Beer Industry on the Brink

The team was busy last week attending and covering the Brewers Association's annual Craft Brewers Conference in Washington, DC. In addition to live-tweeting various seminars from the conference, our own Jarrett Dieterle published the following dispatch recapping the conference and the current state of the beer industry:

“You’re probably going to get fat.” These were some of the many words of warning handed out by Liquid Mechanics CEO Davin Helden during his talk on what it takes to start a craft brewery in the United States today. Other nuggets included: “My first suggestion is to hire a lawyer,” and “you will drain your savings accounts and 401(k)s” despite working 70 hours a week.

Helden — who proudly announced that he was finally off Medicaid now that his brewery had grown to a sufficient size such that he could afford health insurance — wasn’t the only person sounding a note of caution at this year’s Brewers Association Craft Brewers Conference. Numerous panel speakers cited the possibility that America’s craft-beer market is oversaturated. The Brewers Association’s chief economist, Bart Watson, told brewery owners to get used to slower growth trends, even though craft beer continues to expand its share of the beer market.

With the number of breweries in the United States now topping 5,000, competition in the beer market has grown fierce. Brewers increasingly look for any advantage or leg-up they can find to distinguish themselves from the crowd. From a policy perspective, this makes rational and market-friendly beer laws more important than ever, since the more time brewers spend trying to comply with frustrating laws and regulations, the less time they have to brew and to grow their brands...

Read the whole thing here:

Let all S.C. liquor stores compete on the same level

R Street's Jarrett Dieterle weighed in on a recent South Carolina supreme court case, which held that a law limiting the number of liquor retail stores a single owner could operate within the state was unconstitutional. The article originally appeared in the Post & Courier:

Until very recently, South Carolina liquor store owners were only allowed to operate up to three retail outlets in the Palmetto State. The decades-old cap was struck down late last month by the state Supreme Court as unconstitutional, on grounds the law was arbitrary and motivated solely by economic protectionism.

While the state’s incumbent liquor stores have been quick to condemn the decision, South Carolinians should embrace the court’s holding and resist attempts to reinstate the cap in a slightly altered form.

Read the whole thing at: previously covered this South Carolina case here and here.

Committee to Hold Hearing on Mail Order Wine Purchases in Connecticut

Connecticut's legislature is considering legislation that would allow consumers in the state to have out-of-state wine shipped directly to their door. The Hartford Courant's Daniela Altimari reports:

"The legislature's finance committee will hold a hearing next week on a bill that would permit Connecticut consumers to buy wine over the Internet.

Under current law, online liquor retailers and out-of-state wine shops are barred from shipping their wares to customers in this state..."

Read more at:

Top Texas liquor regulator got "hazardous duty" pay on Hawaii junket

Jay Root of the Texas Tribune continues his excellent reporting on the growing scandal involving Texas liquor regulators:

"The state’s top liquor regulator got “hazardous duty pay” — typically provided to state employees doing risky work — while attending alcohol industry conferences at fancy resorts in Hawaii, Florida and California, state records show. 

The reason: Sherry Cook was trained as a “peace officer” — a cop — a designation that allowed the director of the Texas Alcoholic Beverage Commission to increase her take-home pay, get a state-owned vehicle and fill her tank with free state gas. 

Cook is not alone. 

TABC paid to help Deputy Director Ed Swedberg get trained last year as a certified police officer and gave him a car even though he — like Cook — is a civilian employee whose job description does not require peace officer certification, records show. 

The agency's annual reports show the number of employees provided state-owned cars at TABC's Austin headquarters has more than doubled in less than a decade. In 2008, six people at agency headquarters had state-provided cars, the report that year said. By the 2016 fiscal year, that number had shot up to 15, the reports show.

High-powered weapons apparently come with the job, too..."

Read the whole thing at:

The Texas Tribune also recently reported that the state's top liquor regulator is stepping down amid the controversy: has previously linked to the Texas Tribune's ongoing coverage of this situation here and here.


Bill Allowing Shipments From Out-of-State Wine Stores to New Yorkers Gains Support

Business Wire reports:

"With the introduction of Assembly Bill 5991, New York State is poised to open the door for the state's wine consumers to enter the 21st century. The bill, sponsored by Representative Amy Paulin, would give New York wine consumers the right to receive wine shipments from out-of-state wine stores, Internet retailers, wine-of-the-month clubs and wine auction houses....

'Consumers of fine wine in New York State are slowly learning that it is currently illegal for them to receive shipments from out-of-state wine stores. They cannot fathom why these shipments would be illegal, while out of state wineries, New York state wineries, and New York state retailers are legally able to ship them wine.' said Tom Wark, executive director of the National Association of Wine Retailers. 'A5991 would give New Yorkers access to nearly every wine available in the American marketplace and that is a privilege that they should have had years ago.'..."

Read more at:

Toward a brewer-friendly Maryland

The Baltimore Sun's editorial board takes up Maryland's recent beer legislation controversy, coming out in favor of the state Comptroller Peter Franchot's creation of a new task force to re-examine the state's beer laws.

"The fight this over Maryland's beer laws during the 2017 General Assembly session wasn't a new one. Craft brewers have been chafing for years against a post-Prohibition regulatory scheme that restricts their ability to set up and expand their businesses while putting them at the mercy of more established (and more politically connected) players in the wholesale and retail sectors. The only difference this year was the presence of alcohol industry giant Diageo, which found common cause with the little guys over its plans to create a Guinness-themed taproom at an old spirits plant in Relay. If not for that, the brewers' complaints would likely have fallen on deaf ears yet again; instead, the legislature eventually agreed to legislation that expands the amount of beer Guinness and the craft brewers alike can sell in their taprooms.

And even so, the process was messy and revealed the extent to which Maryland's liquor laws are not designed to protect the public, much less to foster the growth of a potentially beneficial new industry, but to protect the economic interests of existing wholesalers and retailers. To wit: If Guinness or any of the craft brewers serve more than 2,000 barrels in their taprooms in a year, they can sell up to 1,000 more but only if they first sell them to wholesalers and buy them back at a higher price — not to mention pay to have them transported to a warehouse, unloaded, reloaded and transported back. Any new taprooms will have to close nightly by 10 p.m., a protection for bar owners who fear competition.

In response, Comptroller Peter Franchot has announced the creation of a task force to re-examine the state's beer laws with the aim to make them more craft brewer-friendly. It's an effort that is long overdue..."

Read more at: previously covered the Maryland beer bill debates here.

Minnesota Sunday liquor sales bill gets final OK; Dayton to sign

Tim Pugmire reports for MPRNews:

"The Minnesota House on Thursday sent a final bill to Gov. Mark Dayton to end the state's longtime ban on Sunday liquor sales. Dayton has said he'll sign it. The change could start in July.

Minnesota is one of just 12 states that still ban Sunday liquor sales. Supporters say lifting Minnesota's ban, which dates back to Prohibition, would mean an end to cross-border beer runs into Wisconsin and North and South Dakota on Sundays that cost the state tax revenue..."

Read more at:

It’s time to update Iowa’s alcohol laws

Iowa's Alcoholic Beverages Division administrator co-authored an op-ed in the Des Moines Register on updating the state's alcohol laws:

"For many years, Iowa’s alcohol laws have, essentially, been static. The few revisions that have occurred have been to accommodate changes in the industry such as native wineries and breweries. As the pace of change within the industry accelerated over the past decades, these somewhat ad hoc solutions continued, leaving our state with a patchwork of exceptions that have created confusion and regulatory uncertainty.

In an effort to address this condition and at the request of Gov. Branstad and Lt. Gov. Reynolds, we convened a 15-member group of stakeholders in September 2016 to study Iowa’s alcohol laws to determine what changes could be suggested for legislative consideration...

[T]he recommendations presented to the governor and lieutenant governor were centered on the disparity that continues in the alcohol manufacturing world and are part of HF 607, which has passed a vote by the House of Representatives and is heading to the Senate for consideration.

Key provisions in HF 607 include allowing native distilleries to sell their products by the glass to customers at their facilities and to sell nine bottles of their making per person (they are now limited to two bottles). The bill also eliminates the requirement for brewpubs to route the beer they pour into growlers through a wholesale distributor, saving time and hassle for both the brewpub and the wholesaler. Additionally, HF 607 allows breweries to serve wine by the glass at their tap rooms, a reciprocal privilege based on the fact that the Legislature had carved out an exception in 2009 that allowed wineries to serve beer..."

Read more at:



Craft beer regulation change stalls in NC legislature

Reform will have to wait at least another two years in North Carolina, as a bill to raise the state's 25,000 barrel self-distribution cap was strangled in committee. Mark Binker has the story for The News & Observer:

"Lawmakers will drop their attempt to raise the self-distribution limit for North Carolina’s craft brewers, according to a proposal distributed to members of the House Alcoholic Beverage Control Committee shortly after 8 p.m. Tuesday.

Rep. Chuck McGrady, a Henderson County Republican, confirmed that the new version of House Bill 500 will also drop language that would have allowed brewers to more easily break their contracts with wholesalers.

“I can’t pass the bill with that in there,” McGrady said. “I’m very disappointed. It just seems like the inside politics game wins here.”

The beer bill has been one of the most closely watched pieces of legislation this session. Just getting the bill out of committee in its original form would have been a difficult task. A bruising battle surely would have ensued on the House floor, and Senate leaders have said they have little appetite for the measure.

Under current law, small brewers may distribute up to 25,000 barrels of beer on their own. If they produce and sell more, brewers must enter an agreement with a wholesaler, a middleman who collects taxes and delivers beer to bars, restaurants, and retail stores. The system is a holdover from the Prohibition era and was originally aimed at keeping large brewers in check..."

Read more at: has previously linked to commentary and news surrounding the effort to "raise the cap" in North Carolina hereherehere, and here.

North Carolina House ABC Committee Hears Beer-Cap Arguments

Sarah Willets reports for Indy Week:

"The House Alcohol Beverage Control Commission discussed a bill this morning that would raise the cap on how much beer breweries can sell before they must go through an independent distributor.

The morning committee meeting included testimony from the N.C. Craft Brewers Guild, Craft Freedom, a group of brewers in favor of raising the ‘’barrel cap,” Charlotte’s NoDa Brewing Company, the N.C. Beer & Wine Wholesalers Association, and the Christian Action League. No vote was taken. The committee will revisit the bill next week, said Representative Chuck McGrady, bill sponsor and committee chair.

Currently, North Carolina brewers who sell no more than twenty-five thousand barrels of beer each year can get their own wholesaler permit and sell their own beer. Beyond twenty-five thousand barrels, they need to go through a wholesaler. These wholesale agreements are exclusive and can cost breweries revenue.

House Bill 500 would raise the barrel cap to two hundred thousand barrels per year and let breweries get out of distribution contracts when they see fit..."

Read more at: has previously linked to commentary and news surrounding the effort to "raise the cap" in North Carolina here, here, and here.