Connecticut bill would raise brewery suds sales

Jordan Walsh, center, of Brookfield, Mariana Kouchinsky, of Bethel and Nick Parker, of Bethel, sample some of the beers available at Nod Hill Brewery, in Ridgefield, Conn. Thursday, March 15, 2018. Jordan Walsh, center, of Brookfield, Mariana Kouchinsky, of Bethel and Nick Parker, of Bethel, sample some of the beers available at Nod Hill Brewery, in Ridgefield, Conn. Thursday, March 15, 2018. Photo: H John Voorhees III / Hearst Connecticut Media Photo: H John Voorhees III / Hearst Connecticut Media Image 1 of / 42 Caption Close Connecticut bill would raise brewery suds sales 1 / 42 Back to Gallery

Each year at Christmas time, beer-loving customers come to the taproom of Veracious Brewing looking to buy six, seven, maybe 10 growlers of the brewery’s craft ales, stouts and porters for their holiday parties.

Mark Szamatulski, owner of the Monroe-based brewery, wants to sell his beer to these customers and usually has enough to fill their requests, too. But every year he has to tell them they can’t buy that much.

“Every week you turn someone away from buying extra growlers,” said Szamatulski.

Szamatulski points to a Connecticut state law that is the bane of the state’s exploding craft beer industry.

Breweries are permitted to sell up to 9 liters of beer to an individual in its taproom for off-premises consumption. That’s the equivalent of four growlers or a case of 12-ounce brews.

But in pint cans (16-ounces), which are growing in popularity in the craft beer market, that comes to just 19 cans — less than a full case can be sold. Kegs are also too large for brewers to sell.

Lawmakers are now considering adjusting the sales cap to allow brewers to sell more directly to consumers. A bill proposed by Gov. Dannel P. Malloy would, among other measures, allow unlimited sales and align state law with that of Maine, Vermont, Massachusetts and New York.

But Sen. Carlo Leone, D-Stamford, chair of the General Law Committee now considering the bill, says there is no chance lawmakers will go for unlimited brewery sales.

“Any time we hear the word ‘unlimited’ — that scares a lot of people,” he said. “We’re not quite ready to do undo the system in one fell swoop.”

Still, raising the 9-liter limit may be on the table. The General Law Committee will meet on Tuesday, their deadline to advance bills to the floor, and may vote on the matter.

Even a small increase to the 9-liter limit would be a relief to many of the state’s more than 60 breweries. But Connecticut beer distributors — middlemen between manufacturers and retailers — are not in favor.

The legislation could turn breweries into monopolies, armed with the power to manufacture, serve and sell more of their beer, worries Jude Malone, executive director of the Connecticut Beer Wholesalers Association, which represents six major distributors around the state.

“It is dangerous to go down that road,” she said. “This really concerns us - how big they want to be.”

More local beer

Brewers contributed $718 million to the Connecticut economy in 2016, according to the U.S. Brewers Association.

Local breweries argue that ending the limit is about growing the whole industry and putting more fresh beer in the hands of consumers.

Raising the limit would allow out-of-state visitors to buy more local beer when they stop at breweries, increasing beer tourism, said John Kraszewski, owner at Armada Brewing in East Haven. And for local customers, they could buy unlimited amounts of the newest brews on can release days, instead of buying 9 liters and then waiting for the beer to hit liquor and package stores to purchase more.

In addition, breweries would be less constrained by the amount of shelf space they could get at a liquor or package store for their beer, Kraszewski said, and they wouldn’t have to wait for end-of-the-month payments to come in from those retailers — crucial for breweries just starting up.

“There is more money to be made in the tap room,” summed up Michael Bushnell, co-owner of Lock City Brewery in Stamford. “The distributor takes about 30 percent of your money when they control product.”

On a busy Thursday night at Half Full Brewery in Stamford, only a handful of customers said they had ever bumped up against the 9 liter limit. Those who did were mostly brewery regulars, like Steve Betancourt, who lives down the street from Half Full.

“We want to support the local breweries even if it costs a little more than a Budweiser,” he said.

Betancourt travels to New York and Massachusetts to visit breweries and said he has often seen people lining up at 4 a.m. on can release days to buy their cases in those states. But under current law, Betancourt can’t see that happening here.

“Nobody is going to take a trip if they know they are limited,” he said.

Taprooms divided

Some 14 breweries testified their support of the change to lawmakers, along with representatives from Connecticut’s package store, farm and hops industries. Four other breweries contacted by Hearst Connecticut Media also said they strongly favored tossing the cap.

But noticeably absent from the public conversation has been the voices of the state’s largest breweries.

Two Roads Brewery in Stratford told Hearst it had no comment on the legislation. Thimble Island Brewing Company and Stony Creek Brewery in Branford, Thomas Hooker Brewing Company in Bloomfield and Cambridge House Brew Pub in Granby did not respond to requests for comment.

Half Full, the seventh brewery to open in the state, didn’t give a specific opinion on the proposal, but said in a statement, “We believe that the best outcome is one that maximizes the benefit to the consumer — after all, we are all in business to serve the consumer — and is fair and balanced for suppliers, retailers, and distributors.”

Unlike many smaller breweries, most of these larger ones work with distributors to get their beer on the shelves of liquor stores. In many ways, breweries and distributors are dependent on each other for profits.

But now more business out of brewery taprooms might mean fewer sales to their distributors. That puts the big breweries in a sticky spot.

Speaking on behalf of distributors, Malone said unlimited selling power was never part of the legislature’s original vision of Connecticut breweries. The intent was breweries as places that would make beer and gives tours — not serve or sell directly, she said.

But since 2012, back when the state only had 20 open breweries, laws have been loosened almost every year to favor breweries, she said. Malone doesn’t think this is fair to distributors, of which many are local businesses, too.

“They’ve allowed them to be a brewer, a wholesaler and the retailer,” she said. “That’s outside the three-tiered system that’s allowed by the laws of Connecticut.”

Different by state

Connecticut is not the only New England state with a cap on brewery sales for off-premises consumption.

Home to more than 40 breweries, New Hampshire also limits sales by breweries or other liquor manufacturers to “a 15.5 gallon keg or the equivalent of one case of 12-ounce containers per person per day,” according to the state Liquor Commission.

In Rhode Island, which 22 breweries call home, sales are held at 288 ounces, the equivalent of one case of 12-ounce beers or about 8.5 liters. For now, many brewers are satisfied with that cap, established in 2016, because the previous limit was just 72 ounces, or six beers, said Brent Ryan, president of the Rhode Island Brewers Guild.

But Connecticut beer-makers say the state should follow the lead of its other neighbors, where sales are not limited..

In Vermont, the state with the most breweries per capita, according to the U.S. Brewers Association, no limit on taproom sales for off-premises consumption exists. Maine, Massachusetts and New York don’t have 9-liter limits, either.

Connecticut brewers say this has allowed craft beer production in those states to grow much more quickly than in Connecticut.

Massachusetts has climbed to 110 breweries from 34 in 2007, according to numbers from the the Massachusetts Brewers Guild and the state’s Department of Agricultural Resources websites. Another 50 Massachusetts breweries may open in 2018, the Boston Business Journal reports.

Meanwhile, New York State is now home to 400 breweries, surpassing the previous record of 393 breweries set in 1876, Gov. Andrew Cuomo proudly announced in February. The state has issued 243 new brewery licenses since 2012. Cuomo attributed the growth of his state’s beer sector to “modernizing laws and rolling back red tape.”

Nod Hill Brewing in Ridgefield is less than seven miles from the New York border. When New Yorkers visit the brewery, they are often surprised to learn of Connecticut’s beer limit.

“It’s just kind of unexpected,” said David Kaye, operations manager for Nod Hill Brewing. “It’s resulted in us not seeing the profit we could see from the sale of these cans.”

Kraszewski of Armada Brewing said he moved from Chicago to open shop in his home state of Connecticut because he wanted to create local jobs. But state laws have him considering a move.

“I would love to see the growth of Connecticut beer be as well off as New York and Massachusetts,” he said. “If I can’t grow at the rate that my business can grow in all these other states, it doesn’t incentivize me to stay here.”