Amendment could help local startup breweries

The change would let microbreweries profit by selling beer in growlers.

by Katherine Lymn

Jason Sowards wants to start a brewery. He has already done the research, location scouting and business planning. But one obstacle still stands in his way: Under a current Minneapolis ordinance, Sowards wouldn’t be able to sell beer on the premises of his brewery.
For Sowards, making this up-front revenue is crucial to his business plan for Harriet Brewing Company.
Currently, only breweries that are also restaurants with on-sale liquor licenses may sell beer directly to take off the premises.
Hoping to change the ordinance in his favor, Sowards approached City Councilmember Gary Schiff with his concerns three months ago. Sowards found his first ally.
“[Schiff] thought it was preposterous, which it is,” Sowards said.
Since the first meeting with Schiff, Sowards has brewed up a small movement of others in the beer industry who hope to see this amendment pass.
The amendment would allow microbreweries to sell their beer in growlers — refillable, 64-ounce jugs — from their warehouses. Currently, only businesses with full restaurants can sell growlers in Minneapolis, said Linda Roberts, district supervisor in business licensing for the city of Minneapolis.
At a public hearing for the amendment at the July 26 Regulatory, Energy and Environment committee meeting, brewers from the Twin Cities came out in support, which came to be known as the “Brew Beer Here” legislation.
Sowards has been waiting to sign the lease on a possible brewery building until an amendment is passed. The full council will vote on the amendment Friday.
Roberts cited neighborhood support and spoke in favor, saying it will be a “good added opportunity to our businesses in Minneapolis.”
The economic benefits cited did not end there.
Brewing historian Doug Hoverson said craft beer breweries attract tourism and the “creative culture” that makes a community vibrant.
“It’s unfortunate that there are people who really want to open the business in their location and take advantage of Minneapolis’ cultural reputation and to merely have one little ordinance in the way,” Hoverson said.
The ability to taste and purchase beer at the brewery itself is a way to build up a community following, especially crucial for startups, Hoverson said.
“The bottom line is that selling growlers is a way for the brewer to have a direct connection with their product to a consumer,” said Jim Diley, co-founder of Fulton Beer.
The income generated from growlers, which cost more per ounce than kegs, also helps startup breweries.
“Pretty much anyone can fill a growler, whereas bottling and canning lines are hundreds and thousands of dollars,” Hoverson said.
This is the case for Sowards, who may use money generated from growler sales to later install a bottling line, he said. Even a used bottling line can cost as much as $50,000.
“[Selling growlers] gives [brewers] some cash flow in the early days while they’re trying to build their presence and their market,” Hoverson said.
“Without that [income], you’re relying on sales to your distributor or direct sales to bars,” Diley said. “That sometimes is tough when you haven’t had a product out there before.”
Diley said it would have been much easier to start his brewery in Minneapolis if the ordinance had been in brewers’ favor back when Fulton was established in 2009. Instead, the brewery is in Wisconsin.
In cases such as Fulton’s, when the beer is brewed outside of its target market area, Hoverson said the brewers miss out on the opportunity to build a community following.
“That really doesn’t help the community feel much,” Hoverson said, “because if I want to go watch the Fulton guys make a batch of beer and taste it right off the line, I have to go to Black River Falls, Wis., which is over two hours away.”
“It’ll be devastating if it doesn’t pass,” Sowards said of the amendment. “All this has been counting on the growlers going through.”