Wednesday, March 30, 2011

Keep 'Em Separated

While here in Minnesota we grapple with proposed changes to our arcane state liquor laws to allow breweries to essentially operate as brewpubs and to allow liquor stores to open on Sundays, we're not the only state addressing such matters. As a story in today's WSJ reports, Colorado Abuzz Over Beer Fight:

A fight brewing in the Colorado legislature has lawmakers bitterly divided over beer.

"Abuzz Over Beer Fight," "A fight brewing," and "bitterly divided"? Nice to see that newspapers can still have fun with a story.

The state House of Representatives is expected to begin debate soon on a bill that would dismantle Colorado's great beer divide, which since 1933 has limited the sale of beer with higher alcohol content to liquor stores, restaurants and bars.

Supermarkets and convenience stores, meanwhile, have had a monopoly on beer with less than 3.2% alcohol by weight, which is equivalent to 4% by volume. Now, they want the opportunity to cash in on sales of the stronger stuff.

In 2010, Coloradans purchased nearly six million gallons of lower-alcohol beer, compared with 104 million gallons of higher-alcohol brews.

Colorado's beer laws, enacted after Prohibition to keep the most intoxicating brews away from teens, have created unusual situations. The Coors Light sold in supermarkets is made with a shorter fermentation period, which produces a lower alcohol content, than the Coors Light sold in liquor stores—though the brewer says there is no difference in taste, and the packaging is nearly identical.

Only four other states—Utah, Oklahoma, Indiana and Kansas—have similar rules.

Last time I checked, these beer regs sounds an awful lot like what we have here too.

At first blush, allowing convenience and grocery stores to sell strong beer might seem to be a no brainer for the beer-loving crowd. Upon further review however, you discover that more outlets for beer might actually limit the breadth of the available beer offering.

On the other side, liquor-store owners predict financial disaster if they lose their monopoly on stronger brews. Beer accounts for 60% to 70% of sales at most liquor stores in the state, said Jeanne McEvoy, who runs an industry trade group. She predicts that as many as 700 of Colorado's 1,660 liquor stores would go out of business if the rules were changed, throwing thousands of people out of work.

Colorado's 130 craft breweries are also fighting to keep the status quo. The proposal would greatly expand their potential market, by letting them sell their full-strength beers to chain groceries. But the brewers prefer to market their beer to independently owned liquor stores, some of which are enormous—50,000 square feet—and stock scores of niche brands and seasonal brews. Supermarkets don't have the shelf space, so if big grocery chains came to dominate the beer market, consumers might have less exposure to local products, said John Carlson, executive director of the Colorado Brewers Guild.

"I'm not saying it will be Armageddon," said John Bryant, president of Oskar Blues Brewery in Longmont, Colo. "But it would change the dynamics of craft breweries in Colorado."

To me, the potential upside benefits to the proposed change--easier and more convenient to buy strong beer--don't outweigh the downside risks--less local craft brews to choose from on store shelves. I'm not all that familiar with the situation on the ground in Colorado, but in most parts of Minnesota it's not that hard to find a liquor store. Being able to buy beer when you buy gas or groceries would be nice, but not if the trade off is limiting the craft beer choices.