Good Beer Hunting

Louisiana Breweries Take Self-Distro to the Capitol on “A Strong Moral Case”

photo by Michael Kiser

photo by Michael Kiser

This afternoon will mark another important moment in the ongoing saga of Louisiana beer, as Senate Bill 314 is discussed in a committee hearing in front of seven state politicians.

Professionals from across the industry are expected to provide testimony to Senate Committee on Judiciary B on the bill, which is targeted at self-distribution for in-state wineries, but contains an amendment that would include breweries as well. The state updated its laws in 2012 to allow breweries to sell their beer within their own taprooms, but Louisiana is still one of just 13 states in the country to not allow businesses to sell directly to retailers in some fashion.

The bill is sponsored by State Sen. Sharon Hewitt, a Republican who began serving her first term in office in January 2016. As originally written, the law would have had only impacted the state’s three operating wineries, but now has the potential to expand its reach to most in-state breweries.

As written, the beer-focused amendment would allow for a production brewery (not brewpub) making less than 25,000 barrels a year the right to self-distribute up to 10,000 BBLs. It would apply to about two-thirds of the state’s 34 beer-producing businesses. Thanks to a 2014 update to the original own-premise sales law, breweries can currently sell via their taproom 3,000 BBLs a year or 10 percent of volume, whatever is greater.

The challenge, as it always seems to be with updating Prohibition-era laws, is convincing elected officials to show support for the changes. The arguments for and against are the same as typically heard: brewery owners say updating laws would allow them to grow their businesses, hire more workers, and build interest for the state and a Louisiana-made good. Distributors, never a group that takes to change easily, contend that three-tier laws enable them to best serve producers, especially when they put “blood, sweat and tears” into selling brands.

“No ugly divorces,” Mockler Beverage co-owner Patrick Mockler recently told the Greater Baton Rouge Business Report. “They have expectations of us, and we have expectations of them. The system works very well.”

It’s a common refrain from wholesalers all over the country. And indeed, the system does work well...for them. On face value, breweries may have an uphill battle convincing the judiciary committee of the unlevel playing field. Of the seven-member panel made up of five democrats and two republicans, six have accepted campaign donations in their most recent 2015 election efforts from the Beer Industry League of Louisiana, a trade group that represents the state’s distributors, according to numbers tracked by the National Institute on Money in State Politics, a nonpartisan nonprofit organization. Contributions ranged in amounts from $1,000 to $3,500. The lone standout member is Sen. Karen Carter Peterson, who received $2,853 from the Beer Industry League during a 2011 campaign, but not during her 2015 reelection. Three years ago, she did receive three separate $500 contributions each from Anheuser-Busch, Republic National Distributing, and Crescent Crown Distributing.

“There’s no way we could go dollar-for-dollar in campaign contributions, but the three-tier system is supposed to be set up so we shouldn’t have to,” says Karlos Knott, president of Bayou Teche Brewing as well as the Louisiana Craft Beer Guild. “We have a strong moral case, and in some ways that should be supreme to the dollar, but we know it’s not.”

Knott says he expects the committee to vote at the conclusion of arguments today—the day’s hearings begin at 2:30 p.m. Louisiana local time—as to whether SB 314 should move to state chambers for consideration. He expects to have 20-30 people available to speak on behalf of the bill, including employees from retailers, ingredient providers, an economist, and staff from breweries and bars. He’s having just one of his 11 employees stay at the Bayou Teche taproom so the rest “can see democracy at work, or not at work, I don’t know,” he says with a chuckle.

The number of those offering testimony would have been higher, Knott says, but some business owners and allies of the bill backed out of their allotted time in front of the judiciary committee.

“Reports of distributors visiting retail accounts, threatening them to not testify on behalf or support small brewer self distribution,” Scott Wood, owner and brewer at New Orleans’ Courtyard Brewing, tweeted this weekend. In a conversation with GBH, Wood went a step further, suggesting that brewery owners and staff also changed their minds about presenting at the hearing for fear of damaging their brands.

Representatives from the Beer Industry League didn’t return GBH’s calls for comment by publication time.

No matter what’s happening behind the scenes, Wood points out the obvious ramifications for his own business, and likely others: he wants to grow, but it needs to be financially viable. He’s currently planning to start work on a new production facility this summer and spend $1-$2 million in the process, but “if the laws changed, we’d be posed for pretty extreme growth,” he says. “I think it would not be a lot of time from there before we’re at 10,000 BBLs.”

Even still, the opposing argument is that things are already pretty good and have allowed growth so far, so why rock the boat? In an interview with Greater Baton Rouge Business Report, John Williams, executive director of the Beer Industry League of Louisiana, noted that craft beer made up 4.5% of the sales in Louisiana last year, while taking up about 18% of retail space and more than half the taps at bars and restaurants. There’s already opportunity to compete, he said.

Oddly enough, all this back-and-forth over modernizing distribution law seems secondary to two other recent bills that got significant attention. One, proposed by democratic senator Eric LaFleur, wanted to allow 19- and 20-year-olds to drink legally with proper certification. It was quickly pulled.

Another bill currently moving through the Senate, though likely to be amended along the way, would allow for retailers, restaurants, and third-party services to deliver factory-sealed alcohol. It’s a service that’s rapidly growing behind the success of companies like Drizly and Instacart.

To ease worry about abusing the law, it would require a delivery person to be at least 18 years old and have a valid vendor permit and confirm the age of customer upon delivery. The delivering retailer would also need to purchase the alcohol from a Louisiana-licensed wholesaler.

“We’ve worked very, very hard with the Louisiana Restaurant Association, the Louisiana Beer League and with retailers to get his bill in the correct posture,” Sen. Dan Morrish, the bill’s sponsor, told Senate Committee on Judiciary B when first presenting the proposed law.

The Beer Industry League’s Williams expressed concern on certain aspects of the bill, including permitting and delivery locations, but admitted his organization was working toward compromise.

That bill advanced without objection. We’ll see what happens with SB 314 in a few hours.

—Bryan Roth