Breweries vs. taverns: A new perspective
First off, I want to say that I don’t have a financial dog in this fight. I don’t represent any business or organization. I’m just a regular Montana guy who likes to drink the fantastic craft beer Montana breweries produce and who enjoys the friendly, wholesome atmosphere Montana brewers have established in their taprooms.
Amid all the economic gloom we’ve endured in the past decade, at least one Montana industry, craft brewing, has rapidly grown. Montana’s 38 breweries now pump $50 million per year into the state’s economy. Montana ranks second in number of small breweries per capita, barely beat by Vermont — and don’t be surprised if we move up on that list. Many breweries are those small, family-owned businesses all politicians support.
So why would any legislator draft a bill to shut down the industry? That almost happened, and might still happen, in this legislature.
Rep. Jeff Weldon, R-Dillon, requested the drafting of a bill that would have forced breweries to sell 90 percent of their production in taverns (at a much reduced profit margin) and only 10 percent in their taprooms. According to the Montana Brewers Association, this bill would have instantly shut down 31 of Montana’s 38 breweries and wounded the survivors.
After an immediate uproar, Weldon shelved the bill, but the Montana Tavern Association (MTA), which endorsed the Weldon’s bill, has made it clear it intends to push a bill later in this session to limit the competition from taprooms.
That story may be hot copy soon, but right now I want to address the root cause of this conflict.
From my perspective, the members of MTA deserve most of the credit for making Montana’s small breweries and taproom successful. They, in essence, created their own competition, the same competition they’re now whining about. For starters, MTA agreed to the 1999 law that allowed breweries to sell small amounts of beer directly to customers in tasting rooms. And secondly, most taverns have been long-term marketing agents for brewery taprooms.
Without going into the sordid details of Montana’s archaic liquor laws, it’s key to know that for decades — and especially after the state gave tavern owners a massive bonus by linking all-beverage licenses to gaming licenses in the 1980s — tavern owners in quota areas essentially had licenses to print money. Most, but not all, decided they wanted to make money by becoming neon-filled, smoke-filled, dimly lit “casinos” that sold all or mostly crappy beer produced by big, out-of-state mega-breweries.
Tavern owners have the right to run their businesses how they want to run them, but they should have realized that they were only serving a minority of the marketplace. Somewhere around 20-25 percent of us enjoy going into smoke-filled faux casinos for a national brand beer with friends or co-workers after work. That left a large majority looking for something better. Enter Montana’s brewers.
Mostly starting in 1999, microbreweries came along and opened taprooms with a friendly, neighborhood pub-type atmosphere and became instantly popular — no smoke or gaming machines, with community tables, and perhaps best of all, great tasting, locally brewed craft beer made mostly from Montana products.
Even in the early years of the 21st century, when the tavern owners saw the burgeoning popularity of taprooms, did they change? No, but they did keep fighting legislation to ban smoking in bars and taverns. At the same time, a couple of dozen Montana breweries opened, and not a single one ever allowed smoking in its taproom, even when it was legal to do so, because they understood the marketplace and knew the majority of us hated breathing second-hand smoke. Ditto for gaming machines.
Tavern owners could have changed their business models and swept up much of this huge market. If they would have revamped their businesses to roughly emulate the amentias we now find in most taprooms, there wouldn’t be nearly as many breweries in Montana, nor would their taprooms be so popular. Taverns could have had the lion’s share of this business, but they passed on it, so now, do they have the standing to complain about the success of Montana’s craft breweries?
This is, incidentally, also true for the beer distributors, which are monopolies and managed like it. During the critical years after the 1999 law, with a half-dozen new breweries opening each year and every existing brewery expanding as fast as it could, distributors were — and still are — mostly committed to distributing the products of mega-breweries owned by multinational conglomerates.
They could have embraced the “drink local” trend and growing interest in better-tasting beer and encouraged taverns to replace national brand handles with locally brewed craft beer and help the small start-up businesses get both feet on the ground, but did they? No, so now, distributors likewise have little room to complain about not getting their cut when a small Montana brewery sells beer directly to consumers in a taproom or self-distributes.
I see this finally changing. I’ve been in small town taverns with five out of six handles devoted to Montana microbrews, but that’s a very recent development. Whenever I go into a tavern or restaurant, I always ask for the local craft beer, and in far too many cases, I have to drink water.
Given this history, I hope people will rally to support their local craft breweries if (when?) taverns and distributors come after them. Montana’s brewers are growing their businesses strictly within Montana law, and our craft brewing industry is a bright star in our economy. Let’s keep it that way.
A far better option, of course, would be a for brewers, distributors and tavern owners to sit down and hammer out a compromise that served all three, which seems eminently doable to me. This would be so much better than initiating an epic battle in the legislature where somebody will lose big and have scars on their memories for a long time.
Bill Schneider is a former magazine editor, former book publisher, former outdoor writer, former online columnist and is retired and living in Helena.