Starting Friday, Georgia breweries will officially be allowed to sell beer directly to consumers, ending a contentious, decade-plus-long dispute between the state’s beer manufacturers and wholesalers.
Earlier this year, brewers and wholesalers compromised on legislation, Senate Bill 85, that expressly permits direct sales via brewery taprooms — something that had previously existed in a much more confusing form.
Under SB 85, which goes into effect on September 1, the state’s breweries will be allowed to sell up to 3,000 barrels annually, directly to consumers, for on-premise consumption in brewery-owned taprooms. Consumers will also be allowed to purchase up to one case of beer per week for off-premise consumption.
“We’re calling it Beer Independence Day,” said Jason Topping, Red Brick Brewing Company’s facility and events director.
Georgia, which is one of the last states in the nation to allow direct sales, had previously only permitted breweries to sell tours and offer “free” samples — a system that many brewers found confusing and unnecessarily burdensome.
Like many Georgia breweries, Red Brick, based in Atlanta, has invested a considerable amount of money to upgrade its taproom operations in anticipation of the new rules taking effect.
So far, the company has spent about $50,000, according to Topping, who was appointed to a newly created position in order to build a business model based on “own-premise” sales. Red Brick is the oldest operating craft brewery in Georgia, and the company has already hired six new workers to staff the taproom and extended its operating hours, Topping added.
If revenues increase as expected, Topping said Red Brick would reinvest “hundreds of thousands of dollars” into the construction of a new patio and beer garden.
“For us, it’s just kind of like bonus money that we’ve never been able to see before that we’re excited to take and reinvest in the business, and hopefully continue to strengthen and grow the brand,” Topping said. “We want to do all kinds of interesting, fun projects to help turn this place into more of a destination.”
Meanwhile, Georgia’s largest craft brewery, Sweetwater Brewing, plans to celebrate the changes with a party on September 2 that will include live music, food trucks and full pint sales that will benefit victims of Hurricane Harvey.
Although the majority of Sweetwater’s focus will remain on the commercial distribution side of the business, the company’s director of marketing, Steve Farace, told Brewbound that extra cash flow could serve as a “lifeline” for smaller upstarts.
“Hopefully it allows them to grow smarter so that they’re making better beer because they’re properly financed in order to do it,” Farace said of up-and-coming breweries’ ability to sell direct. “And they can invest in a lab and better equipment and better talent.”
For an established brewery like Sweetwater, however, the immediate benefit is still somewhat an uncertain, Farace said.
“We’re not going to dump a ton of money into it right away because we’re not really sure what the customer is going to be looking for,” he said, “and [we want to] understand that and be ready to evolve with them and continue to make this experience better and better.”
In order to forecast its potential taproom business, Sweetwater is using historical data from its tour programs, Farace said.
“With more than 100,000 people a year that come through our tours, we have had a lot of beer go over the bar in the 20 years that we’ve been in business,” he said.
Even with 100,000 visitors annually, Sweetwater most likely won’t eclipse the 3,000 barrel threshold, however. Consider the math: If every single patron drank one 16 oz. pint in the taproom, the company would sell approximately 400 barrels over the bar each year. Expressed differently, those 100,000 visitors would each need to consume at least seven beers in the taproom before Sweetwater brushed up against the limit.
Nevertheless, Farace said the company does anticipate an uptick in visitors as a result of the change. To accommodate, the company hired “about a dozen” employees and extended the hours of its main taproom and tasting room at The Woodlands barrel-aging facility, he said.
“When we built this brewery, we built it for the future,” Farace said. “To see this opportunity in front of us now, we’re glad that we made the investment that we did.”
Another craft outfit, Monday Night Brewing, is in the process of building a sizeable brewing and taproom destination in the Beltline area of Atlanta. Eleven months ago, the company broke ground on the $2 million project, which will be focused on the production of barrel-aged and sour beers.
“The law change was a big part of why we decided to build that second brewery in Georgia,” Monday Night Brewing co-founder Jonathan Baker told Brewbound. “Anything is a big step forward.”
Monday Night is hoping to open its second facility by the end of September. In the meantime, Baker said the company will expand the hours at its existing taproom and treat the September 1 law change as a “soft launch” in order to gauge customer demand.
Despite plans to open its new facility later next month, Baker said some of the beers aging and souring at the facility are still “two to three years” away from an official release. Baker said sales at the company’s existing taproom could help offset some of the upfront investments that the company has made to build the new facility.
To fully capitalize on the ability to sell directly to consumers via the company’s current taproom, Baker said Monday Night would spend a few thousand dollars on various upgrades such as the addition of a point-of-sale systems, as well as new shelving and glassware that will help transform the space into a “marketing tool.”
“It will probably be closer to $5,000 to $10,000 by the time the year is up,” he said of the investment.
Still, Baker said it may take time for consumers to adjust to the change and that taprooms are “no longer just a place to pregame before you actually go out for the night.”
Another person looking forward to taproom sales? Former Stone brewmaster Mitch Steele, who departed the San Diego craft brewery last year to help launch New Realm Brewing in Atlanta.
“I live in California, and taprooms here are the lifeblood of a lot of the small brewers here,” he said. “They’re generating a lot of income through their taprooms.”
Last September, the owners of New Realm announced plans to build a brewpub, and Steele said they were hopeful that change was forthcoming. Now that it has arrived, the company plans to trade its brewpub license for a manufacturing license, a switch that will allow New Realm to produce more beer without losing the ability to sell directly to consumers.
“When that law changes,” he said. “… it will allow us to sell a lot more beer than we could if were were classified as a brewpub, yet still have a restaurant and still be able to serve beer in our facility and sell beer to go.”
New Realm is slated to open in early November, about three months behind schedule, Steele said. The company’s plan is to eventually scale production to 20,000 barrels annually and begin broader distribution, despite its initial focus on selling direct.
“We will distribute,” he said. “We don’t know what the timing will be. I think the first few months that we’re open, we’re going to be focusing primarily on selling the beer in our restaurant.”