Restrictive Craft Beer Laws May Put Small Breweries Out Of Business

Discussion in 'Beer News & Releases' started by officerbill, May 12, 2020.

  1. officerbill

    officerbill Devotee (482) Feb 9, 2019 New York
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    Minnesota breweries struggling to stay open can't expect any help from their “partners”
    https://www.forbes.com/sites/kennyg...laws-may-put-small-breweries-out-of-business/

    The article focuses on Minnesota, but I wonder how many other states have similar fights going on in the background.
     
  2. bsp77

    bsp77 Poo-Bah (2,307) Apr 27, 2008 Minnesota
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    Minnesota is the worst
     
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  3. IGaveYouPower

    IGaveYouPower Initiate (178) Dec 2, 2010 New York

    Very, very thankfully not any type of issue in NY.

    Breweries here can fill growlers and crowlers, they can sell cans, bottles, merch and other random stuff out of their taprooms and they can do both local delivery and in-state shipping.

    This seems (as most dumb things are) very short-sighted on behalf of stores and wholesalers. Okay, you wanna protect your own sales by having people buy at your store instead of the brewery but when that's extrapolated over the large scale and breweries have a VERY narrow avenue to sell their product... they go out of business.

    And then that hype brewery whose cans get people in to your store -- where they likely buy other things too or enjoy the selection/staff/whatever enough to come back more often -- goes out of business. And so does the next hype brewery. And then the local favorite. And then another local favorite.

    Then your wholesalers and stores are left trying to peddle a bunch of beer nobody wants as consumers spend more time and money buying direct from breweries to try and protect the ones that remain.

    Dumb dumb dumb dumb dumb dumb dumb.
     
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  4. dennis3951

    dennis3951 Savant (997) Mar 6, 2008 New Jersey

    There are a lot of rules and restrictions on the breweries but they can sell beer to go in any format they choose. They can also deliver to peoples homes if they care to.
     
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  5. traction

    traction Zealot (533) Dec 4, 2010 Georgia
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    Stupid law I absolutely don't agree with however it is completely unsurprising bottle shops/liquor stores don't want competition from breweries and will do whatever they can to shut it down.

    The mishmash of alcohol laws across the United States is very irritating. Georgia breweries weren't allowed to sell direct to the public until 2017. Also the vast majority of websites that sell beer won't ship to Georgia but a handful will which makes absolutely no sense to me. Why is it legal to receive beer from one state and not another?
     
  6. muck1979

    muck1979 Initiate (67) Jul 3, 2005 Minnesota

    Hey, we just got limited Sunday off-premise sales legalized a few years ago. It's going to be awhile before we get to do crazy things like buy beer over 3.2% ABW in grocery or convenience stores or buy a six-pack at a brewery taproom.
     
  7. Kraz

    Kraz Initiate (122) Feb 12, 2018 Indiana
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    It's a real shame to read things like liquor stores stopping sales in a time like this.
     
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  8. thedaveofbeer

    thedaveofbeer Aspirant (237) Mar 25, 2016 Massachusetts
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    Wait.... Breweries in MN can't sell their beer to go in cans or bottles from the brewery? That is ridiculous. What a corrupt joke!
     
  9. VitisVinifera

    VitisVinifera Initiate (141) Feb 25, 2013 California

    This was discussed a week or so back in the pro brewer forum in Reddit, and I suggested that the Minn brewery trade association fight this, as the winery & brewery trade associations across states over the years have usually spearheaded alcohol law liberalization. They said the distro tier was so in politician's back pockets that they couldn't possibly compete. Still, that's been the situation in other states and they've gotten it done (I grew up in Colorado, and I've seen things open wayyyyyyy up since way back).
     
  10. dukeandduke

    dukeandduke Meyvn (1,349) Feb 2, 2015 Illinois
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    You know these rent-seekers have no morals or legitimate basis for operating if they have to hide behind corrupt laws and outright lies. Not sure how someone can say with a straight face a 20-30% job reduction exceeds a 70-80% revenue reduction.

    This is one of the reasons I spend a majority (and growing) percentage of my beer dollars direct with brewers.

     
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  11. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    In Minnesota, these laws have been on the books for decades, and were likely put in place to protect small brewers from predatory practices from larger brewers. As with all such regulatory laws, businesses are built up and established that have depended on these laws. This is only natural and not evil.

    Before COVID-19, small taproom breweries had an advantage of being able to sell beer packaged for take-home (750ml bottles, crowlers and growlers). Larger breweries are prohibited from selling any take-home packages, so the first quote in the OP is out of context. It IS illegal in MN for larger breweries to sell growlers, etc.

    Breweries of the size of Surly cannot sell any take-home beer at all, either now or before.

    In addition, Surly has a restaurant, and they sell their food for take-out during the shut-down. However, even though restaurants are allowed under the COVID-19 restrictions to sell packaged beer along with their take out food (one 6-pack per order, I think), Surly's restaurant cannot do that because they are also a brewery. Breweries of this size must depend on distribution to retail stores to sell their packaged beer. This was true before COVID-19 and it remains true. Changing the law would be a big benefit to Surly.

    For the smaller guys, like the brewery you referenced, @dukeandduke, I don't see it as much of a benefit in the short term.

    They have a business plan built around their taproom and crowlers for take-home and perhaps small self-distribution in kegs and crowlers.

    I'm not sure how making it legal to sell for take-home a package size that they are not set up to handle is an advantage to them during the shut-down. Can they actually spin up packaging in 12-16 oz cans in that short of time, especially when cash flow is already tight? Perhaps someone in the industry in MN can explain.
     
  12. dukeandduke

    dukeandduke Meyvn (1,349) Feb 2, 2015 Illinois
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    Minnesota has many onerous and un
    These restrictions should be repealed period regardless if this helps in the short term. Full stop. All breweries should have the ability to sell beer direct to consumers regardless of packaging format, and self distribute, deliver or ship direct to consumers if they so choose.
     
  13. deanzaZZR

    deanzaZZR Initiate (139) Jan 8, 2015 California

    Yikes. Is this a Lutheran culture thing?

    Since COVID California breweries can now ship directly to California customers and (also new) craft beer bars to sell growlers and crowlers to go. Before growlers and crowlers were only available from breweries.
     
  14. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    No argument here, but the changes are being put forward as pandemic relief.
     
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  15. unlikelyspiderperson

    unlikelyspiderperson Meyvn (1,309) Mar 12, 2013 California
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    I think they could always do that, most just chose not too for logistical reasons
     
  16. dennis3951

    dennis3951 Savant (997) Mar 6, 2008 New Jersey

    I don't know about MN but in NJ there are companies with mobile canning lines that come to and can beer for breweries without their own line.
     
  17. PapaGoose03

    PapaGoose03 Poo-Bah (2,683) May 30, 2005 Michigan
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    Utah has the most restrictive laws that I have personally experienced. It's been 6-7 years since I've been there, but the two laws that I ran into were the 3.2% alcohol restriction, and the rule of no more than two glasses in front of a customer at any one time put the kabash on taster flights. I've read that some things have improved since my visit but I don't know if either of those rules has changed.
     
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  18. bsp77

    bsp77 Poo-Bah (2,307) Apr 27, 2008 Minnesota
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    But lots of breweries are lobbying for it during the shutdown, so clearly it does help them. This wouldn't include the smallest taprooms who don't distribute, but the ones who are under the 20k / year limit and already have a canning line. Indeed, Insight, Bent Paddle, Utepils, Bauhaus, Bad Weather, Lupulin, Blackstack, Fair State, Modist, etc.

    Speaking of which, the 20k limit means that the larger ones can't even sell crowlers and growlers, which seems ridiculous for brewers such as Fulton and Castle Danger, which are nowhere near the size of Summit, Schell's and Surly, but are over the 20k. I would say something positive about allowing the big 3 MN breweries to sell as well, but Summit and Schell's (not sure of Surly) have been backing the current distribution system, likely in part because they benefit if some of the smaller guys die.
     
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  19. JackHorzempa

    JackHorzempa Poo-Bah (4,486) Dec 15, 2005 Pennsylvania
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    Below is from Wikipedia:

    “Current Utah law sets a limit of 4.0 percent alcohol by weight (5% ABV) in beer sold at grocery and convenience stores and at establishments operating under a "beer only" type license, such as taverns, beer bars and some restaurants.[5] Beer over 4.0 percent by weight (5% ABV) is available in State Liquor Stores and Package Agencies and at clubs and restaurants licensed to sell liquor.[2][5]”

    Was it 3.2% when you visited? If so, then they have increased that a bit to 5% ABV for retailers like grocery stores and convenience stores. You can purchase higher gravity beers but from other retailer types.

    Unfortunately in PA I have some ‘experience’ here as regards wine & liquor. Liquor can only be purchased at state owned stores (PA Fine Wine & Spirits) and the majority of wine brands can only be purchased at those state owned stores. Fairly recently they liberalized the sale of wine where some wines are available for sale at grocery stores that buy a special license. Thankfully beer is sold by private businesses but not too long ago (about 10 years) they were principally only sold by Retail Beer Distributors and only by the case (24 bottles/cans).

    Cheers!
     
  20. PapaGoose03

    PapaGoose03 Poo-Bah (2,683) May 30, 2005 Michigan
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    You have jogged my memory a little bit, but I am not sure if it was 3.2 or 4.0 or whether it was abv or abw. I now recall searching out a liquor store to buy some higher alcohol beers, although I also recall buying some beer at Epic Brewing before I left their taproom. That stuff was likely the lower alcohol beers.
     
  21. traction

    traction Zealot (533) Dec 4, 2010 Georgia
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    I don't think I have ever seen anyone refer to "alcohol by weight". Strange way to write a law since ABV has been the standard as long as I can remember.
     
  22. HouseofWortship

    HouseofWortship Crusader (796) May 3, 2016 Illinois
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    I get it, the law sucks, but think of all the established breweries that got where they are via growlers sales. People weren’t driving out to the middle of nowhere Vermont to buy cans at Hill Farmstead in the early days.
     
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  23. billandsuz

    billandsuz Devotee (435) Sep 1, 2004 New York

    The 3-tier system does have a few benefits. A few. Mostly it is the least worst option.

    Distributors don't want to or can't be bothered with small brewery accounts. Fine, makes business sense. Small brewers don't typically meet distro requirements anyway.

    But when the distro then gets in the middle of small brewer's business operations, that bull shit is nonsense. Distro's in Minnesota need to STFU. They can't have it both ways. Distributors are a for profit business and should not set the workings of a free market economy. This crap has been going on for decades and is one big reason the 3-tier system is a broken mess of hap hazard regulations and laws, in all 50 States.

    Cheers
     
  24. JackHorzempa

    JackHorzempa Poo-Bah (4,486) Dec 15, 2005 Pennsylvania
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    It is my understanding that back in the olden days it was popular to specify ABW for beer. For example:

    “Although alcohol by volume is becoming more of a standard in the U.S…”

    https://www.beeradvocate.com/archived-articles/518/

    Speaking of “olden” perhaps @jesskidden can provide additional insight here.

    Cheers!
     
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  25. traction

    traction Zealot (533) Dec 4, 2010 Georgia
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    I'm not sure there is any aspect of beer culture and history that @jesskidden can't provide additional insight about
     
  26. JackHorzempa

    JackHorzempa Poo-Bah (4,486) Dec 15, 2005 Pennsylvania
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    Firstly, let me be perfectly clear, I agree with your posted position.

    The 'challenge' as regards the beer (and alcoholic beverage) industry is that it is a heavily regulated industry with typically more regulations than apply to other consumer goods. Needless to say with the abundance (perhaps too many?) of regulations the term "free market economy" does not 100% apply here.

    It would be my personal preference that there be a lesser amount of regulations.

    There was a recent initiative to further liberalize the sale of alcoholic beverages in Pennsylvania. In response the vested industries mounted a campaign to counter this. For example:



    "Nothing personal, it's just business".

    Cheers!
     
  27. dukeandduke

    dukeandduke Meyvn (1,349) Feb 2, 2015 Illinois
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    WTF with that ad?

    Nice use of a mafia/Godfather quote to summarize the criminal cartel's stance.

    EDIT: @JackHorzempa Completely understand the source and viewpoint of UCFW, just amazed and stunned at the blatant absurdity of their "arguments".
     
    #27 dukeandduke, May 13, 2020
    Last edited: May 13, 2020
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  28. JackHorzempa

    JackHorzempa Poo-Bah (4,486) Dec 15, 2005 Pennsylvania
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    That ad was paid for and produced for by the union that represents the workers of the state owned liquor stores. Needless to say they do not want the sale of spirits to be sold by private businesses since they will be staffed by non-union people. The union people would be adversely affected. In addition the unions heavily 'invest' in the Democratic politicians and needless to say those folks support their cause.

    I am pretty sure you already know this but the various vested interest groups (e.g., unions, politicians, etc.) want things to be the way that benefit them. The well being of the consumers/constituents is of a secondary (or tertiary) concern.

    Cheers!
     
  29. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    More likely because it is the vast majority of their business and they view the distributors as partners, not competitors.
     
  30. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    Don't forget the mantra of never letting a crisis go to waste.

    Liquor store business is way up during this, so those distributing breweries should be seeing increased sales at retail.
     
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  31. billandsuz

    billandsuz Devotee (435) Sep 1, 2004 New York

    Wow. What an obnoxious commercial.

    Two moms discussing the health and safety of children? Anytime some folks are telling you they are doing it for the children, watch out.

    "If they sell beer and wine in grocery stores, people will buy beer and wine in grocery stores!"
    which translated means
    "If they sell beer and wine in a grocery store, I will lose my State sponsored monopoly!"

    Ma and Pa liquor stores historically do not want to see alcohol sold anywhere because they would need to increase hours to the legal maximum, since grocery stores are 24 hour and can always sell alcohol whenever it is legal.

    They also don't like the idea of paying for a very expensive license (NJ for example) and then see Wal Mart buy the same license that costs the equivalent of a few hours sales for one day. Can't compete.

    I do think that most people can see right through the fear mongering. I live in NY, where beer is available at any C-Store. And we do not have any different under age problems than PA as far as I can tell.

    State liquor stores are really a tax generating enterprise of course, so there is always that.
    Cheers
     
    #31 billandsuz, May 13, 2020
    Last edited: May 13, 2020
  32. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    "3.2" laws have always been by weight.
     
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  33. bsp77

    bsp77 Poo-Bah (2,307) Apr 27, 2008 Minnesota
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    I feel as if you aren't actually reading about what is going on. I have seen multiple articles regarding how much they are hurting. Here are the points I have seen:

    1. Keg sales to restaurants and bars make up x% of their business (I have seen this number anywhere from 20% to 50%). That has dried up
    2. Taproom sales make up x% of their business, and this differs greatly based on the size of the brewery. Crowler and growler sales typically don't bring them back up to speed in this channel
    3. This leaves the rest to the distributors and retail. Yes, liquor sales are up, but have you looked at a single article explaining how they are up? Hard alcohol, wine, and macros are up; craft is not. And, while I haven't seen this in writing, my guess is that where craft is doing better is in the standbys that are available for delivery and at big box and warehouse stores (and I assume supermarkets for outside MN as well). What would hurt the most is the type of beer that people like to peruse (many people are just in and out for purchase) and try out, which would mean the beer from the smaller breweries.

    It is a fact that the smaller breweries are hurting; they are publicly stating it and many are in danger of closing. And if you want to have an argument about how distributors aren't part of the problem in MN, do at least the minimum of research.
     
  34. JMN44

    JMN44 Initiate (171) Sep 19, 2013 Minnesota

    MN craft brewers have stated that MN liquor stores sales are way up due to increased sales in hard liquor and macro beer. Craft beer sales in stores have been flat.
     
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  35. traction

    traction Zealot (533) Dec 4, 2010 Georgia
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    TIL - obviously this was way before my time

    > After the repeal of Prohibition, a number of state laws prohibiting the sale of intoxicating liquors remained in effect. As these were repealed, they were first replaced by laws limiting the maximum alcohol content allowed for sale as 3.2 ABW. As of 2019, the states of Minnesota and Utah[citation needed] permit general establishments such as supermarket chains and convenience stores to sell only low-point beer; in the 2010s, Colorado, Kansas, and Oklahoma revised state laws to end this practice.

    And I thought GA had bad laws. We didn't get Sunday sales of alcohol until 5 years ago and breweries couldn't sell any packaged beer until 2017. Right now the worst law we still have concerning beer is that any beer over 14% is illegal in the state. I can buy 190 proof everclear but not a bottle of BCBS that isn't custom made for the Georgia market at a lower ABV.

    https://wearebrewstuds.com/stories/...county-stout-goose-island-goof-sorry-georgia/

    If you read that article Goose Island actually sent a load of regular BCBS to GA but since it was illegal here and asked everyone who received it to send it back.
     
  36. JackHorzempa

    JackHorzempa Poo-Bah (4,486) Dec 15, 2005 Pennsylvania
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    You will not get a disagreement from me here.
    Well, I have the ability to see this for what it is but I suppose I should caveat that (nevermind)...
    That is an counter-argument I have heard before but I always retort that the state will realize taxes of the privatized the sale of spirits (and all brands of wines). For every sale of booze there is a 'hidden tax' (Johnstown Flood Tax enacted in the 1930's) plus there is sales tax (6% where I live). And maybe some other excise tax? Whether the booze is sold at a state owned store or a private store taxes are collected. In the meantime Pennsylvanians who are near a border state (I am kinda 'close' to Delaware) will often times travel to neighboring states to shop; I will state I do this. In this case the state has lost all revenue (including taxes).

    There may be some aspects of the financials of the PLCB that I am not aware of but to my mind the principle reason for lack of full reform here is the power of the union representing the state store workers in conjunction of the politicians they 'have in their pocket'.

    Cheers!
     
    #36 JackHorzempa, May 13, 2020
    Last edited: May 13, 2020
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  37. officerbill

    officerbill Devotee (482) Feb 9, 2019 New York
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    In South Carolina one child per week dies because of the liquor laws :scream:
     
  38. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    I've read all of that, and have no doubts about it.

    My skepticism is that any of these changes will do any good for the very small breweries that are typically used as examples. Drive-in service is not the same as being in a taproom. I doubt it would help that much. Every little bit helps, but people who go to the taproom to socialize and drink just aren't going to make up for that with at-home drinking.

    For the little guys, if they aren't already canning in 12-16 oz, how realistic is it that they could get mobile canning operations lined up and develop a 4- or 6-pack drive up business before this whole thing opens back up?

    I am supporting the small breweries closest to me by buying their crowlers and 750 bottles either delivery or curb-side. I think that is a more productive strategy in the short term than trying to hitch your wagon to such a radical change pushed through a notoriously slow-moving legislature.

    I believe these laws do need to change, so I am in favor of all of the proposed laws. But, I'm just a cynical old curmudgeon who is not taking these "rescue the small breweries from the pandemic" stuff as being really about that. They only make sense in that regard (IMO) if the shut down lasts for months more.
     
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  39. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    Yeah, I've read something similar - maybe from the same source.

    However, in my view that also says people are unlikely to buy these 4- and 6-packs just because they are from a brewery drive-up rather than from a liquor store.
     
  40. MNAle

    MNAle Poo-Bah (1,795) Sep 6, 2011 Minnesota
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    It was North Carolina... try to keep up! :grin::grin::grin::grin: