Florida bill would undercut craft beer industry growth

Florida often appears in the news for the wrong reasons, and that is holding true for its fledgling craft brewing industry as well. News outlets around the state have reported that a bill approved by a Senate committee (a 9-4 vote) would force almost all but the smallest breweries to buy their own cans and bottles from distributors (at a markup) before selling them. The only breweries exempt would need to sell fewer than 2,000 kegs annually, and essentially maintain that level in order to do so. The exempt breweries are almost so small that the exemption is irrelevant for them.

This all started innocently enough. Remember the positive momentum surrounding a bill that would allow breweries to sell 64-ounce growlers? Well, that Senate Bill language was altered by other interested lobbying parties, and SB 1714 could severely curtail growth opportunities for Florida craft brewers.

Details from the Miami Herald article:

Breweries would still be allowed to sell beer on tap in tasting rooms. And they’d be able to sell half-gallon beer jugs, called growlers, that now are illegal in Florida, along with the gallon and quart growlers that currently are legal.

The bill was changed to eliminate a provision that would have forced all breweries to sell their cans, bottles and kegs of beers to a distributor and then buy it back at a markup without the beer ever leaving the brewery. If the bill passes, distributors would have to pick up the beer at their brewery, bring it back to their warehouses and then redeliver it to the brewery.

The only exception would be breweries that make 1,000 barrels or less, the equivalent of 2,000 15-gallon kegs. But brewers said that’s not large enough to be able to profitably bottle or can beer.

The Miami Herald article notes that a majority of craft brewers from around the state have made it clear that this bill would halt expansions or potentially prompt a move out of state to continue growing.

“That bill is a play by large corporations to add more regulation, more requirements, more stress to small breweries,” said Ken Rosenthal, who opened Pair O’Dice Brewing Company in Clearwater six months ago. “No mistake, this bill will seriously hinder and even kill growth in the craft beer industry.”

Another great article on the topic from the Jacksonville Business Journal quotes Joshua Aubuchon, a lawyer and lobbyist for the Florida Brewers Guild, who sums up the issue: A small craft brewery is being regulated as a large beer producer well before it is able to move to that next level — which essentially needlessly punishes success at a very low level.

“They’re saying that 1,000 barrels, 2,000 kegs, would put you in the same league as all the big breweries,” Aubuchon said. “Anheuser-Busch conservatively brews 100 million barrels. So what we’re saying in this law is that 1,000 barrels puts you in the same big league as your 100 million barrel competitor.”

Florida craft breweries above that 2,000 keg threshold include Cigar City Brewing in Tampa, Tequesta Brewing Co., Dunedin Brewery and Tampa Bay Brewing Co. Breweries expecting to exceed that number in 2014 include Bold City Brewery in Jacksonville, Swamp Head Brewery in Gainesville, Funky Buddha Brewery in Oakland Park and Green Room Brewing in Jacksonville Beach.

What exactly will happen to one of those above breweries if this bill continues on its journey? From The Tampa Bay Times:

Joey Redner [founder of Cigar City] said Cigar City sells about 100,000 kegs a year, which hardly puts it on par with Anheuser Busch, which sells about 100 million kegs a year.

“We’d lose $175,000 in profit,” Redner said. “We can survive that, but other small brewers can’t.”

David Doble of the Tampa Bay Brewing Co. agreed. “I break even at 14,000 kegs,” he said. “So 2,000 kegs is absolutely nothing. If this bill were to pass, I am done. For people to say no jobs are to be lost are fooling themselves.”

Our humble take

We usually aren’t the types to put our two cents in, but the rules in this bill seem especially silly, arbitrary and counterproductive, aimed at an industry that is growing by leaps and bounds across the country. There is no need to reinvent the brewhouse here — there are plenty of craft beer distribution models in other states that are thriving  to the benefit of beer drinkers, brewers and distributors. Doesn’t seem like much to ask Florida to simply match what’s working pretty great in a ton of progressive craft beer states in the country instead of cutting off their taps to spite their kegs.

Update (04/30/2014): Florida’s craft brewery bill to die in House