E-Malt.com News article: US, IN: A nearly 20-year-old state law could slow the growth of microbrewery industry

Some small brewery owners are worried a nearly 20-year-old state law that ties state tax breaks to the amount of beer they produce could slow the growth of Indiana's emerging microbrewery industry, Chicago Tribune posted on March, 22.

Indiana has 34 breweries that brewed nearly 50,000 barrels of craft beers last year. But most of that volume came from three microbreweries, each of which is approaching a production cap of 20,000 barrels per year to qualify for state tax breaks.

Breweries that produce more than 20,000 barrels will see their state taxes nearly double under a 1993 state law, The Indianapolis Star reported.

Those breweries want to raise the annual production limit raised to 60,000 barrels.

Omar Robinson said his Sun King brewery in Indianapolis could close tasting rooms, stop distributing its own beer and close its brew pubs if its taxes rise.

"The craft industry has exploded, so I guess this problem just kind of sneaked up," Robinson said on March, 21, as he watched another new stainless steel brewing tank being delivered to Sun King's building downtown.

In 2010, Sun King's first full year of operations, the brewery made about 5,200 barrels of beer. This year, it hopes to brew about 12,000 barrels and should reach about 20,000 barrels by next year, Robinson said.

The owners of Three Floyds brewery in Munster and Upland brewery in Bloomington also are concerned, and a lobbyist for the industry says there's no bill in the legislature to change the law, but he hopes to propose one.

Mark Webb, lobbyist for the Brewers Guild of Indiana, said the Indiana General Assembly is focused on other issues, but still he hopes legislators will be sympathetic to concerns of Indiana's emerging beer industry. Less than 2 percent of the beer consumed in Indiana is made in the state.

Webb said that raising the limits to 60,000 barrels, "should buy us some time, and it matches the definition (of a small brewery) used in federal law."

If no progress is made this session, Webb said the industry will keep pushing for changes to the law and try to have a bill ready to introduce in the next legislative session.

The breweries' growing pains mirror those of Indiana's small wineries, which were limited to 150,000 gallons of production a year in the 1970s. The small winery act has been amended many times since to make room for Hoosier winemakers bottling hundreds of thousands of gallons a year.

The microbrewery law was written when Indiana had three small brew pubs making 1,000 barrels a year, so the 20,000 ceiling seemed high, lobbyists for the industry told the Star.

At Upland, marketing operations manager Charles Stanley said the Bloomington brewery grew from about 8,500 barrels last year to around 10,000 barrels this year "so we have a few years to go."

“We're growing while we control the quality," Stanley said.


23 March, 2011