Until last year, state law barred alcoholic beverage makers and wholesalers from using social media to promote their products at the retailer level, even though many of them did anyway.
That changed in August 2016, when a revision to the law allowed companies to use unpaid marketing for on-premises brand promotions or tastings, sharing price information and communicating when retailers made their products available.
The new law paved the way for local breweries to better communicate with customers and fans, according to industry sources contacted for this report, who said the changes helped level the playing field for small producers competing against multinational corporations with massive marketing budgets.
“For any of the little guys, we really don’t have advertising budgets, so we rely on guerilla marketing and social media marketing as major forms of advertising,” said David Ringler, owner and “director of happiness” at Cedar Springs Brewing Co. LLC. “We had to speak in generalities before. Now, we can let our fans know where they can taste our beer.”
Known for its Küsterer brand of German-style beers, Cedar Springs Brewing self-distributes its draft beers to a handful of bars and restaurants across West Michigan. To market its products, the company uses organic unpaid social media on all major platforms (Facebook, Twitter, and Instagram), email lists to club members and the general public, and public speaking engagements — all low-cost methods for engaging customers.
While acknowledging the company has limited distribution — about a third of its beers go into the market — Ringler said Cedar Springs benefits from being able to share information about retailers now that such communication is allowed by law.
“We post literally several times per day from different angles and platforms — which is a practice shared by many,” Ringler said. “The ability to include our retailing partners helps us jointly spread the message regarding our unique, Bavarian-style products and attracts guests to our retailing partners by utilizing both of our audiences without using any non-public resources that wouldn’t be available to all.”
While Grand Rapids-based Craft Beer Cellar opened seven months ago at 400 Ionia Ave. SW and has only existed under the changed law, co-owner Brian Beaucher sees how the updates benefit smaller local breweries.
For example, Craft Beer Cellar is one of a handful of retailers that sells beers made by Speciation Artisan Ales LLC of Comstock Park, which lists the store on its website and uses Facebook to highlight bottle releases.
“Most likely, the small breweries take advantage (of the law),” Beaucher said. “Speciation takes advantage of it. You can’t get their beer at many places anywhere, and we’ve had people say, ‘We saw you on Speciation’s website, and that’s why I am here.’”
Craft Beer Cellar hosts in-store tastings at least once a week and offers educational events on Tuesdays that often feature discussions from guest brewers about their products. A sold-out Nov. 7 tasting featuring Speciation was cross-promoted via social media.
According to Grand Rapids-based attorney Joe Infante, who chairs the alcoholic beverage regulation team at Miller Canfield Paddock & Stone PLC, the law applies to all alcohol manufacturers, including breweries, distilleries and wineries, which incorporates makers of mead and hard cider.
“I think it has really helped breweries, not so much that they are doing more with social media, but that they are doing the things they always did without fear of Michigan Liquor Control Commission coming after them for a violation,” Infante said. “One of the things they still need to watch out for is enforcement by MLCC because not everyone there shares the same opinion on what is allowed and what is not allowed.”
David Harns, public information officer for the Department of Licensing and Regulatory Affairs, which oversees the MLCC, said Michigan law still “prohibits the three tiers of the alcohol industry from aiding and assisting each other by providing gifts, loans of money or property of any description, or any ‘other valuable thing.’”
Suppliers, wholesalers and retailers also cannot partake in cooperative advertising in which the names or logos of companies in different tiers of the alcoholic beverage distribution scheme appear together.
“Licensees could be subject to MLCC violations for giving or accepting any aid and assistance and for advertising cooperatively except as allowed under (state law),” Harns said.
The exceptions include using free social media for marketing as spelled out in the law that went into effect last year, Harns said.
REMOVING UNINTENDED CONSEQUENCES
For Scott Graham, the executive director of the Michigan Brewers Guild, the change in the social media law demonstrated the willingness of lawmakers to update regulations to how companies conduct business in the modern era. When the original laws were enacted, the internet and social media didn’t exist.
“Fast forward to today, and you can put a tap takeover on social media. It’s fixing an unintended consequence,” Graham said. “I think (the law) was definitely hindering them before.”
Still, Graham described the situation as “a touchy issue” since “many brewers weren’t paying attention to (the old law) anyways.”
“It wasn’t a law that revolutionized the way people marketed — it cleaned things up. What brewery didn’t post what they are doing on social media? I think it just cleaned up an unintended consequence,” he said. “If I am distributing my beer, of course I am active on social media, of course you’re talking about things you are doing.”
At Cedar Springs Brewing, Ringler thinks the ability to use social media or guerilla marketing has helped smaller companies compete against macro-brewers like Anheuser-Busch, MillerCoors and Heineken that have massive advertising budgets.
“I think the point of the measure was to allow non-paid conversations to occur, but still have some safeguards in place to prevent large players from drowning out the smaller voices with marketing dollars via paid ads,” he said. “It’s common sense that we would be able to market our stuff. It tends to level the playing field for small brewers and help them be more competitive in the marketplace.”
Graham added that it’s just natural for brewers to want to share information about where their products are available, which the law now allows.
“If you’re not doing this, you’re missing a basic opportunity to market yourself,” he said.