcohol beverage industry--whiskey, wine, and even the National Restaurant Association. Everyone was represented. We opened the door, and in they walked. That's great, and it's constructive.

Our size can also be a problem. We can launch a PR program, but about all we can do with our budget is get it started. To sustain it and get the maximum use out of it we need friendly help. Ingenuity will carry us so far, but if we're going to do it right, it takes bucks.

Fortunately, even though we're small we have certain advantages over the big guys. We're not as bound up in the corporate decision making processes. We can more easily undertake iniatives that serve everybody, and if they serve everybody, we get helped too.

MBA: The industry seemed somewhat more unified in fighting the excise tax threat than in years past. Would you agree? JL: Yes. And although we had many, many meetings, we never really assigned different roles to the different groups involved. It never got down to |you do that, and we'll do this...' but it sort of worked that way. Other groups knew what we were doing, and we knew what they were doing, and we all worked together. An ad-hoc coalition was put together, the Coalition Against Regressive Taxation (CART). CART involved groups beyond the alcohol industry, other industries that were also subject to excise tax increases. But we also worked together as a beer industry. |You go see X and I'll see Y, and we'll compare notes.' Even when it came to standing outside the finance committee door, everything clicked. We said, |No sense in having five of us stand here, one of us will stay and the rest of us wil fan out.'

MBA: Was that the first time you'd seen that level of unity? JL: Absolutely. There was a dire threat and we needed everything we could put together and it just worked, and it demonstrated how much we can do together that we can't do alone. I mean it's stupid to allow rivalries or some sense we've got to have credit to interfere. There is still that attitude on the part of some people, but on the tax matter it was overcome by the sense of a common threat. It's like the coalition in the Persian Gulf. Who would ever have thought that we'd be standing alongside the Syrians and the French?

MBA: Would you foresee the creation of a large umbrella lobbying organization in this industry? JL: Probably not. Underneath all this there's a fragile kind of commonality--underneath there are very powerful competitive pressures, and market pressures. That has always been a problem with the brewers, and with beer versus distilled spirits. Sometimes, it's even a problem within our organization. Those are normal human elements. The best you can hope to do is harness them for a broader purpose for awhile.

MBA: Have you examined the new budget proposal? JL: Yes, we have. Ron Sarasin was down for a White House briefing, he's been through it and he's got a pretty good feel for what affects us. Behind each of the budget proposals are detailed plans. The proposal gives us an overview and allows us to pick out key issues, but we've got to get into the details to really understand what is going down, and what's behind all those innocent words.

MBA: Based on your preliminary examination, what issues are likely to impact the industry? JL: Well, there is the special occupational tax (SOT). The proposal last year was to repeal the tax for retailers, and make up the lost revenue by increasing the tax on wholesalers and suppliers. They would have made up the revenue from the repeal by distributing the burden among the wholesalers and suppliers. The practical effect would be to increase the wholesalers tax by $500 per license site, per year to $19,900. We spent a lot of time fighting that last year and kept it from happening.

This year, the administration has retreated from the proposal and is now suggesting an alternative that would require beer wholesalers to determine and get physical evidence that a retailer has in fact paid his SOT. The problem is that the retailers often don't pay them. They've only got 60 percent compliance, and it's been that way for years.

According to the BATF, they have difficulty with compliance because they say they don't know who the retailers are. Well, that really is stupid. Every retailer in this country requires a license to sell alcoholic beverages, and BATF could certainly work out an agreement with the states to get lists of the licensees and then go after them. But that's too easy. The bureaucratic mind works differently. As expressed in this budget, they want beer wholesalers to be liable under law for selling beer to any retailer who doesn't present evidence that he's paid his SOT at time of delivery. They're trying to make us unpaid tax collecters. It's ridiculous.

Let's say an A-B dealer in Georgia delivered to some market, and they didn't have evidence they'd paid the SOT. So he says, |Well, you don't have the proper evidence so I'm taking my trucks back.' That store will get its beer from someone, probably some transshipper. So guess who gets stuck with the liability under this law. The guy who refused to sell the beer.

It's a stupid proposal, but of course it's less injurious and thus less pressing for us than some of the measures in last year's budget. Other than that, there was nothing said in this budget about excise taxes, but it was noted that there will be a supplemental budget coming down to pay for the costs of the Persian Gulf operation. One of the demands on the Congress is to come up with the wherewithal to pay for that operation, and that would be our moment of maximum danger.

We also have the General Accounting Office (GAO) and other groups pushing for an equalization tax for non-revenue purposes. Two arguments here. In September of 1990 the GAO did a report recommending that the tax on alcohol be equalized on the basis of alcohol content for administrative and economic efficiency reasons.

MBA: What does that mean? JL: Well, it seemsanytime you have a complex formula written into law, the accountants think it's wrong. It's really just a matter of form. They're not worried about fairness when they talk about having a higher tax on beer or wine. Only an economist could explain the mindset that produces that kind of rationale. Nevertheless, it has its effect. It tends to make any proposal for equalization look more innocent, whatever its real motivation. The second force pushing equalization for non-revenue purposes is social. They are saying that the higher the price of any alcoholic beverage, beer especially, the better it is for society. They believe that will ultimately result in fewer highway deaths, fewer cases of liver cirrhosis, etc.

Third, there are certain well-known competitive pressures between distillers and brewers, with even some in Congress maintaining that a drink is a drink and therefore it should be taxed the same.

When you put the three together, and add to that the unquestionable need for revenue, whether it's to pay for the Persian Gulf or pay for the profligacies of past Congresses, it doesn't really matter. That's a tempting package for any politician. It boils down to four reasons to pass a measure that does one thing, gives the Congress more money to spend.

We're very concerned, and we're taking nothing for granted. Happily, the brewers feel the same way about this situation. They know that even without any plans in the budget proposal, we're easy to target. There are too many hungry politicians out there for us to do anything but keep a high anxiety level.

MBA: What will the structure for the upcoming NBWA Legislative Conference consist of? JL: I don't know if you've been to one of the conferences, but this is how it works. We bring our wholesalers, or however many we can get to come to Washington. We give everybody a good sound briefing on the issues that we think are most pressing, and get them out to visit with their Congressmen and make our pitch. We give them some coaching and some background material. We've been doing this about three years, and each year we've had better success than the previous year. For an even longer period of time, Anheuser-Busch has been doing its own legislative conference, with their very select group of wholesalers. This year, we've agreed to join hands, not just with A-B, but with all the brewers--Miller, Coors, Stroh and Heileman. The NBWA will serve as the coordinator and host organization. We expect to get as many as 500 beer wholesalers in town.

MBA: How many have you had in previous years? JL: We've never had over 150. This year, we're going to give everyone expanded briefing sessions. We're going to hose them down with issue information, so when they walk in they'll be prepared for just about anything that may be asked of them. They'll be prepared to give short, concise, and effective presentations as to why any given issue is important. The first time out, unless they've been politically active back home, there's a certain shyness about talking to a senator... but once you do it, and see that they're nothing more than ordinary people, it gets easier. Every time a wholesaler comes back they're more confident, better at going in, more enthusiastic, because they know what will happen. This approach has a lot of potential.

MBA: What issues are you going to be pushing this time? JL: We've had discussions with the brewers, and we've generally agreed that there will be three main issues we'd like wholesalers to lobby on. Taxes will be clearly number one, I think we all agree on that. One is the excise tax issue, and then anything that might develop on the SOT. Another issue will probably be the bottle bill, because there's some heavy pressure up here for a national bottle bill. The third will be against the Gore-Kennedy measure, the bill designed to impede advertising.

MBA: What is the status of Gore-Kennedy? JL: I'm sure they're going to put it in. And, in my opinion, it's something we have to take seriously. That's because it taps into what that shrill crowd of neo-prohibitionists have been saying about our supposed evil ways. Rhetoric that we haven't effectively answered. So we've got a fight on our hands. Part of our chances for success will be in demonstrating we're a responsible industry.

MBA: Specifically? JL: Well, some of it has to do with advertising. Some of it has to do with showing some sensitivity, with certain activities that we as an industry engage in, like spring-break promotions. But mostly it has to do with a pre-emptive strategy. Because this is a big one. If you want to bring it down to one bill that demonstrates the need for a pre-emptive strategy of some sort, it's Gore-Kennedy. There's a lot of pressure building up behind it.

There was a time when the industry could afford a kind of stone wall attitude, but that has changed dramatically, and it's changing more every day.

We've got to change our tactics to keep up and I hope to hell that we don't wait as long as the tobacco industry did, because they're close to being terminal. The only thing that will save tobacco at this point is that they're so beat-up and wrecked now. They're like Iraq, our bombers have hit them so many times that they're running out of targets, and that's a hell of a way to get the bombers to go away.

MBA: In the worst case scenario, do you see the alcohol industry ending up in the same boat? JL: Well, we've got people like Sullivan (Secretary of Health & Human Services Louis Sullivan), and this guy would have our billboards down. That could be dangerous. He's got a pretty strong case he wants to make about tobacco, but as I said, tobacco is starting to fall apart as an issue. They've done so much damage to that industry. Even the Tobacco Institute has blinked for the first time in my memory. They've got a self-financed program to actively discourage young people from taking up smoking. The key point here is that as tobacco becomes less of a tempting target, they'll look to alcohol. I was told by an old friend that he was at lunch with a guy from the Tobacco Institute, and the guy was beside himself with joy, and he said |I heard some news today, best thing I've heard in 20 years. Mike Pertschuk and his organization, the Advocacy Institute, has decided to cut down on their efforts against the tobacco industry and start going after alcohol. That's good news for tobacco, but you guys in alcohol better watch your ass.' Mike is a follower of Ralph Nader, he used to head the Federal Trade Commissionm, now he runs this advocacy group. He makes it his business to teach advocates on the other side how to be effective communicators with legislators and with the press, how to put programs together. We're in his cross-hairs. Given what I've told you earlier, the image problem we have on the Hill, you add to that a very smart, well-financed, resourceful group like the Advocacy Institute, put them on your trail...look out, because we could be headed down tobacco road.

MBA: In sum, how must the industry respond? JL: We've got to build a well-trained, well-versed nucleus of people, starting to work on legislators at the grass-roots level, and working up to Washington. Given our small numbers we can't hope to prevail by force of numbers like the NRA. They've got million or more members, we don't.

We've got to make up for our small size with quality and intensity of activity. That's more expensive, more difficult to pull off, but it has to be done. We've got to, so that even if we get beat, we won't have to look back with regret and say, |Damn, we didn't do anything, we just didn't see it coming.' Whether we succeed or not, I don't know. Their guys are pretty good. But we've got a good case to make, we just haven't made it the right way yet.

I guess that's my way of saying that lobbying doesn't start or end here in Washington. It's a full-time occupation, it's broad, it's local--it must be an all-consuming effort by this industry. The impression seems to be that you can just hire a lobbyist without really thinking about what caused events to come to a pass.

It's more complicated than that, and our response has to be broader. It's kind of a mosaic really, and we haven't got all the pieces quite yet. But we're getting there, and I'm encouraged by the things I've seen. We've got a great deal of cooperation with the state directors, and if we all keep pulling together there's a great deal we can accomplish.

PHOTO : Jack Lewis in his Washington, D.C. office
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Title Annotation:1990 Statistical Study; interview with National Beer Wholesaler's Association's vice-president Jack Lewis regarding Capitol Hill's view of the brewing industry
Publication:Modern Brewery Age
Article Type:interview
Date:Mar 11, 1991
Previous Article:Chicago's first Irish ale debuts during St. Patrick's Day.
Next Article:Wholesaler focus.

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