E-Malt.com News article: US, IL: Distribution laws hinder charity beer sales

Beer crafters at the Limestone Brewing Company in Plainfield would like to sell kegs of 6450 Red Ale to local restaurants who want to serve it to their customers, The Herald-News reported March, 20.

Naming the ale for Plainfield’s Rotary Club Chapter 6450, Limestone donates 50 cents of every draw of the sweet malty ale to the local charity.

A number of Rotary Club members who own eateries would like to put 6450 Red Ale on their menus, helping the local brew pub and their charity.

But they can’t.

“The way the law stands right now, the only way to get beer out of here is in half-gallon growlers we fill at the taps,” said Ken McMullen, head brewer at Limestone Brewing Company, “unless we sign on with a distributor.”

That problem has pulled Limestone Brewing Company into a fight brewing over self-distribution rights for small beer crafters. Two bills set to come to vote in the Illinois Legislature this month could allow small brewers to sell specialty beers directly to retailers.

“Illinois brewers’ longstanding rights to self-distribute are under threat, which could slow down the tremendous growth of craft brewing and its related economic impact,” according to a statement on the Illinois Craft Brewers Guild website.

The boutique beer business is booming. While beer sales overall were down 2.7 percent last year, the craft beer niche grew by 12 percent in retail dollars. The retail value of craft breweries in 2009 was an estimated $6.98 billion, up from $6.32 billion in 2008. Craft brewers sign about 100,000 paychecks in the U.S., including serving staff in brewpubs, according to figures from the Brewers Association.

Small beer crafters such as Limestone Brewing Company see self-distribution as an important avenue of building business in a hot market, broadening consumer choice and creating local jobs.

Because of a court ruling, to sell their beers to retailers, small breweries will need a distributor. If no distributor is interested, the pub will be banned from marketing it themselves.

If Limestone were allowed to distribute its beer, “at this point, it would just be Ken McMullen loading up a few kegs in a truck and driving them downtown and unloading them,” McMullen said.

“But that could lead to something bigger,” he said. “It doesn’t make sense that we can’t do that.”

The pair of bills, Senate Bill 88 and House Bill 205, would allow brewers producing fewer than 60,000 barrels of beer a year to hold a distributor’s license. Brewpubs such as Limestone, now permitted to sell up to 50,000 gallons for off-site consumption, would also be allowed to self-distribute if the new bill becomes law.

The issues behind the brewers’ bills are tangled. The bills are the byproduct of a recent federal court ruling, Anheuser-Busch InBev v. Illinois Liquor Control Commission, which deemed a section of Illinois law unconstitutional because it did not treat in-state and out-of-state brewers the same.

That court decision came after a U.S. Supreme Court ruling in Granholm v. Heald affecting direct shipments of wineries.

But that case quashed the right of Illinois brewers to sell their beer directly to restaurants, bars and package goods outlets. But the ruling gave the Illinois General Assembly until March 31, when the decision takes effect, to amend the Liquor Control Act. The judge said the General Assembly could consider a gallon cap “to permit self-distribution by for small brewers, which many states do constitutionally.”

Distributors and large brewers have come out winners in the court rulings and aren’t likely to encourage the bills’ passage since it benefits small brewers.

“Distributors and other larger breweries have the advantage because, the way things stand, small and new breweries just don’t have the same opportunities to make their business grow,” McMullen said.


23 March, 2011