You can learn a lot from a simple margarita… because when you take one home from a restaurant in America, you’re participating in a change that was hundreds of years in the making. In this episode, we dig deep into how cocktails-to-go became suddenly legal (and why they were once illegal in the first place). It’s a surprisingly complex story that reveals our weird history with alcohol, and how the smallest shifts can lead to unexpectedly massive changes.
Jason Feifer: This is Build for Tomorrow, a podcast about the things from our past that shaped us, and what it takes for us to shape the future. I'm Jason Feifer. Like most people around the world, I had very little to do on New Year's Eve of the year 2020, there was nowhere to go, we couldn't invite anyone over. So the plan was to just have a quiet evening with my family and then go to bed before midnight, because what's even the point anymore. Then I thought, "At the very least, I should have something special to drink tonight, I should get a cocktail."
So around 8:00 PM, I went online and ordered a Manhattan from a nearby restaurant and then drove over to pick it up. They checked my ID, handed the drink to me in a plastic bottle and I got back in the car and drove home. Nice and simple. But as I poured this drink into a fancy little cocktail glass at home, it occurred to me, this was actually the perfect way to end the year 2020. Because I couldn't have done any of that at the beginning of 2020. At the start of the year, everything I did was illegal basically everywhere in America.
Ordering a cocktail online, illegal, taking a cocktail out of a restaurant, illegal, driving home with it in my car, illegal. And now suddenly in Colorado where I am, and as well as in the majority of states around America, it is just normal business. It is amazing how fast things can change. So as I sat there drinking my New Year's Eve newly legal Manhattan, I got to wondering, what actually went into my ability to drink this? I know this simple answer. I'm sure you know it too. When restaurants were forced to close during the pandemic, many states made to-go cocktails legal as a way of helping these businesses thrive.
But what I didn't know was, well, to start, why was it illegal in the first place? And who pushed for this particular change instead of ... I don't know, some other change? And what happened as a result? And were there people who were once like, "I am the law around here, and I forbid to-go cocktails because they will be the death of society." And if so, what do those people have to say for themselves and now when cocktails to-go are here, and everything is fine? So once the world got passed its very unexciting New Year's Eve, I started making some calls.
My first one was to the National Restaurant Association, the industry group that represents restaurants big and small across the country.
Mike Watley: In my eight years at the Restaurant Association, I've never seen something poll as popular as this.
Jason Feifer: This is Mike Watley, the Restaurant Association's Vice President of State Affairs and Grassroots activism. He says that they have done a lot of polling about to-go cocktails, since it became legal.
Mike Watley: When you ask consumers, 21 plus consumers, "Do you want to make cocktails to-go permanent in your state?" It ranges between 75 and 85% in favor, it's just crazy. And it cuts against all demographics in terms of who supports it.
Jason Feifer: Given that, I said, "Mike, that must feel really good, because changing this law must have been on your agenda for a long time." And he said, "Oh, no." This was never on the top of their priority list.
Mike Watley: Have you talked to the Distilled Spirits Council at all?
Jason Feifer: Not yet. No.
Mike Watley: They're really our partner on this. While we have many issues, this one's important. It's their number one issue right now.
Jason Feifer: So okay, I called up the Distilled Spirits Council that is technically the Distilled Spirits Council of the United States or DISCUS, which is the National Trade Association representing the producers and marketers of distilled spirits products. And I said, I know that this has been on the DISCUS agenda for a long time. And then their Senior Vice President and Head of State Government Relations, a guy named David Woenar said.
David Woenar: Well, interesting enough is the issue of cocktails to-go, really wasn't on our radar, quite frankly, prior to the pandemic.
Jason Feifer: So now this gets even more interesting, because here is this law that suddenly changed and nobody had really ever been thinking about changing it. And the change is extraordinarily popular with consumers and businesses alike. And what happens now? I became more and more fascinated with this. Because, this isn't really a question of alcohol, or even really a question about laws, it's a question about what happens when we discover that a boundary is not a boundary. It's what happens when we reconsider what seemed impossible.
Here you have this law that was so old and unquestioned that the industry associations most impacted by it, were not even thinking about it. And keep in mind, these are organizations designed in part to make changes to law. It's like having this wall in your home that you never really liked, that you always thought would be awesome to get rid of, but you were just told it couldn't be moved because whatever, whatever reasons, so you never even tried, and then one day you wake up and the wall is gone, and the house is still standing. And you think, well, this is my question. What do you think?
Do you start making other changes? Does the lesson of one change embolden you to push for more? That's why to-go alcohol seemed like a useful case study to me. Because already, you are seeing ripple effects. At first when states legalized to-go cocktails, they stressed It was a temporary change, just the thing to do while restaurants were closed. But now ...
Voice Clip (Ohio News): And Mike DeWine has signed a bill that will allow bars and restaurants to sell alcohol to-go permanently.
Jason Feifer: That was the news from Ohio, which in October of 2020, became the second state after Iowa to make that change permanent. And now about 20 states are thinking about doing something similar, or at least extending the change out for another year or two. So on this episode of Build for Tomorrow, here is what we're going to do. We are going to look at how we got to this place, and I don't just mean changing the law, I mean ... that it was ever illegal at all. Because America once had a very different attitude towards alcohol.
Livia Gershon: Kids drank, toddlers would drink the dregs of their parent's rum toddies second, that's 1770th ish.
Jason Feifer: That's Livia Gershon, who you'll hear more from in a minute. So how do we go from kids drinking rum toddies to a restaurant not able to package and sell a rum toddy for a law abiding adult's home consumption? The answer is fascinatingly complex. It involves prohibition of course, but also an alcohol industry that has been intentionally fractured and turned against itself, and a patchwork of state laws that everyone's afraid to change. And, the slow, slow but sometimes very promising force of change that's coming for it anyway. And yes, I learned a change like to-go alcohol can ripple outward in surprising ways.
It can create new change. It's all coming up after the break. I am really excited about this sponsor, because it is a podcast that I have enjoyed listening to for years. It is called the a16z Podcast. And if you're interested in the future, or innovation or the impact of technology on our world, then you will be interested in what this show has to say. The a16z Podcast is produced by Silicon Valley venture capital firm Andreessen Horowitz. And I will tell you, I have had the pleasure of talking with a bunch of partners there over the years and they are smart. The a16z Podcast brings you direct, undiluted expert views from the front lines of the tech industry.
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Subscribe to the a16z Podcast wherever you get your podcasts, if you want to stay on top of tech and the future. We have so much to take care of, take care of our families, of our work, of our communities. And in the process, we often forget to take care of ourselves, to focus on our own well being. But we must. If you are struggling with feelings of not being in control or unhappiness or just need to talk with someone, well, that is why there's BetterHelp. BetterHelp is a professional counseling service where everything happens online. BetterHelp matches you with the appropriate licensed professional therapist who you can connect with in a safe and private online environment.
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Why they were illegal in the first place. What that tells us about the alcohol industry at large, how that change happened and what might happen next. And let's start with that voice you heard a moment ago talking about toddlers drinking rum toddies. Because toddlers were not the only ones throwing it back in colonial America.
Livia Gershon: People might think about Puritans and the idea that, oh, maybe they would be against drinking a lot, and they were against getting drunk, but they were not against alcohol.
Jason Feifer: That is Livia Gershon, a journalist who's researched the history of alcohol consumption. And fun fact, after reaching out to Livia for this episode, we realized oh, Livia and I used to work literally across the street from each other at competing local newspapers in North Central Massachusetts like 20 years ago. Life comes at you fast. Anyway, here's the thing to know, in America's earliest days, people drank about double the amount of alcohol that we do now, they were drinking alcohol, like it was water. And, that is for good reason.
Livia Gershon: Well, one thing was that the water wasn't always clean. So people didn't obviously have the same understanding of germ theory that we have now, but they did know that drinking beer, through the process of brewing that you actually did something to make it more portable.
Jason Feifer: This actually goes a long way back, at least as far back as the Middle Ages. People made something called small beer, which was a very low alcohol content beer that was functionally your water. If you were a laborer, you would drink small beer all day to quench your thirst. Around the dinner table, your kids would be enjoying a small beer. And this made sense for health reasons. But it did also mean that people were drunk a lot. So much so that in 1737, Benjamin Franklin wrote something called The Drinker's Dictionary, which is a list of 228 ways to say someone's drunk, grouped alphabetically.
Okay, fine. Yes, I will tell you my top five favorite ways to call someone drunk in the 18th century, according to Benjamin Franklin, counted down by some drunk people.
Jason Feifer: "He has Seen a Flock of Moons."
Jason Feifer: "He Owes no Man a Farthing."
Jason Feifer: "He's Been too free with Sir John Strawberry."
Jason Feifer: "He's had a Thump over the Head with Sampson's Jawbone."
Jason Feifer: "Sir Richard has taken off his Considering Cap."
Audience: [crosstalk 00:11:37].
Jason Feifer: Yes, all of that was directly from Mr. Benjamin Franklin himself. Anyway, slowly but steadily after that, America starts to turn against alcohol. Some of this is quite reasonable. For example, by the mid 1800s, America is starting to transition from an agricultural to a industrial society which makes drinking on the job a very different thing.
Livia Gershon: In previous like an agricultural employment, it wasn't that big of a deal. But if you're trying to follow an assembly line, it's a lot bigger problem.
Jason Feifer: But there are other forces at play here too. The rise of religious objections drinking, the American Temperance Society, the demonization of immigrants in their urban saloons. The anti alcohol movement took a little break during the Civil War. But then it started right back up.
Jarrett Dieterle: Prohibition didn't just happen overnight. Obviously national prohibition was a very black and white thing. But before that, it started at the local level, when one county would vote to go dry, and another one would be wet.
Jason Feifer: That is Jarrett Dieterle, a senior fellow who researches alcohol policy at a think tank called the R Street Institute, and who has a podcast about alcohol laws that I really love called The Right to Drink. And this is a very important point, because this is the moment when to-go cocktails would become illegal. Why was I not able to buy a cocktail at a restaurant and drive at home in the beginning of the year 2020? It is because of these decisions being made in the 1800s. So here's the setup. Before national prohibition, individual localities were banning alcohol. And if you lived in a county that suddenly went dry and you wanted to drink, what could you do?
Well, that was simple, you just drive over to the next county. So to stop that from happening, these counties and states said, all right you smarty pants drunkards. Now it is also illegal to get in your car, or I guess depending on the situation, your horse with alcohol.
Jarrett Dieterle: So, there's always been a bias against transporting alcohol that I would argue doesn't make a lot of sense today. But it originated I think some of that mentality from that era.
Jason Feifer: These kinds of laws kept growing and growing until 1920. Prohibition. It became the law of the land. And when prohibition was lifted in 1933 ...
Jarrett Dieterle: Temperance's forces didn't just go away, they didn't give up. A lot of them just oriented their focus at the state level.
Jason Feifer: Which is where it all began anyway. And also, this made sense because many states still had laws on the books against alcohol. Lifting prohibition did not mean lifting these local laws from before prohibition. And they were often really strict. Like in Kansas, businesses could not serve alcohol by the glass. Over time of course, many of these laws were repealed, but some are still with us, which is part of what creates America's very weird and confusing landscape of alcohol laws. Can you just rattle off some of the strangest or most restrictive alcohol laws that are still with us for one reason or another?
Jarrett Dieterle: Yeah, it depends state by state. But just a couple examples. Utah still has a version of what is known this iron curtain which is basically an effort to have some kind of a partition or barrier between the bartender and the customer, so you can't watch them making the drink. Indiana has what's called their warm beer law, which actually prohibits convenience stores and gas stations in the state from selling refrigerated beer. They can sell beer, but it has to be at room temperature. It's literally illegal to put it in the refrigerator. I would say probably 12, 13 states have what are known as control state systems at the retail level.
So that means that you actually have to go to a government-operated store, my state of Virginia is like that, to be able to buy alcohol. It's like a Soviet era throwback, when you walk inside compared to anyone that lives in the state where you have private liquor stores.
Jason Feifer: And of course, until very recently, that list of crazy laws could have also included no to-go cocktails from restaurants. So how did that change? Well, before we get to that specific change, let's talk about how to change an alcohol law in general, because it is not easy. And I'm going to give you two big reasons why. One of them isn't going to sound surprising, but the second one made my mind melt. So here they are. The first reason it's hard to change alcohol law is, public safety. And the second, is the alcohol industry itself. Let's take them in order. First, public safety.
Now, it should go without saying, but I will say it here just to be clear, some people do very unsafe and stupid and reckless things when they are under the influence of alcohol, and we need smart laws that keep people safe. No question there at all. But still, it is worth asking, what is a smart law? Here's an interesting example of how hard it can be to answer that question. In Massachusetts, happy hour is illegal. You cannot leave work at the end of the day, go to your local bar in Boston and enjoy a few bucks off a Sam Adams lager until 7:00 PM. And why is that?
That is not something that goes back to prohibition, it just goes back to 1984. There were some tragic deaths caused by drunk drivers in Massachusetts at the time, and lawmakers felt like they needed to do something.
Jarrett Dieterle: That was also during the era in America where DUI penalties and laws nationwide were really ramping up. And so one of the things they decided to do was to ban happy hour.
Jason Feifer: And now decades later, we can see the results of all of those efforts, DUIs across America are down, which is fantastic. It is a result of movements like stricter punishments for drunk driving and cultural changes driven by influential organizations like Mothers Against Drunk Driving. And Massachusetts now does rank well among states, it has a lower than average drunk driving fatality rate. But it's not the lowest, and in fact, other states that do have happy hours, also have low rates. So, is the happy hour law in Massachusetts having an impact? And if it's not, would removing the ban help the local hospitality industry while having a negligible impact on public safety? The thing is, we may never know.
Jarrett Dieterle: I don't think that anyone in the state legislature is particularly eager to be given that history to be the person that then comes back and says, "Hey, let's legalize happy hour again."
Jason Feifer: When a law is on the books, it is just very hard to get it off the books. No politician wants to be blamed if something goes wrong. But, there's also another reason that laws are really hard to change. Jarrett had this very [economicsy 00:17:54] term for it. He called it ...
Jarrett Dieterle: Concentrated benefits and diffuse costs.
Jason Feifer: As in, a small number of people feel a benefit more strongly than a large number of people feel the cost. Here's another example of that. Remember a minute ago, Jarrett said that in Indiana, convenience stores cannot sell cold beer, they can sell warm beer, but you've got to take it home and cool it down yourself. And why is that? Presumably so that someone can't drive up to a gas station, fill up their car, grab a cold one, and then crack it open as they drive away? That seems like a real stretch, which is why the citizens of Indiana totally oppose this law.
Jarrett Dieterle: They pulled it and it is overwhelming, the amount of Indianans that if [inaudible 00:18:35] want to have cold beer in their convenient store.
Jason Feifer: So what's the problem? Why does this law not change? The problem is that this is not an issue that people will take to the streets about. It doesn't make them passionate enough, they're not going to go banging on senator's door demanding cold beer, they're not going to vote about it. But you know who will go banging down senator's doors insisting that the law does not change?
Jarrett Dieterle: So in Indiana, the liquor stores a different type of licensee from the convenience stores, they are allowed to sell cold beer, they're the only people that can.
Jason Feifer: Concentrated benefit, diffuse costs. The liquor stores are very happy with this law. So if you're a state senator, and you're trying to weigh the cost benefit of changing this law, you're thinking, "Well, changing the law is popular, but voters probably won't reward me much for changing it. But the liquor stores will definitely punish me if I change it." And that's a problem. And so the law stays. And this transitions us nicely into the second challenge in changing alcohol laws. Probably one like I said, was the complexities of public safety. Problem two is the alcohol industry itself.
Because if you talk to people who work in alcohol long enough, you will hear the same term come up over and over again.
Jarrett Dieterle: The three tiered system.
Mike Watley: Three tier system.
David Woenar: We work in a three tier system.
Jason Feifer: The three tier system. I had absolutely no idea about this. So okay, the three tiers are producers, distributors and retailers. If we're talking about beer for example, that means there is the person who brews the beer. And then there's the middleman who moves the beer from the brewery to wherever it's being sold, and then finally, there is the place where you, the consumer actually walk in and buy the beer. These are the three tiers, producer, distributor retailer. And no company can operate in more than one of the tiers. If you run a brewery for example, you cannot load up a truck full of your own beer and then drive it over to a beer store and sell it to them.
And if you're a distributor, you cannot start making your own beer. The tiers are separate. And where did this come from? Of all people, it came in part from John D. Rockefeller Jr. Here he is in 1932.
Voice Clip (Mr. Rockefeller): I was born a tee total. All my life, I have been a teetotaller on principle. Neither my father, nor his father, ever tasted the drop of intoxicating liquor.
Jason Feifer: In 1933 as prohibition neared its end, Rockefeller commissioned a report called Toward Liquor Control, which imagined different ways to slow the spread of alcohol. One of his concerns was, what if the alcohol makers just gained too much power?
Jarrett Dieterle: There was this huge fear that there would be towns for example, a whole towns where all the saloons were owned by one Brewer and they all served the same beer.
Jason Feifer: How do you stop alcohol from becoming a financial, cultural and political powerhouse? The answer, was a three tier system. You stop companies from owning more than one part of the industry. This is very unusual by the way. Many companies today are praised for owning multiple parts of their industry. It is called vertical integration and it's why Apple sells you its own iPhone, add its own Apple Store, and why Peloton makes bikes and tablets and also produces its own content. People love this. It's good business.
And maybe you're thinking, "Wait a second, I have visited a vineyard and bought wine there. Isn't that a manufacturer also acting as a retailer? And I've gone to a brew pub and bought beer that they brew at the back. Isn't that a retailer also being a manufacturer?" And the answer is, yes and no. Yes, in the past few decades, many states have created little carve outs for certain kinds of businesses, like brew pubs and wineries. But no, because it's not as open as it might seem.
Jarrett Dieterle: So yeah, there has been more and more reforms to the system, they have started allowing blurring of the tiers. And it freaks people out. A lot of states have limits on how much alcohol can be sold through the brew pubs and the tap rooms, they don't want them to get too big. Some states over a certain number of barrels require the breweries literally to make the beer, sell them to the wholesaler, and then buy their own beer back and sell it, because they're so worried about the system.
Jason Feifer: And this, this nicely sets us up to understand the central question of this episode, which is, why were to-go cocktails from restaurants once illegal? The answer is in part, the three tier system. All right, let's start by going back to Mike Watley, the guy from the National Restaurant Association.
Mike Watley: If you look at the restaurant industry as a whole over the past couple of years, you've seen an increase in off premise consumption. So, that can be a takeout, that can be via drive thru, or increasingly that can be delivery.
Jason Feifer: And in some ways, this shift has been great for restaurants, it means that you can serve more people than you have seats for, and you don't even need as much expensive real estate. But in other ways, it's bad for restaurants. Because if people aren't sitting and hanging out in your restaurant, then they're not ordering alcohol, and that's often a restaurant's highest margin item. This is a problem. So the National Restaurant Association started talking to lawmakers in many states and saying, "Look, why not let these restaurants sell alcohol to-go? We'll put all sorts of safety restrictions on it." The alcohol has to be factory sealed, like [inaudible 00:23:57] opened canned beer or something, IDs have to be checked, stuff like that.
And some states started to say, "Okay."
Mike Watley: So you ordered a meal, you can get beer, a six pack or a bottle of wine, but nowhere allowed you to actually mix a cocktail on site, cap it and then send it out the door either to go or via delivery.
Jason Feifer: And why is that? Well, a couple of reasons, though first, just to acknowledge some potential confusion. In this episode, I've mostly talked about to-go cocktails, but occasionally, I have also just said to-go alcohol, which would include beer and wine as well. And the reason for that is because the legality of all this stuff has been in flux though beer and wine were a little ahead of the game compared to cocktails as you just heard. So cocktails are the newest thing though beer and wine is a conversation that's been happening for a long time. Anyway again, why are these different things?
Well, for one, beer and wine have often been treated differently from liquor. Beer and wine are seen as drinks for food, but liquor often is not. And so, different drinks have gotten different laws. But, some small shifts were happening. Back in 2019, Texas and Louisiana did take a baby step, they allowed restaurants to sell manufacturer sealed, single-serving mixed drink containers. These are not cocktails made by the bartender mind you, these are like ... have you ever seen a canned Margarita at a liquor store? That's what I'm talking about here. And, guess who really wasn't into that change?
Mike Watley: The largest opposition of this, and this may not surprise you in many jurisdictions is liquor stores, who were worried about this cutting into their margin.
Jason Feifer: Because this seems to chip away at the dividing lines. So now what? A restaurant is also going to be a liquor store? Sure, they're both technically retailers, so they're within the same tier of the three tier system, but they're retailers with different functions. Now you are changing how the system works.
Mike Watley: Anything that happens to upset the existing system of the three tier system for alcohol, just raises a lot of concerns usually.
Jason Feifer: And I don't know if this is what John D. Rockefeller Jr. imagined when he championed this idea in 1933. But I really do think that he would be happy with the result. Because if you want to stall the alcohol industry, this is a brilliant way to do it. Now you have companies protecting their own little turf, and they're doing what companies or industries often do, which is that they try to get the law to preference them instead of their competitors, which in this case is often just a different part of the alcohol industry. If a beer brewery can open up its own store and start selling its own beer there, you better believe that the distributors and the retailers are going to be very upset about that.
And maybe they're going to run to their local lawmakers to try to oppose it. And this is why changing alcohol laws can be so complicated, because it often pits different parts of the industry against each other. For example ... well, okay, this is my own pure speculation here, I want to make that really clear, my own speculation. But, remember David from DISCUS, the group that represents distilled spirits manufacturers, just listen to what he said to me, when the three tier system came up in our conversation.
David Woenar: We're committed to the three tier system, which is the supplier who has a relationship with the wholesaler, who in turn has a relationship with the retailer. And we're all trying to grow the pie.
Jason Feifer: Again, this is my own speculation here. But those sure sound like the careful words of a diplomat. Would whiskey distilleries like to open their own bars and distribute their own whiskey? I assume they would. But David can't say that. I didn't even ask him that. Because, just imagine the absolute hell that would be raised by other parts of the industry, if they heard him say that he wants to tear the three tier system down, it would be chaos. So again, this is my own guest here. But that's what I heard when he told me, "We are committed to the three tier system." He wants changes that benefit his members of course, but he does not want to set off his neighbor's and partner's alarm bells.
So, now we have a big part of our answer. Why wasn't anyone pushing hard for cocktails to-go? Because the restaurant and distilled spirits industries had other priorities. And also, because anything that pushes up against the three tier system gets very complicated very fast. Here is Jarrett from the R Street Institute again.
Jarrett Dieterle: When it comes to things like to-go cocktails, the restaurants are the retail level, right? So you're not really skipping any rungs. But I think there's a lot of fear that once you've opened the door to delivery alcohol, it is only a matter of time, before people start asking, why can't I ... like I do for example with my Apple Computer, go on apple.com and order my Apple computer and Apple ships it directly to me or I go to an Apple store and buy it. And so I think there's a huge amount of fear in the industry that if we start updating the laws a little bit and allowing things like delivery in to-go alcohol that it's going to end up taking over the market.
Jason Feifer: The three tier system is a slippery slope waiting to happen. Everyone seems to know it. All right, now we know the problem that surrounded to-go cocktails. Let's now talk about the solution. Because like I said at the beginning of this episode, this isn't really a question to me about alcohol, it's a question of how change can happen suddenly, and then what happens next? If you legalize something like to-go cocktails, do you set yourself up for more change to come? Or more broadly, when the impossible suddenly becomes possible, does that impact other things that once were thought to be impossible?
Maybe, suddenly, they're possible too. We'll answer those questions next, after the break.
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To begin answering that question, let's go back to David Woenar, the Senior Vice President and Head of State Public Policy at DISCUS. A few minutes ago, I said that beer and wine are often regulated differently from liquor. As you might imagine, the liquor industry really didn't like that. So about two decades ago, DISCUS started to push what David calls an equalization narrative, basically trying to convince lawmakers to treat all alcohol the same. This would mean pushing to change a lot of laws around the country. One of which for example, is this prohibition era law that bans liquor stores from operating on Sundays.
DISCUS has had a lot of success here. These laws were all around the country, including when David's home state of Massachusetts, lifted its own Sunday sales laws. He remembers it very well.
David Woenar: I can tell you that was 2003, that was passed and Governor Romney signed it on the night before Thanksgiving because that's the night I met my wife. I was celebrating that bill being assigned-
Jason Feifer: Were you really?
David Woenar: Yeah.
Jason Feifer: Wait a second, you were out at a bar celebrating that bill and you met your wife there?
David Woenar: Yeah, exactly.
Jason Feifer: Ain't that great. It's like the classic meet-cute story in the lobbying world. Boy gets liquor law changed, boy celebrates at a bar, boy meets girl. Anyway, DISCUS had a long list of laws like this that it wanted to change. But of course, as we learned before, to-go cocktails from restaurants wasn't really on that list. And then the pandemic arrived. And in March of 2020, DISCUS heard some interesting news out in New York. Governor Andrew Cuomo was one of the first governors to shut down bars and restaurants. But part of the deal that he made was that he allowed them to sell alcohol to-go.
Of course, DISCUS's first thought here was, "Hey, this better not be a thing where beer and wine are treated differently from liquor."
David Woenar: We threw our team reached out to the governor's office to make sure that it applied to distilled spirits and cocktails, and it did.
Jason Feifer: Score one for the equalization narrative, right? And then this unexpected thing happens. Connecticut and New Jersey follow with similar law changes. And now, DISCUS, which was not focused on to-go cocktails is suddenly thinking, "Wait a second, we have got a bigger opportunity here." So they start reaching out to other states. And meanwhile, other organizations are doing the same thing. So a coalition begins to form, DISCUS, the National Restaurant Association, the Bartenders' Guild, advocates for local businesses, they are all going around the country and being like, "Hey, politicians, we have got a great idea for you, and it is to-go cocktails."
David Woenar: We tried to pitch it as being creative outside the box in a crisis situation which politicians, they like to feel that way about themselves, if they are creative, that they're going the extra mile.
Jason Feifer: Flattery really will take you to the top. And soon a kind of three step plan forms among this coalition. Step one, convince states to allow to-go alcohol on a temporary basis. This was quite successful. As of this recording, 32 states plus Washington D.C. have gotten on board. Then, step two, make sure everyone is really comfortable with it, which is tricky because these changes were happening really fast and on a state by state basis. Here is Mike from the Restaurant Association.
Mike Watley: Those regulations were written so quickly, that they're very different in terms of how they're written, and how the alcohol actually must be given to the customer.
Jason Feifer: These new laws were generally saying that cocktails had to be sold in a closed sealed container. But then the question came up, which is like, what technically is a closed sealed container? Is a solo cup with some saran wrap on top considered a closed sealed container? What about a cocktail poured into some plastic bottle? Does the cap need to be somehow machine sealed? Can you just put a sticker on it or some tape or something? And as this conversation is happening, industry is getting really involved. Because of course, they see this as a critical point. Mike and David both stress this to me, the safer they can make to-go alcohol, the fewer problems it'll cause and the greater the chances that they will achieve step three.
And oh yeah, what is step three?
Mike Watley: We want to make this permanent, we want to either make it permanent or extend it out for a long period of time, so that it can hopefully become permanent in the future.
Jason Feifer: Which is capitalizing on that truism about laws that we talked about earlier. Once you change a law, it's really hard to change it back. Once consumers get used to cocktails to-go, can you really take it back from them? They will be pissed. So the longer the change stays in place, the greater the chance is that it'll become permanent. And actually, this got me thinking about a bigger truism about change in general, which is, when you're in the position of changing something, you really own that thing. It is in your control, you have the power. But the second that you make the change, you no longer become the sole owner of it.
The change ripples outward, it creates an entirely new environment around itself, a new ecosystem. Change creates change. Like in the case of letting bars and restaurants sell alcohol to-go.
Dennis Grum: The big thing was just showing these businesses that, getting into takeout canning is something they can do, it's very accessible to them.
Jason Feifer: This is Dennis Grum. He's one of the founders of Oktober Can Seamers, a company that does pretty much exactly what it sounds like. They make machines that are small enough to fit on a bar top and instantly seal cans. So a restaurant could fill a can from a tap and then seal it and send it on its way. Oktober Can Seamers existed before the pandemic, but as soon as to-go alcohol became more widely legal, their sales spiked, and they started adapting.
Dennis Grum: We added a couple of new can sizes to our offering. Those have the premium look and feel that a craft cocktail business would be looking for.
Jason Feifer: This is not the only example like this. Just look around. For example, I asked a few great cocktail bars to share what they did when to-go cocktails became legal. At The Dead Rabbit in Downtown Manhattan, they started putting QR codes on the top of their to-go cocktail bottles. So if you scan it, you get a video with exactly how to dress up the cocktail. Here's Jillian Vose, she's their managing partner and beverage director.
Jillian Vose: We wanted to make sure that the drinks that you were taking home you could execute them as close as possible to if you were here at the bar.
Jason Feifer: Over in Montpelier, Vermont, a distillery and cocktail bar called Barr Hill sold to-go cocktails in unique glasses that could be reused in people's homes for other things. And they also set up a program where in exchange for a donation to charity, they would hack out something special from a 75 pound block of ice.
Sam Nellis: A two inch by two inch cube, or a sphere, or Collins kind of spear or even just a bag of pebble ice or a bag of one inch cubes.
Jason Feifer: That was Sam Nellis, the beverage director there. And back in New York, the bar Bathtub Gin created a line of unique cocktails that people could bring home and keep around for a while if they wanted. Here's the owner, Dave Oz.
Dave Oz: Each of our cocktails is shelf stable and lasts at least six months, with unique flavors such as the passion for Negroni and the peanut butter old fashion.
Jason Feifer: And here's why I played all that for you. What you heard aren't just band aids on a problem. Yeah, they helped keep these businesses alive during the pandemic. And everyone from these bars stressed how critical that was. But they're also opportunities for the future. Their business is adapting to a new reality, to something that they're suddenly allowed it to do, and they're making it a part of their lives and their customer's lives. When you allow to-go alcohol, a new industry will spring up to support it.
New businesses will be created, new lines of revenue will be built out. During the fall of 2020 for example, off premise spirit sales were up about 26% industry wide, and at the peak in 2020, online alcohol sales were up at 500%. Sales also jumped for cocktail books and home bartending kits. All of this makes it even harder to take these changes away. Because like I said, change creates change. Which brings me to my final question, which is this. When you change one thing, does it become easier to change another? This felt like the hardest question to answer. I know it's kind of abstract, but, okay, here's what I was thinking.
Imagine the people who thought that to-go cocktails were an impossibility, just couldn't be done, shouldn't be done. And then it's done, and everyone likes it. This guy does not fall. So if you're the person who once thought that this change was impossible, have you learned a lesson here that you can apply elsewhere? Do you maybe start to think, maybe other things that I thought were impossible might actually be possible. Does that occur to you? I asked everyone I interviewed some version of this. And most people were like, "Yeah, sure. I guess in theory that's possible." But then David at DISCUS, told me this story.
David Woenar: West Virginia is an example. We were pushing Sunday sale for probably like 10 years, and did not get any traction. So we looked at repealing the brunch law.
Jason Feifer: The brunch law. In West Virginia on Sundays, restaurants could not serve alcohol until 1:00 PM. So if you showed up for brunch before then, there is no Bloody Mary for you. And DISCUS said, "Hey, how about we push this to 10:00 am? A simple three hour change, good for restaurants, good for consumers? What's the harm?" And lawmakers went for it, the governor signed the bill in 2016. But critically, this new law didn't actually change the brunch hours anywhere. What it did was allow individual counties to put this question on their local ballots so that voters could decide on a county by county basis, if they wanted Bloody Marys at 10:00 am on Sunday, or if they wanted to wait until 1:00 PM.
And from a lobbying standpoint, this was really smart.
David Woenar: As municipalities were voting to enact the brunch law, that gave legislators a sense of what was going on in their districts. As far as beverage alcohol goes.
Jason Feifer: The result, the vast majority of West Virginians went to the polls and voted for Bloody Marys at 10:00 am. There was an appetite to change these laws. And once everyone saw that, DISCUS went in for the kill, and they tried again to change the state's Sunday sales law, which prohibited liquor sales on Sunday.
David Woenar: We said, "Look, your constituents just voted to adopt the brunch law. And we looked at Sunday sales. And that did lay the groundwork for that for sure.
Jason Feifer: It worked. They changed the law in 2019. And then, they just kept changing things.
David Woenar: And most recently, voted to make the whole state wet, get away from dry counties.
Jason Feifer: That happened in 2020. So in short, DISCUS wanted to make big change in West Virginia, but they were not getting anywhere. So they switched tactics and focused on something super small, letting voters vote on whether people can have drinks with brunch, three hours earlier than usual on Sunday, the voters said yes. And suddenly, lawmakers who were once afraid of change, learned that change isn't so bad after all. In fact, at least as liquor sales are concerned, people really like change. And soon, the state was making all sorts of change. Will this be the story of to-go cocktails?
A change that came out of nowhere and inspires other change as well? Maybe, only time will tell. There is already a big conversation happening about delivery alcohol, for example, letting packaged stores deliver alcohol directly to your home and expanding how third parties like DoorDash can do it as well. Maybe the success of to-go cocktails will make that an easier sell. Maybe the next big change is something nobody's even thinking about. Whatever the case, it's a reminder of just how much everything we have or don't have or want or desire, is intertwined. Think of it, in the beginning of 2020, if I wanted to walk out of a restaurant with an old fashioned, I could not.
And I might have said, "Oh, come on, how hard is it to let me just go enjoy this cocktail somewhere else?" And the answer would have been, it's just a matter of some laws passed 200 years ago and the very unusual way that the alcohol industry is carved up into three tiers. But, that's not to say change was impossible. Sure, it took a pandemic to do it. But that's just how things go sometimes, a crisis forces us to reconsider the rules as we know them. And that leads to opportunity. And then it presents us with a big question that we should be constantly grappling with. And that is this.
How can we maximize a moment of change? And then after that, how do we order another round? And that's our episode. But hey, remember that clip I played from John D. Rockefeller Jr. a little while ago, it was actually from a speech he made to announce that he was changing positions going from pro prohibition to anti prohibition, a ground shaking event of the time. So why did he do it? I will play some more from the speech. But first, if you like this podcast, then please support it with your enthusiasm, subscribe and tell a friend and sign up for my newsletter which is all about how to find opportunity in change.
You can get it by going to jasonfeifer.com. And if you'd like to get in touch, just follow me on Twitter or Instagram I am @heyfeifer, h-e-y-f-e-I-f-e-r. DM me and I promise to reply. This episode was written by me, Jason Feifer and reported by me with additional help from Bruna [inaudible 00:44:53] sound editing by Alec Bayliss. Our theme music is by Caspar Babypants. Learn more at babypantsmusic.com. Thanks to everyone you heard in this episode, as well as Hannah Lee communications, Adam [inaudible 00:45:04] and a big shout out to Rosetta Hall in Boulder, Colorado, which is where I bought the cocktail that inspired this episode.
This show is supported in part by the Charles Koch Institute, the Charles Koch Institute believes that advances in technology have transformed society for the better and is looking to support scholars, policy experts in other projects and creators who focus on embracing innovation, creating a society that fosters innovation and encouraging people to engineer the next great idea. If that is you then get in touch. Proposals for projects in law, economics, history, political science and philosophy are encouraged. To learn more about their partnership criteria, visit cki.org.
Again, that is cki.org. All right. Now, as promised, a little more from John D. Rockefeller Jr. Titan of industry and lifelong teetotaller, he was one of the most prominent supporters of prohibition, but on June 6th, 1932, he surprised the country by announcing his support for repealing prohibition. This was huge news. The New York Times devoted nearly half the front page [inaudible 00:46:06] the next day, along with the headline, Drys are Resentful; Wet Chiefs Jubilant. Can you imagine being known as a wet chief? Anyway, here is part of what John had to say.
Voice Clip (Mr. Rockefeller): I earnestly hoped, that a host of advocates of temperance, that it would be generally supported by public opinion, that this has not been the result, but rather that drinking generally has increased, that the speakeasy has replaced the saloon, not only unit per unit, but probably twofold, if not threefold. That a vast army of lawbreakers, has been recruited and financed on a colossal scale, that many of our best citizens piqued at what they regarded as an infringement of their private rights, have openly and unabashed, disregarded the 18th Amendment, that has an inevitable result, respect for all law has been greatly lessened.
Jason Feifer: So I mean ... let me get this straight Mr. Rockefeller, humans have been drinking alcohol for many 1000s of years, but you thought that banning it would easily win everyone over and then you were surprised when people went ahead and kept doing the thing that they want to do anyway? It's like when abstinence only programs don't teach kids about safe sex and then are surprised when everyone starts getting pregnant. Come on, guys. You have to deal with how the world really is, not how you fantasize it to be. That is it for this episode. Thanks for listening. I am Jason Feifer, and let's keep building for tomorrow.
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