Two prominent Indiana craft breweries have started a campaign to raise awareness of what they say are outdated rules that are limiting their potential for growth.
Launched by Indianapolis’ Sun King Brewing and Munster-based 3 Floyds Brewing, the Support Indiana Brewers campaign seeks to at least double the state’s production cap of 30,000 barrels annually for brewers that also operate in the wholesale and retail tiers. While breweries can produce an unlimited amount of beer for sale within Indiana, under current law, once a brewery surpasses 30,000 barrels it forfeits the right to self-distribute and operate a taproom.
Without immediate change, campaign organizers say, an Indiana craft brew industry that had an economic impact of $609 million in 2012, according to the Brewers Association, could be stifled.
“This is about economic development and jobs, job creation, and working to give back to our communities,” Sun King founder Clay Robinson told Brewbound. “We won’t pass [30 thousand] without the law changing because we’re not willing to give up either one of those items, self-distribution or the tasting room.”
As Brewbound reported in December, Sun King cut ties with its only three wholesalers in the state in order to stay under the cap and maintain both its tasting room, which Robinson says is his most important marketing tool, and self-distribution rights.
Right now, breweries can skirt the production cap and keep their tasting room and self-distribution privileges by selling excess production out of state, but Robinson contends 30,000 barrels is such a small fraction of the state’s overall beer market that the cap should be lifted regardless.
The aim of the campaign is to raise the cap to at least 60,000 barrels, which would fall in line with an existing federal tax break for small brewers. But brewers are also hopeful that a cap of 90,000 barrels will also be considered. Currently, at least four different, albeit similarly minded bills (three in the Senate; one in the House) that would raise the cap are expected to be introduced this legislative session.
“My company is unable to grow or sell more beer close to home, so we kind of stagnate,” added Robinson. “We’ve always wanted to sell our beer in Indiana and if the law doesn’t change, I guess at that point we have to look at what market outside of Indiana we would want to sell beer in.”
Unlike in other states, where self-distribution and tasting are also hot issues, the movement has support throughout the three-tier system as well.
Phil Terry, CEO of Monarch World Class Beverage, said he would be open to the idea of scrapping the cap altogether to allow for small breweries to flourish.
“That barrel limit, at the end of the day, there’s some act of arbitrariness to it,” he said. “Monarch favors some kind of solution so that craft brewers can continue to operate and not have to cut back production. I don’t know what form it should take, we haven’t really gotten into the details of what’s being proposed, but craft beer is good for the industry and it’s good for the state.”
Terry specified that he wasn’t speaking on behalf of the Indiana Beer Wholesalers Association, of which Monarch is a member. Monarch, it’s also worth nothing, was one of the three wholesalers Sun King severed ties with in December.
But the efforts to lift the cap will likely face some opposition. Robinson said he expects some pushback from the Indiana Beverage Alliance, which lobbies on behalf of the state’s Anheuser-Busch wholesalers.
Marc Carmichael, the group’s president, however, said he’s not against to raising the cap. In fact, he believes the industry is at the point where an adjustment is needed. Instead, where he diverges is with regards to how high the cap should be lifted and how it would then apply to a brewery’s self-distribution rights.
Whereas the campaign calls for the desired 60,000-barrel limit to apply for both production and self-distribution, Carmichael said he’s more in favor of taking a multi-pronged approach. For instance, he would be okay with raising the production cap to 50,000 barrels, but limiting self-distribution to half of that. That, he said, would set the precedent that the state still values the three-tier system.
“We’re not going to do anything to hurt them, we never have. We’re not going to do anything to shut down the things they have now, we never have,” Carmichael told Brewbound. “I want to have a public policy debate about how much self-distribution is appropriate.”
The swell of support for the cause though has been promising, according to Robinson, who said the campaign has already garnered thousands of signatures in the week since its launch.
To further build on the momentum, Sun King and 3 Floyds will soon release a collaborative beer called “Slacktivist,” which the two companies plan to focus a number of promotional events around. Robinson hopes some of the state’s lawmakers will come out to try the beer.
“We’re doing our best to try to share our message and share the facts as they stand and show why the change in the law we want is important,” added Robinson. “It was made a long, long time ago. Hopefully reason and logic will prevail.”