More States Marching Toward Direct Sales?
Source: Beer Business Daily
MARCH 23, 2017
We’ve got a lot of three-tier issues on the hot plate today. read on.
If you’ve been following BBD for the last few months, you know that one of our major headlines is the growth of brewery-owned taprooms. Brewers Association economist Bart Watson estimates that such beer, coming directly from brewers’ brite tanks to customers, probably accounts for about 1 in 11 draft beers now in the on-premise universe. And growing.
It’s a particularly profitable model, selling beer in your own taproom as opposed to through the three-tier system. And we continue to see the expansion of direct sales. In fact, our most recent proprietary survey of the Top 50 Craft Brewers revealed that brewery-owned tasting rooms (or brewpubs) had increased as a portion of their overall sales for half of those brewers who had such operations. That’s over the last 1-2 years.
And while such tasting rooms are a small percentage of the top craft brewers’ ops — with the majority pegging it between 1%-5% of their total business — for a few, it’s between 6% and 15%, and higher.
All that exposition to highlight the current legal battle in Montana.
House Bill 541 seeks to raise the cap for Montana “small brewers” to 60,000 barrels. The current cap is 10,000 barrels.
As we understand, “small breweries” (under 10,000 barrels) can currently can sell up to 48 ounces per person on premise. The bill would extend these taproom sales privileges to all brewers, till 8 p.m.
Montana’s Big Sky Brewing Company owner, Neal Leathers, explains his conundrum.
“Right now, if you’re over 10,000 barrels — that’s 20,000 kegs or 140,000 cases of beer — you can’t sell for on-premise consumption,” he told the local NBC affiliate. “That means we’ve been giving away 800 or 900 kegs a year. That’s over $4 million worth of beer we’ve given to people.”
But the law “does not prohibit breweries from selling and delivering beer manufactured by them, in original packages, at either wholesale or retail.” So Bayern Brewing Company, for example, “shuts down its distribution altogether, aside from their taproom, after they distribute 10,000 barrels of beer.”
LAST HOLDOUTS? Indeed many states have some restrictions on how much beer can be sold at an “own” retail premises, though most can sell some amount. That wasn’t the case in Georgia and Mississippi, at least at the start of this year.
By now Mississippi has passed a law that allows craft breweries, who produce less than 60,000 barrels, to sell up to 1,500 barrels or 10% of their annual volume (whichever is lesser) per year to consumers for on and off-premise consumption. The new law is slated to go into effect July 1.
GEORGIA TOO? In related news, Georgia’s Senate just passed at 52-1 the “Beer Bill” (now applicable to distilleries too), or Senate Bill 85, which would allow brewers direct retail sales for the first time. The bill will allow brewers to directly sell up to 3,000 barrels of beer all-in (including pints at the brewery and package beer to go, up to 288 ounces per person, per day, but who is counting). “Individual customers would be limited to buying one case of beer per day,” per Atlanta Journal Constitution. It’s on its way to Gov. Nathan Deal.
The three-tier bastardization march goes on.