Fearful Symmetries

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12 July, 2007

Messrs. Microbrewers Go to Madison - Part I

This post is about the continuing saga of the Brewpub Tourism Development Act. If you are coming to this in media res, please acquaint yourself with some of my previous entries on the topic for some background:

"Woe Betide the Wisconsin Microbrewer?"
"Woe Betide the Wisconsin Microbrewer? (Follow Up)"
"Rob Larson of Tyranena Chimes In"
"Sand Creek Brewing Comes Out Against BTDA"


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I took Wednesday afternoon off from work to head downtown and attend a public hearing on the Brewpub Tourism Development Act or Senate Bill 224 by the Committee on Transportation, Tourism and Insurance. It had been introduced on the 3rd of July and moved to the committee. When I arrived, it took me a while to find the room but find it I did. Being a bit early, it was empty so I took a seat and relaxed. Soon enough folks started entering. First was Russ Klisch of Lakefront and president of the Wisconsin Brewers' Guild along with Heidi Supple, co-owner of Fox River Brewing Company. Hot on their heels were Rob and Stacy Larson from Tyranena and Jim McCabe of the Milwaukee Ale House. An AP reporter approached Klisch and they began chatting a few seats down from me. I overheard a bit of their conversation which included Klisch noting the misconception amongst the senators that the Great Dane represented all of the brewers in the state. He would reiterate this point in speaking to the committee. Otto Dilba and a crew from the Ale Asylum entered along with a gentleman with several boxes in tow. They contained beer bottles from various breweries across the state with messages from the brewers speaking out against the bill. As I chatted with Otto, they were distributed to the committee members who soon made there way to their seats. The side of the room I was on had all the microbrewers/brewpub owners against the bill and they were donning polo shirts with their breweries' logos. It was the casual side of the room. On the other were many folks there for the other bill to be considered at the hearing as well as those speaking in favor of SB 224. These folks were clad in suits and ties. It was quite a contrast and, as you'll read later, quite indicative of the positions of the two sides and their approaches to the bill.



The committee is made up by the following members who are listed with some of the brewpubs and breweries in their districts (thanks to Michael Horne):

Sen. Joseph Leibham, R-9th, Courthouse Pub, Manitowoc
Sen. Dale Schultz, R-17th Lake Louie Brewing Co., Arena
Sen. Dan Kapanke, R-32nd City Brewery, Pearl Street Brewery, LaCrosse
Sen. David Hansen, D-30th Hinterland Brewery, Green Bay
Sen. John Erpenbach, D-27th Capital Brewery, Madison; New Glarus Brewery, New Glarus
Sen Jeffrey Plale, D-7th Milwaukee Ale House, Milwaukee
Sen. Roger Breske

First to speak was Sen. Fred Risser who introduced the bill. He briefly explained the purpose of the bill as being to update laws from the first half of the 20th century and to allow the Great Dane Brewpub and others to open up to six locations. In addition, he gave the brewers seated around me good news by asking the committee to not take executive action after the meeting so that more discussion and tweaking of the bill could take place. With his departure Eliot Butler, president of the Great Dane and Michael Welch, whom I assumed to be Butler's lawyer, were seated. Butler addressed the committee and laid out why he is in favor of the bill: he third location at Hilldale is not serving his beer. Sen. Hansen spoke about this being a "fairness issue" and indicated that he wanted to bring the opposing sides together. In addition, he was amenable to amendments to the bill. He was followed by Sen. Plale who asked for Butler's reaction to the sentiments of his fellow brewers who were against the bill. Mr. Welch answered by reiterating that the bill created a new brewpub classification and said that it was basically two microbrewers who were most vocal. He concluded by saying that he was happy to continue working with Plale on an amendment to address the concerns of the microbrewers.

I can't speak for the brewers who were sitting by me but I think that, if I were them, I would have taken offense at Welch's intimation that it was merely a couple brewers who had issues with the bill that were making a stink. There were five seated in the same room as Welch that were prepared to speak against the bill and one of them was going to speak on behalf of the Wisconsin Brewers' Guild, an organization that represents 60 concerns, if I'm not mistaken. And while not all members were opposed to the bill (the Great Dane is a member, for example), it seemed clear that the majority of the Guild's membership was opposed. Next was Sen. Breske who asked whether the bill would affect pub/restaurant chains. Welch mention the "small brewers exception" which applied to entities that manufactured less than 4,000 barrels annually. They would not be affected if they did not have any class B licenses which allow the sale of beer on or off premises where sold. Next Breske asked whether this bill would open the doors for national chains of brewpubs. Welch answered no and said that the limit is six locations and up to 10,000 barrels of beer annually for everyone.



Fred Gray of Gray's Brewing spoke next. He talked about his business before urging the committee to look 20 years down the road. Flexibility was needed for businesses to grown and adapt to changes in the market. Sen. Erpenbach ased what he would change to which Gray replied that he would set a limit on Class B licenses and that the limit would apply to all brewing entities equally. Sen. Plale chimed in and inquired as to whether modifying the bill so that the 40% of sales of food were changed to an aggregate percentage as opposed to the current per location basis would provide relief. Gray responded by saying that his Tied House is about 40% food and 60% beer. Adding his brewery which sells no food would up his ratio to about 90% beer. Gray also pled for more clarity in the language of the bill and noted that it began life at two pages and has since grown to 28. Sen. Schultz asked about his production growth over the past year and the past three. For Gray's it had risen until recently and has now leveled off. Mr. Gray was looking to open in a new market next year to increase growth but, under the bill, he would not be able to do so.

With no more questions, Mr. Gray was followed by Pete Hanson, a lobbyist for the Wisconsin Restaurant Association. The organization included members who were brewers or owners of brewpubs and he indicated that the WRA is strongly supportive of brewpubs being able to operate more than two sites. His concern and that of the WRA was that the bill would limit the ability of concerns such as the Great Dane to expand with restaurants that do not serve its own beer. If you had one brewpub, you were considered a brewing entity and were thusly limited to six locations. I got the impression that owning just a single brewpub limited you to only five more locations even if they were purely restaurants and did not serve any beer that you brewed on or off premises. Hanson expressed concern about the bill creating barriers to entry and thought it unfair that it forced entrepreneurs to choose the restaurant or brewpub path instead of being able to have a business modeled that included elements of both. Only Sen. Breske spoke and his lone comment was that no executive action would be taken today.

I'm going to end part 1 here lest this entry veer perilously close to Moby Dick length. But take note of a few things. Firstly that everyone so far expressed their desire to see the Great Dane start brewing at their Hilldale location ASAP. Secondly, notice that the bill was introduced on the 3rd of July, a day when most people are gearing up for a day off and not paying much attention to politics. The third thing is to remember that the bill creates a brewpub category in state statutes and that it essentially forces brewers to choose between being a brewpub or a microbrewery. Lastly, I want to mention that I found Mr. Hanson's contribution interesting. Until then, I thought of this issue as being one about brewpubs and breweries and hadn't thought about restaurants being affected.

(To Part I.)
|| Palmer, 7:48 PM

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