"Right now I'm in a position where my commodity is myself"

💀 Murdered darlings: cocktails-as-NFTs edition, 2 middle-tier trends 2 watch + more!

Mar 08, 2022

I depend on readers to underwrite the labor that goes into producing this newsletter. Thanks for reading!—Dave.

I just published a story at VinePair scrutinizing the glass-half-full claim that blockchain technologies in general and non-fungible tokens in particular will make it easier for bartenders to defend their cocktail recipes as intellectual property, which at the moment is pretty much impossible under United States copyright law. The TL;DR, according to four attorneys (three that focus on IP in the beverage-alcohol industry, and one who teaches IP law at the University of Miami and writes about blockchain legal issues), is basically “Not really, and/or not any time soon.”

I hope you’ll check out the full piece for more context, because while recipes most certainly cannot be copyrighted (NFTs be damned), there are a surprising amount of wrinkles to the issue, plus a few reasons that NFTs could provide additional revenue streams for bar owners and brand-savvy individual bartenders. As a bonus, here are a few “murdered darlings” from the reporting process—i.e., interesting insights and quotes from sources that didn’t make the final cut.

The quotes below have been lightly edited for length and clarity.

— Brendan Palfreyman, an intellectual property attorney at Harris Beach who focuses on the beverage-alcohol business, on creating copyrightable work vs. creating NFTs:

NFTs can't create intellectual property protection [under U.S. copyright law.] If you're the guy who did the $69 million NFT, that piece of artwork that he created is protected by copyright because art is copyrightable. But if you mint an NFT in connection with something that’s not copyrightable, there's no recourse you would have [to defend it.] Like, a bartender could sell an NFT for a crazy new cocktail, but it doesn't create any intellectual property rights. Whoever bought the NFT couldn't then go to the bar next door that's making the same thing and say, Hey, I own the NFT for that, you can make that! The bartender next door would say, It's a recipe, recipes aren't copyrightable. There's nothing you can do to stop me.

Dan Barsky, an attorney with Holland & Knight and an adjunct professor at the University of Miami School of Law, on how NFTs could assist bars in monetizing iconic cocktails:

Take for example the Hand Grenade in New Orleans. Everybody knows the Hand Grenade, they sell it to you in the in the plastic cup with the grenade on the bottom. I can make a Hand Grenade at home. But I can't go sell them as Hand Grenades without infringing their trademark. I don't get the cup, I don't get the experience. I see NFTs as being another line of marketable, salable material that can go along with new cocktail recipes. You can take pictures, you can create NFTs, and you can create other things that go along with the cocktail. Such as if you go out and buy the authentic version of the drink, you get a special NFT just like you get the Hand Grenade cup.

People could say, Look, I bought the authentic [Hand Grenade], here’s the NFT in my crypto wallet. It’s just like any kind of memory that they have from going to the bar or establishment… they can have that as an NFT. It’s another monetizable stream.

— Megan Deschaine, mixologist and president of the United States Bartenders Guild’s Charleston chapter, on getting compensated properly for the value of creative cocktail development:

That's something that I’m trying to determine in current tense. Right now I'm in a position where my commodity is myself, and there's no real accessible threshold of comparison of what rates or values are. Just last weekend, I did cocktail creation for this big gala and I've been kicking myself all week for undervaluing my time. I could have easily got an extra grand out of that project, but I didn’t. It’s hard to communicate the value of a recipe, or even the production of said recipe. It's not like you can go and compare… there’s no website database that says “This is how much it's worth.”

— Philip Greene, trademark attorney and author of several cocktail histories, on how most “internet law” is just existing offline law applied to the internet:

Okay, you have these wacky things called domain names. Nobody understood that [in the early days of mainstream internet adoption.] How can you have a WhiteHouse.com that has pornography when the White House is where the President lives? Well, that's because there's WhiteHouse.gov for the White House, and there's WhiteHouse.com because people in the White House didn't think to register WhiteHouse.com and you had cybersquatting.

That was the mind-blowing thing of the late ‘90s… [For example:] Wait, how could somebody own Budweiser.com that isn't Budweiser? Because they bought first, because they went registered with with Network Solutions and got Budweiser.com, because Anheuser-Busch was asleep at the switch. I don't even know if Budweiser was a subject of cybersquatting, but it's just the first thing that popped in my head. But there is a mechanism to get something back that should not have been registered to this cybersquatter. They finally figured out a way called the Uniform Domain-Name Dispute-Resolution Policy where Budweiser could get their domain name back from the would-be owner of Budweiser.com. I guess they might come up with something like that for NFTs, I don’t know.

📬 Good post alert

Kelsey D. Atherton @AthertonKD

sitting down at one of those bars with a "soup of the day: whiskey" sign and then eating the whiskey with a spoon like an absolute maniac

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🚚 Middle-tier update: corporate consolidation and labor organization

If you’re reading this newsletter you probably know that U.S. booze sales are conducted via a three-tier system: supplier (who make-a de booze), wholesaler (who move-a de booze), and retailer (who sell-a de booze.) Mainstream, consumer-facing beverage-alcohol industry coverage tends to focus on suppliers and retailers, but very rarely on wholesalers for reasons including but not limited to mainstream consumers don’t give a shit about wholesalers.

But despite being boring/behind-the-scenes, the “middle tier” (as American beer/wine/spirits distributors are collectively termed) is pivotal in dictating what drinks they’re able to buy, where and when they’re able to buy them, and the direction and pace at which different segments of the industry and even individual brands grow/die. That’s power you can’t buy. That’s the power of ~~fear~~ the middle tier.

With all that power, Fingers would like to mark two ongoing trends for further inquiry. First up: corporate consolidation! In the past, say, 18 months, big distributors have gotten bigger by acquiring competitors in a continuation/acceleration of a years-long trend. The category is getting so concentrated, in fact, that in a February 2022 report (prompted by an executive order from President Joe Biden last summer) the U.S. Treasury Department made specific note of it. Consolidation, “particularly at the distribution and/or retail levels for beer, wine, and spirits” is a source of anticompetitive concern and a target for potential remedy, wrote the report’s authors, who urged the Department of Justice and the Federal Trade Commission to keep a close eye on the tier. Stay tuned!

The second trend to watch in the middle tier is labor organizing. In the past month alone, according to Jonah Furman’s indispensable union round-up newsletter Who Gets The Bird?, there have been four union drives and one victorious election at booze distributors (quoting WGTB? here):

25 wine distribution workers for Opici in Albany, NY voted 14-10 to join UFCW Local 2D.
40 more workers for wine distributor Winebow are organizing in Glen Allen, VA, with Liquor & Wine Sales Representatives Local 3 (but see footnote1 for more on why Furman calls this a “dubious union”)
90 drivers for beverage distributor Markstein Beverage Co. in Sacramento are organizing with Teamsters Local 150
47 alcohol distribution workers at Southern Glazer’s Wine & Spirits in Aurora, CO are organizing with Teamsters Local 455
46 wine distribution workers for Winebow in the greater NYC area are organizing with UFCW Local 2D

These are not huge numbers, don’t get me wrong. But unlike smaller, younger efforts at organizing the craft beverage industry, middle-tier workers aren’t starting from scratch: there’s an existing, longstanding tradition of unionizing the business of warehousing, delivering, and stocking booze. (For example, the Teamsters, one of the biggest unions in brewing and the biggest in trucking, has locals dating back to the 1800s in its Brewery & Soft Drink Conference.) So when considering the potential of labor organizing in the craft/non-craft beverage industry, it’s important to keep the middle tier in mind. After all, with their legislatively protected role as middlemen, distributors hold a lot of power… which means that their workers, when organized, do too.

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Furman: “[I]t’s a Chicago-based union of dubious integrity, run by a politically influential family that in 1999 was found to be replacing its own members’ jobs through a staffing agency, and in at least one NLRB case from 2001 was found to have been brought in specifically to supplant the Teamsters, which could be what’s happening here, considering that just last month UFCW filed for an election at Winebow in upstate New York, and last year the Teamsters did the same in California.”