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Food and beverage in N.J. Joining the beer industry can be quite a brouhaha #8212 Ever-increasing competition, ever-changing legislation are just some of hurdles

The craft brewery industry creates nearly 9,500 jobs and $1.24 billion in economic impact in the state of New Jersey. But it's one of the toughest business sectors to manage and navigate for both brewery owners and the people trying to protect their interests.-(PHOTO BY AARON HOUSTON)

The craft brewery industry creates nearly 9,500 jobs and $1.24 billion in economic impact in the state of New Jersey.
But it’s one of the toughest business sectors to manage and navigate for both brewery owners and the people trying to protect their interests.

With over 50 breweries operating in the state, nearly 20 more set to open by the end of the year and another 40 expected to open within the next 18 months, the Garden State Craft Brewers Guild is gearing up for increased membership and continuously advocating for further legislation to help smaller breweries establish and grow.

It’s what has kept Don Russell, executive director of the Garden State Craft Brewers Guild, and Eric Orlando, vice president of the Kaufman Zita Group in Trenton and government affairs representative for the guild, extremely busy since 2012, when revisions to New Jersey’s Class A licensing statutes for alcohol, wine, distilled spirits and beer — most notably, the right to sell product after tours on its site and up to a keg for off-site consumption — helped to quadruple the number of craft breweries in New Jersey over the last four years.

“The huge explosion in the numbers of breweries in this state 100 percent happened because the state changed the laws that allowed small businesses to get started,” Russell said.

The Garden State Craft Brewers Guild — an association comprised of over 100 licensed breweries, breweries-in-planning and other businesses and organizations that have a vested interest in craft beer in New Jersey — played a pivotal role in those changes by advocating on behalf of its members in Trenton and Washington, D.C., regarding the laws and regulations affecting the craft brewing industry.

But it hasn’t quite done enough to boost New Jersey up from the bottom 10 percent of the nationwide industry yet, Orlando said.

“Everyone else was growing around us until the laws passed in 2012,” he said “Back then, it was about having conversations with folks in the industry, saying, ‘OK, what are best practices in other stages? What rights and privileges have worked across the country that have helped to grow the craft industry in those states? What is holding New Jersey back from growing its industry?’”

It’s time again for the Garden State Craft Brewers Guild to engage in such dialogue with the New Jersey Legislature.

This time, it’s for equal rights.

“We want to have the same rights as the wine growers in New Jersey have,” Russell said. “(Breweries) want to be able to sell growlers — not bottles or cans — at farmers’ markets, too.”

The bill — which has gone back and forth last year regarding fees, local police approval and more — allows the New Jersey Division of Alcoholic Beverage Control, or NJABC, to issue a site-specific, $75 permit to the holder of a limited or restricted brewery license to sell beer at a community farm market.

Unintended consequences
A trio of bills to set aside funds to help schools in New Jersey remove lead from drinking water cleared the Assembly Environment and Solid Waste Committee last week and is awaiting final approval.
One of the bills — the Smart Container Act (A-2281) — would establish a 10-cent or 20-cent deposit on plastic, glass and aluminum bottles and cans, depending on their size.
“Craft breweries, which have grown their businesses to a certain point and are now bottling tens of thousands of beers, might now be subject to a 10-cent bottle tax,” Eric Orlando, vice president of the Kaufman Zita Group in Trenton and government affairs representative for the Garden State Craft Brewers Guild, said. “It could cost some hundreds of thousands of dollars, which, for many brewers, would hurt their growth, raise the price of their product and discourage the bottling of beer.”
Opposition also has been voiced in regards to the disruption of the state’s current recycling programs and to the act’s limited and archaic means of generating revenue.

As an emerging part of the state’s tourism, the Garden State Craft Brewers Guild believes such legislation could help breweries positively impact New Jersey farms and market vendors.

“It doesn’t seem like such a radical shift in state policy and it shouldn’t garner a ton of attention, but the reaction by some has been (poor),” Orlando said. “The traditional segments of the alcohol industry have come out in opposition. They think it’s going to blow up the three-tier system by providing other outlets to buy alcohol.

“In fact, it’s more of a marketing opportunity for brewers than actually making a ton of money selling beer. It’s more about connecting with their consumers — and it makes sense that the fans of craft beer would go to farmer’s markets as part of the local, fresh food movement.”

Additionally, the Garden State Craft Brewers Guild is fighting for equal distribution rights between limited brewery licensees, or “microbreweries,” and restricted brewery licensees, or “brewpubs.”

“In terms of New Jersey and the licenses themselves, there are limited breweries, which are small breweries (selling less than 300,000 barrels per year) that are able to package and sell their beer both out of their own tasting rooms and through self-distribution around the state in liquor stores, bars and restaurants,” Russell said.

“We also have restricted brewery licenses, which means brewpubs (selling less than 10,000 barrels a year) are able to have liquor licenses that enable them to sell beer, alcohol and, most importantly, food.”

In 2012, brewpubs and breweries alike gained the ability to sell their beer off their own licensed premises, however, brewpubs were restricted to using state-licensed wholesalers to do so, while breweries were given permission to self-distribute.

“We’re asking in addition to the limited breweries and the wineries that the restricted breweries also have that right, too,” Russell said.

The proposed bill would authorize restricted breweries to annually sell up to 1,000 barrels of beer to in-state and out-of-state retailers.

Lastly, the Garden State Craft Brewers Guild wants to make very clear that the consumption of food on limited brewery premises is indeed allowed.

“There is currently language in the limited brewery license that says they cannot sell food or operate a restaurant on premise,” Orlando said. “But state regulators and competing businesses have had mixed interpretations, stating that, if someone wanted to buy a pizza and bring it into the brewery, they can’t do that.”

Clarification of the law is needed in order for Garden State Craft Brewers Guild members to act as responsible retailers.

“While we cannot sell food from a licensed brewery, someone from the outside should be able to consume food on the premises — almost like a Bring Your Own Food bill rather than a Bring Your Own Booze,” Orlando said.

“We’ve made no proposals at all for limited breweries to sell food, even though it makes sense to eat while you’re drinking,” Russell said. “In fact, Pennsylvania requires its breweries to sell food in the tasting room, but their liquor licenses are a lot different, generally cheaper and there are more of them.”

That’s really what it all comes down to: the scarcity of retail liquor licenses and the threat to their high price tags.

“The limited brewery licenses are far less expensive than restaurant licenses, and the restaurants see this as devaluing,” Russell said. “But we actually make the beer those restaurants sell and, if we didn’t have those licenses, they wouldn’t be selling our beer.”

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On Twitter: @megfry3

Meg Fry

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