Craft brewers not satisfied with self-distribution law
New law prevents brewpubs from self-distributing.
Last month, Gov. Pat Quinn signed into law a bill restoring the right of small Illinois craft brewers to sell their products directly to taverns and retailers without using a middleman. Legislators in Springfield heralded the law as a victory for the little guy. But craft brewers feel the bill is limiting: It permits only breweries that produce 15,000 barrels a year or fewer to self-distribute, caps self-distribution at 7,500 barrels per year and does not permit self-distribution by brewpubs. Haymarket Pub & Brewery owner Pete Crowley is thirsty for more.
Crowley, who serves as president of the Illinois Craft Brewers Guild, argues the brewery size limit and self-distribution cap don’t give independent breweries enough room for growth. “And, as a brewpub owner, I want to sell beer to other bars,” he says. “Why should I have to give a distributor 30 percent of the profits?”
All Illinois breweries used to be able to self-distribute in state with no cap, although only two breweries—Argus Brewery in Chicago and Big Muddy in Southern Illinois—used their distribution licenses to sell their own beers in bars and stores. That changed last year after St. Louis–based Anheuser-Busch InBev tried to buy the distributor City Beverage–Chicago. The Illinois Liquor Control Commission blocked the sale because an existing law dictated that only in-state breweries could self-distribute. Anheuser-Busch sued, arguing the law was discrimination against interstate commerce, and last fall a judge resolved the case by ruling that all brewers must use a distributor to sell beer in Illinois. No brewer, in or out of state, was allowed to self-distribute, leveling the playing field.
Since SB 754 partially lifts this self-distribution ban, it’s a boon for upstart breweries like Pipeworks Brewing Company, which plans to open a production brewery soon in Bridgeport, starting out at about 500 barrels per year. “[The law] affects us very positively because we’re going to be producing such a small volume of beer,” says cofounder Gerrit Lewis. “We have a great relationship with a distributor we want to partner with once we get to that level, but it’s extremely helpful financially to distribute ourselves for the first few fledgling years.”
Crowley acknowledges the bill helps smaller-production breweries, but says the Brewers Guild originally submitted a stronger bill to the Illinois legislature, giving breweries that produce up to 60,000 barrels a year the right to self-distribute up to 20,000 barrels annually, and extending that right to brewpubs. But he says the clout-heavy, Springfield-based Associated Beer Distributors of Illinois persuaded legislators to water down the bill, and the version passed against the guild’s wishes. “The distributors rode a wave of confusion on the issue and got what they wanted,” he says.
“All we did is tell the truth: A brewpub is not a brewer,” says ABDI president Bill Olson, who says the organization doesn’t support brewpubs having self-distribution rights. “They keep wanting to call themselves brewers, but they know [brewing] is just an add-on privilege of being a retailer.”
Revolution Brewing owner and Brewers Guild board member Josh Deth, who helped lobby for the more expansive bill, maintains the law Quinn signed “is the beer distributors’ version.”
“I would like to be able to sell a keg of beer from my brewpub to Quenchers bar down the street, but I can’t do that,” Deth says. He plans to open a $3 million, 50,000-square-foot production brewery in Avondale next year, and anticipates the facility will quickly exceed the 7,500-barrel limit for self-distribution.
Deth and Crowley hope there will be an opportunity to change the law in the next year or two by raising the cap and allowing brewpubs to self-distribute, which they say will encourage the growth of craft brewing in a state where big breweries dominate.
“I want to see more local, full-flavored beer being sold,” Deth says, “and I want to spend my time brewing rather than schlepping down to Springfield.”