Illinois Bar Owners Voice Opposition to Law Allowing Taprooms to Sell Other Companies’ Beer and Cider

Following the signing of a law allowing Illinois breweries to immediately begin selling beer and cider from outside beer companies in their taprooms, several Chicago restaurant and craft beer bar owners expressed concern that new regulations create additional competition for their businesses.

On August 11, Illinois Gov. Bruce Rauner signed House Bill 4897, which allows licensed Class 1 breweries (producing up to 30,000 barrels annually) and Class 2 breweries (making up to 120,000 barrels a year) to purchase beer and cider from either a wholesaler or a self-distributing brewery to sell in their taprooms. The new law also eases storage and transfer regulations for beer companies.

The expanded sales privileges have a handful of Chicago bar and restaurant owners voicing concerns over what they perceive as an uneven playing field. In an email to Brewbound, Pat Berger, owner of Kaiser Tiger and Paddy Long’s, wrote that the new law helps “dissolve the distinction between a taproom and a bar” leaving as the only difference a bar’s ability to sell wine and spirits.

“Taprooms are going from a place to grab a pint after a tour to enticing a customer to spend the whole evening there,” he wrote. “To me, that’s why we have brewpub licenses. If you want to be a full service, one-stop shop to the consumer, then you should be subject to the same laws and zoning rules as the rest of us.”

Map Room owner Laura Blasingame added: “We don’t think it’s cool that breweries with taprooms act as bars.”

Hopleaf owner Michael Roper, who has been an outspoken critic of brewery branded taprooms, said he is now competing with about 80 local brewery tasting rooms.

“Many, many bars like mine have seen dramatic downturns in business,” he wrote. “The taproom explosion is an existential threat to a lot of us.”

Roper told Brewbound that he also believes the new law further erodes the three-tier system.

“Since the beer brewed on site carries a profit margin far beyond anything we can offer, taprooms now allowed to offer a full line of beverages have a leg up on traditional taverns and bars,” he wrote. “Going even further are brewpubs like Jolly Pumpkin and Ballast Point here in Chicago that are essentially brewery-owned bars that sell their beers that are not brewed on site. How is that not a tied pub?”

Craig Fass, owner of The Bad Apple, echoed concerns about global beer companies such as Ballast Point-owner Constellation Brands, Heineken-owned Lagunitas and others opening satellite brewery taprooms in the city.

“We’re just a little guy and we’ll be squeezed out is where I see this going over and over again,” he said. “Money controls everything, and small independent businesses aren’t going to have a say because we don’t have the money that Constellation has, that Lagunitas has. We just don’t. We don’t have the power and the influence.”

According to Berger, the new law lacks safeguards to prevent unscrupulous business owners from exploiting the changes.

“With this new law I could set up a production brewery with a home brew kit, get a taproom license and essentially operate a bar in an area where bars aren’t allowed,” he wrote. “Before this law, if you wanted a successful taproom you had to make good beer because that was all you could sell. Now you can have one tap of your crappy house beer and fill the rest with guest taps.”

However, two Chicago brewery owners told Brewbound that they don’t anticipate major changes in the way they run their taproom businesses.

“We sell high 90 percent of our beer off-site through distributors to bars and restaurants and stores,” Revolution Brewing Co. owner Josh Deth told Brewbound. “This is not going to change that.”

Deth, who serves on the Illinois Craft Brewers Guild’s government affairs committee and worked on the taproom legislation, added that beer companies aren’t likely to give up the high margins from selling their own products.

“You’re going to sell your own beer first and foremost,” he said. “And we plan to continue to do so and not charade as a bar.”

Half Acre Beer Company founder Gabriel Magliaro told Brewbound that the new law was necessary in order to allow his company to sell collaboration beers brewed at other breweries’ production facilities.

“Now we can bring that beer here and pour it, which is such a basic thing but for us a huge creative ability that allows us to highlight a lot of the stuff that we’re doing,” he said.

Magliaro estimated that very few of the draft lines in Half Acre’s two taprooms would be dedicated to outside companies’ beer or cider. However, he said his company plans to highlight styles of beer that it doesn’t often brew, such as “true-to-form lambic” beers produced in Belgium.

According to Magliaro, about 40 percent of Half Acre’s business comes from on-premise retailers. And although a “small” but “super meaningful” number of sales are made in the company’s taprooms and on-site retail store, Magliaro stressed the importance of retailers such as Hopleaf

“Half Acre would not be what it is today without our store and our taproom,” he said. “Half Acre also wouldn’t be what it is today without Michael Roper and all of the great retailers either. So that’s all part of a big stew that keeps us healthy.”

Nevertheless, Roper and other bar owners say they will reevaluate which breweries their bars buy beer from in the future.

“Those who have opted to be full on competitors for every single customer are no longer partner in our success so we won’t be partners in theirs,” Roper wrote.

Berger added: “If I notice a brewery concentrating all of their efforts on their taproom while ignoring outside sales maybe I won’t be as quick to support them when they need to sell a few kegs.”

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