Iowa could allow gas stations to fill growlers to go

Iowa residents may soon be able to fill up growlers of craft beer at the same time they're filling up their cars with gas.

But while advocates say they appreciate anything that can help craft breweries grow into new markets, many say they don't think pending legislation goes far enough.

A bill being considered by the Iowa Senate would allow grocery and convenience stores to purchase draft beer and sell it to customers in 64-ounce glass to-go containers known as growlers.

"I think it would be kind of a niche market, but it will get the curiosity of some people who haven't tried us before, or maybe if they don't want to commit to a whole six pack," said Megan McKay, owner of Peace Tree Brewing in Knoxville. "It's a great package to share if you're going to a party, so if they take a growler to dinner or a gathering, then eight other people are trying it who haven't yet."

What the bill doesn't address is brewpubs.

Dave Ropte, brewmaster at 515 Brewing Co. and president of the Iowa Brewer's Guild, said current law makes it difficult for brewpubs — restaurants that also make and sell their own beer — to sell growlers to their customers. What Iowa's craft beer industry really needs, he said, is a law that removes that barrier for them.

"We're certainly not opposed to the legislation, and it's a step forward I think," Ropte said. "Although, quite frankly, (brewers) would like to sell their own beer themselves rather than at the Kum & Go."

How it works now

Currently, Iowa uses a federally enforced, three-tier system to regulate the beer industry. That system's intent is to keep alcohol manufacturers, distributors and retailers separate, and the regulation dates back to the Prohibition Era.

Under that system, companies that make beer can't directly sell packaged beer to consumers. That worked out well in the age dominated by mega-brewers like Anheuser-Busch. But as the craft beer industry grows, smaller outlets who make and bottle their own brews want to sell it directly to their customers.

Iowa and many other states have made exceptions for breweries — places like 515 Brewing — allowing them to have tap rooms where patrons can taste and purchase their beer. But those places aren't allowed to sell much in the way of food.

Brewpubs, like Court Avenue Brewing Co. in Des Moines, make their own beer but also have their own kitchens. Those places are licensed differently and are not allowed to sell growlers directly to customers.

Instead, to keep the three tiers separate, they have to sell their beer to a distributor, the distributor must take it away, bring it back and sell it back to the brewpub. Then, the brewpub can sell it to their customers.

Jim Obradovich, a lobbyist for the Iowa Brewers Guild, said the group would like to try to amend the bill to allow brewpubs to sell their own growlers without having to go through a distributor.

"We hope somewhere in the process, before it gets to the governor's desk, we're going to be able to get the law clarified that this is something brewpubs can do," he said. "Brewers can do it. It's just that small subset of brewpubs that aren't allowed to."

Opposition to change

Mike Heller, a lobbyist for the Iowa Wholesalers Association, said the group would oppose that change.

He acknowledged the move would take away business from distributors, but said his organization opposes it for reasons beyond possible business ramifications.

"You're still dealing with a highly controlled product," he said. "You don't see drug manufacturers retailing prescription drugs. I think there's a distinction when you get into the sale of alcohol products, because they're highly regulated, and there are a lot of tax and revenue implications for the state in the sale of alcohol products. Wholesalers collect a lot of tax revenue for the state. The system has benefits, and it protects consumers, beyond the business implications."

The Senate bill's manager, Sen. Jeff Danielson, D-Cedar Falls, said the version he's put forward — without exceptions for brewpubs — honors the traditional three-tier system. Manufacturers would still have to send their beer to a distributor who sells it to the retailer.

"The challenge is with getting people to understand that there may be a new and emerging market that doesn't necessarily fit the three-tier system," he said. "But we're not there yet. There are a lot of businesses who rely on the three-tier concept to pay their bills. But I sympathize with the craft brewers. I understand what they're asking for."

There is not the support in the Legislature this year to amend the law so that it would also include brewpubs, Danielson said. In addition to distributors, opposition also comes from people who oppose easier access to alcohol on moral grounds.

Danielson said the beer industry has evolved much faster than the laws created to regulate it, but at some point, policy will have to react.

"Policymakers are going to be confronted with 'Does the three-tier concept still serve the public good, or are there other ways we can create the benefit for society who responsibly want to receive alcohol?' " he said. "That is the question."

While the bill has passed an Iowa Senate committee, it hasn't gone to a full Senate vote, and still would need House approval. So it may be a while before you can fill a growler at a gas station or grocery story.

"We don't have any specific plans to bring growlers to our stores, but we're always interested in bringing products and services to our stores to meet the needs of our customers," said Megan Elfers, vice president of marketing and communications for Kum & Go. "If that ends up being something our customers are looking for, we'd consider it."