Proposed law threatens brew pubs’ survival

By MATT PARSONS/Montana State News

Bridger Brewing Company quietly opened its doors earlier this month, serving up a couple thousand pints of their signature Vigilante India Pale Ale and Bridger Porter to patrons thirsty for something new.

But if some members of the Montana legislature have their way, Bridger Brewing may have to close its doors as quietly as they opened.  A bill aiming to protect both distributors and local tavern owners from an explosion of local breweries selling beer directly to the public is on its way to the Legislature and puts at risk an industry at odds with Montana’s alcohol establishment.

When you walk into Bridger Brewing, the air still hangs heavy with the smell of wood stain and fresh paint.  Everything is new, from the beer taps to the bar stools to the stainless steel pizza ovens.  This is not a brewery with a tasting room.  It’s a full-fledged restaurant that happens to brew beer.

“I wanted to create more of a brewpub atmosphere,” said David Breck, founder and brewmaster at Bridger Brewing.  “I’ve always envisioned a comfortable place to come, to bring your family.” 

But at 3 p.m. on a Thursday afternoon, the clientele appeared to be in their mid 20’s.  Hardly a bar atmosphere, though, the patrons were talking as much about the beer in front of them as about their plans for the night.  Many of them ordered “flights,” trying out four-ounce samples of the four beers that Bridger Brewing currently has to offer.

When the laws that regulate Montana breweries and taprooms were created, legislators most likely never envisioned a place like Breck built. Still, Breck believes he is following the spirit of the law.

Currently, a “small brewery” is able to brew from 100 to 10,000 barrels of beer and sell or give away a certain amount of beer per person each day. The Montana statute specifically says that “a small brewery may, at one location for each brewery license, provide samples of beer that were brewed and fermented on the premises in a sample room located on the licensed premises. The samples may be provided with or without charge between the hours of 10 a.m. and 8 p.m. No more than 48 ounces of malt beverage may be sold or given to each individual customer during a business day.”

Breck high-fives one of his servers, which his place is swarming with. This is nothing like Bozone Brewery, where most nights a single bartender manages an entire room of thirsty patrons.  At Bridger there is an obvious focus on service like you would see at a restaurant.

“We employ anywhere from 15 to 20 people at any one time,” Breck said. “This is one of the unintended consequences of allowing breweries like ours to open.  We create jobs. We create a product wholly made in Montana.  We use Montana resources and pump money back into the local economy.”

Still, there are those who would argue that the $600 application fee that Breck paid to get his Montana brewer’s license threatens to disrupt Montana’s system of liquor licensing. Currently, if restaurateurs want to serve beer and wine, they must obtain a cabaret license, and if a bar wants to serve liquor they must purchase a liquor/gambling license. These licenses currently sell on the open market for around $200,000 for a cabaret license and $500,000 for a liquor license.

Breck admits he got a deal on the license. “But we have a quarter million dollars in brewing equipment sitting here.” And Breck isn’t interested in only selling beer in his taprooms; he plans are to build his brand and then send his most popular beers to the tavern community. He even foresees a separate facility that could house a bottle and canning operation.

But Breck says he has to get there first. “We need to have this honeymoon period so we can establish ourselves. A taproom lets us sell beer at a high margin and become profitable. A law like what is being proposed right now in the legislature would put us right out of business.”

The legislation being proposed would limit the amount of beer that a small brewery could serve on-premise to 40 percent of its production.  That would mean that 60 percent of the beer would have to be sold in bottles or kegs to distributors, who would then sell the beer to bars and grocery stores.

“It just doesn’t make any sense,” says Breck.  “We don’t have to sell 60 percent of our pizza outside of our restaurant.”

For businesses like Bridger Brewing and many other small breweries across the state, a change in how they can sell their beer would mean a sizeable shift in their business model and some may have to abandon their current locations.

But Breck believes there is a better way than unilateral legislation.

“I think that the Montana Tavern Association and the Montana Brewer’s Association can sit down and come to some kind of agreement,” he said. “I’m totally open to some kind of a ‘brewer’s license’ that would regulate how breweries operate. I just think the brewers should be part of the conversation.”

There are now some 38 breweries and counting in the state of Montana, second only to Vermont in breweries per capita.  Many of those have sprung up in the last decade and are quite small compared to the larger operations in states like Oregon and Wisconsin.

Still, craft brew sales now count for nearly $50 million in annual revenue, over $1.5 million in state taxes and employ over 430 Montanans, according to the University of Montana’s Bureau of Business and Economic Research. Over 2.6 million gallons of beer is manufactured into 85,000 barrels, bottles and cans in Montana craft breweries each year. That may sound like a lot, but some breweries are actually starting to run out of beer.

Kettlehouse Brewing Company in Missoula recently had to pull back its distribution of its famous Cold Smoke beer because it was approaching the 10,000 barrel limit, according to their website. Montana state law only allows “small breweries” to produce up to 10,000 barrels annually. This is the same law that makes it legal to sell beer from taprooms, something that Kettlehouse couldn’t do if they exceeded the small brewery designation.

Big Sky Brewing regularly exceeds that limit in their distribution and so is not allowed to sell its beer directly to consumers through its taproom.  Because Kettlehouse’s two taprooms in Missoula are more lucrative than their distribution network, they decided to pull their beer from relatively large markets like Kalispell, Helena and Great Falls to stay under the 10,000-barrel cap.

Brewers like Kettlehouse have an interest in working out a solution with the Montana Brewer’s Association so that they can continue both operating their taprooms and distributing their beer through Montana bars and grocery stores. But at this point, brewers like Breck need to keep pouring beers in their taproom so they can pay for all their shiny new equipment.

Some day, Breck and his partners hope they have the same problem as Kettlehouse. But right now that hope hinges on what the Legislature does.

– Edited by Alex Komsthoeft

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