Breweries depend on taproom sales

Throughout the economic gloom of the past decade, one Montana industry, craft brewing, has rapidly grown. Montana’s breweries now pump $50 million annually into our economy. Montana ranks second (behind Vermont) in breweries per capita. Many are those small, family-owned, job-producing businesses all politicians support.

So why would any legislator want to shut down the industry? That almost happened.

Rep. Jeff Welborn, R-Dillon, requested the drafting of a bill that would’ve forced brewers to sell 90 percent of their production in taverns and restaurants (at much reduced profit) and only 10 percent in their taprooms. Most small breweries depend on taproom sales, so according to the Montana Brewers Association, this bill would’ve shut down 31 of Montana’s 38 breweries and wounded the survivors.

After an immediate uproar, Welborn shelved his bill, but the Montana Tavern Association (MTA), which endorsed it, has indicated it intends to continue to push a bill to limit competition from taprooms.

That story may be hot copy soon, but here, I want to address the root cause of this conflict.

From my perspective, the members of the MTA deserve most of the credit for making Montana’s small breweries successful. They, in essence, created their own competition. For starters, the MTA agreed to the 1999 law that allowed breweries to sell small amounts of beer directly to customers. And secondly, most taverns have been marketing agents for brewery taprooms.

Without going into the details of Montana’s archaic liquor laws, it’s key to know that for decades — and especially after the state gave tavern owners a big bonus by linking all-beverage licenses to gaming licenses — tavern owners in quota areas essentially had licenses to print money. Most, but not all, decided they wanted to make that money by becoming neon-filled, smoke-filled, dimly lit “casinos” selling mostly beer produced by out-of-state mega-breweries.

Tavern owners have the right to run their businesses as they wish, but they should’ve realized they were only serving a minority (somewhere around 20-25 percent) of the marketplace — people who enjoyed going into smoke-filled faux casinos for a national brand beer. That left a large majority looking for something better.

Enter Montana’s brewers.

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 great-tasting, locally brewed 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 taverns. At the same time, a couple 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 knew the majority of us hated breathing second-hand smoke. Ditto for gaming machines.

Tavern owners could’ve changed their business models and swept up much of this market by roughly emulating the amenities found in most taprooms, If they would’ve, we’d probably have half as many breweries and you could actually find a place to sit down in a taproom. Taverns had their chance and passed on it, so now, do they have the standing to complain about the success of Montana’s craft breweries?

I see this finally, but slowly, changing. I’ve been in small town taverns with five out of six handles devoted to Montana microbrews, but this is a very recent development. Whenever I go into a pub or restaurant, I always ask for the local craft beer, and in far too many cases, I still have to drink water.

Given this history, I hope people support their local breweries if (when?) taverns come after them. Brewers are growing their businesses strictly within Montana law, and our brewing industry is a bright star in our economy. Let’s keep it that way.

A better way, of course, would be for brewers and tavern owners to sit down and hammer out a deal that serves both, which seems eminently doable and so much better than fighting an epic battle in the legislature where somebody loses big and has scars on their memories for a long time.

— Bill Schneider lives in Helena