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August 2018

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« The Fight Begins | Main | Year-end planning - 1 »

The Fight Begins - Continued

I hope the powers that be in the beer distribution industry are busy trying to get ahead of the on-going attack… a concerted effort for a massive federal tax increase on beer and wine, the dreaded equalization.  I hope like heck that they are crafting a strategy to take control of the message rather than simply responding to an attack(s).

If our only strategy is to respond… the game is already over.  Strategy is by its very nature a long-term plan.  It is the source of almost all business (or war) success or failure.  He who has the best strategy, and executes it, is almost certain to win.  Have you ever competed against a good chess player?  If you are not of a similar caliber, the game is generally determined in the first move or two.  You might not be aware of this fact until the final blow falls, but it was “baked in the cake” right from the start.  Does the same fortune await us?  Seems to me we’ve been taking steps backwards for some time now… almost my entire adult life!  Too often we mistakenly believe we’re “winning” just because there is a lull in the fighting.  Just because no frontal assaults are occurring does not mean the war is over or that we are doing anything other than treading water.  Why don’t we attempt to move the football in our direction rather than simply struggle to keep it where it presently is?! 

Are we going to respond to this falsehood that alcohol taxes are too low since they don’t cover the direct costs of the product’s consumption?  Where are our writers and editorial boards who will go into detail about how the entire DUI industry… and yes, it has become its own self-sustaining industry… is actually a significant money maker?  Road side sobriety check-points don’t cost money, they make money!  That’s the reason they continue to exist.  They are a proven poor method to get drunk drivers off the road but they are also a proven money maker.  They have nothing to do with drunk driving.

MADD is a quasi-governmental agency.  I must have missed the legislative/congressional action which created this arm of the government.  Why don’t we have our own MADD-like organization?  No one in this industry is FOR drunk driving… we have to stop responding and take control.

Indexing the tax to inflation is also good strategy from their perspective.  It might just be a “give-away” negotiating wish, but it will cause us to spend a lot of valuable message time addressing it.  I can hear the politicians now; sure we equalized the tax rate… that’s only fair.  But you got your’s too since we didn’t index the tax to inflation.  See, everybody got something they wanted!

As an astute wholesaler wrote in a recent email:


Sure the rate has not increased, but the actual tax dollars raised have increased. Our excise tax paid to the state has risen 119% since 1992, with the same tax rate and no acquisitions. Not sure what it is nationally, but have to assume dollars have increased as well.

Hopefully the powers that be can make the same argument.

The “fairness” strategy on their part is genius.  A word of warning about the concept of fairness… I have written about it here under the title “That’s not fair and other “irrational” behavior”.  If you doubt the power of the concept of fairness you need to read this post.  The notion of fairness is hardwired in each of us… it is incredibly powerful and once set, extremely difficult to change.

If we lose on the fairness issue, it will not matter what facts we might have on our side.

If we lose on the fairness issue, we will lose.

Capisce?  WE must control the fairness issue.  If they get this emotion on their side, we might as well be talking to the wind… they will not hear what we say.

Don’t blame me… I saw it coming and raised the warning.  

And a final word for those who get upset by my questioning some of the tactics (stupidity?) used to defend questionable state laws.   If I thought like you, I’d secretly be supporting a massive tax increase on beer, and every other legislative and judicial assault that comes along.  If these things passed it would cause great turmoil in the beer industry… and turmoil and bad times are good times for consultants.  But I don’t take this narrow, short-term view where I place my short-term interests above all else.  I don’t say “screw all the rest of them”, it’s good for me.  Instead I loudly and proudly raise the warning, even though this probably hurts my consulting business.  Instead I state what a lot of wholesalers think.  Why do I do this?  Because my beliefs are based on rock solid principles and the various assaults on this industry are fundamentally assaults on these principles.  My positions ultimately have nothing to do with my business… perhaps I’m naïve but I hold them because they are right, not because they meet some short-term business desire.  Can those who attack me say the same?

If you need guidance on these subjects, here’s at least one general rule… if you have to demonize your own products to win; you’re probably on the wrong side. 


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