E-Malt.com News article: USA, NJ: Brewers unhappy about New Jersey beer laws

Greg Zaccardi, founder and president of High Point Brewing Co., in Butler, is frustrated with New Jersey beer laws, Njbiz.com reported on February, 6.

"New Jersey has a unique arrangement of restrictions that are much more restrictive than our neighboring states," Zaccardi said, starting with a provision that prevents brewers from selling cases of beer at their brewery gift shops.

"We're allowed to sell it anywhere else in the world except in our building," said Zaccardi, whose company sells its beers under the Ramstein label.

That may change under a bill that would raise the amount small breweries and brewpubs can produce, as well as remove other restrictions on their selling.

Brewer Charlie Schroeder, of the Trap Rock brewpub in Berkeley Heights, said since the industry was established in 1995, brewers have been too focused on building their businesses to advocate for revising state laws.

"What we're trying to do is have laws that other states are allowed to do," he said. Brewpubs are seeking to increase the amount of beer they can produce, as well as the number of outlets in which it can be sold.

But Paul Santelle, owner of Garden State Discount Liquors, in Perth Amboy, and president of the New Jersey Liquor Stores Alliance, said the steep growth in small brewer production argues against a case that Garden State brewers are being unfairly limited.
"We don't want to go down the same road we just went down with the wineries," Santelle said, referring to legislation signed into law last month that allows wineries to engage in direct shipping. Direct sales, he said, weaken the checks and balances in the three-tier system of producers, wholesalers and retailers.

MBI-GluckShaw lobbyist Jeffrey A. Warsh said beer wholesalers are working with legislators to make substantial amendments to the bill, including restrictions on allowing brewpub owners to sell their beer at other restaurants they own. As written, he said, the bill would allow small brewers to expand their production to 500,000 barrels a year — a provision that's unlikely to benefit current brewers in the state.

Once in-state brewpubs could sell through multiple outlets, "what would stop other breweries from being able to do that?" Warsh asked.

Robert J. Pinard, executive director of the Beer Wholesalers Association of New Jersey, said the 500,000-barrel limit would allow the vast majority of U.S. breweries to open direct sales outlets in New Jersey, putting local brewers at a disadvantage. Instead, he would like to see the current 300,000-barrel limit lowered.

"The problem is more than just having some empathy for some small businesspeople who want to get off the ground," Pinard said. "The problem in New Jersey is you're going to have “out-of-state" breweries using the law to their advantage.”

Santelle pointed to a provision in the bill that would allow brewpubs to expand from two to 10 outlets as a way of cutting out other retailers.

"They really want to monopolize what they're selling," Santelle said, adding that in the long run, the changes could lead to a brewer monopoly on some beer sales, which he said could have implications for consumer choice and prices.

Pinard said the state also could lose millions of dollars in sales and excise tax revenue, since wholesalers currently collect those taxes. Pinard said the wholesalers employ more than 2,000 residents and contribute an estimated $100 mln to the economy.

Eric Orlando, a Kaufman Zita Group lobbyist working with the Garden State Craft Brewers Guild, said the brewers want to work with wholesalers and retailers to revise the bill.

A potential beneficiary of the bill is Flying Fish Brewing Co., in Cherry Hill, which is expanding to a new facility in Somerdale.

"We're trying to compete with at least one arm tied behind our backs," said Gene Muller, Flying Fish founder and president, noting the state is No. 32 in the country in production by small breweries. "With our demographics, we should be doing a lot better than that."

Muller said out-of-state visitors are disappointed when they find out how little beer they can buy at the brewery. "You try to give directions to a local beer distributor and you say, go here and take a jughandle, and their face goes blank," he said.

Paul Gatza, director of the Colorado-based Brewers Association, said New Jersey is trailing other parts of the country, where a growing business model for breweries is to sell directly to the public.

"In general, consumer choice tends to win out in the long run," he said.

And Muller said being able to sell more beer directly to the public has positive precedents, both from in-state wineries and out-of-state breweries.

"We're not inventing anything new," he said. "We're doing something that the wineries have already done. Cats aren't sleeping with dogs."


08 February, 2012