Push to change Vermont Beer Laws

Beer marketing issue brewing at Statehouse

April 20, 2008

Last year the Harpoon Brewery produced and distributed 745,000 cases of beer from its plant in Windsor to retailers and restaurants in Vermont and around the country.

Harpoon’s barleywine, however, while brewed and bottled in Vermont, isn’t sold here. State law allows beers of up to 8 percent alcohol content to be sold in grocery and convenience stores that have class two liquor licenses, and the barleywine, part of Harpoon’s 100 Barrels limited release series of specialty beers, is too strong (its alcohol content level is 10.3 percent) to make the cut. The barleywine is now available only in the state’s 75 liquor stores.

Harpoon is working with the Vermont Brewers Association to change that. The association wants to broaden distribution of specialty “craft” brews to Vermont’s 1,200 or so beer and wine retailers.

Under H.94, which passed the House last year and is awaiting a committee hearing in the Senate, the permissible alcohol level for craft brews would be raised to 16 percent, which is comparable to the alcohol level of wine.

“You can purchase beer with a higher alcohol than 8 percent through Vermont liquor stores,” said Steve Miller, general manager of Harpoon’s Windsor brewery and a member of the Vermont Brewers Association’s legislative team. “Out of 75, there are only 35 that carry any of these beers and it’s a very limited selection. They’re sort of hidden in the corner in some of the stores.”

State officials, however, are actively fighting passage of H.94 because they worry that consumers, particularly underage drinkers, will imbibe the more potent craft brews as they would mass-produced, low-alcohol content beers. This potentiality, they say, poses a threat to public health and safety.

It’s all about the malt

To grasp the issue, it helps to know some basic facts about beer-making.

Beer has four basic ingredients: water, malt, hops and yeast. At issue is malt, made from germinated and dried barley. Once dissolved in water, the sugars in the malt are eaten by yeast, creating alcohol as a byproduct. The amount of malt used changes the amount of alcohol in the brew and the flavor and body of the beer.

Many traditional beer styles call for large amounts of malt and result in a higher alcohol beer than the typical convenience store brands. Most stay below the 8 percent limit, but several, such as English barleywine, Belgian trippel and some German bocks, shoot over it.

Matt Nadeau, the VBA’s president and owner of Rock Art Brewery in Morrisville, created a “mild” barleywine, called Ridge Runner, as one of his flagship beers, and has beefed it up to a full-strength barleywine that is 10 percent alcohol.

“Right now, that beer can be offered in 75 Vermont state liquor stores instead of 1,200 or 1,400 second class licenses (retailers),” he said. “My hometown, where the brewery started in Johnson, doesn’t have its own liquor store.”

Barleywine might not be the kind of thirst-quencher you’d reach for after pushing around a lawnmower, but Nadeau said the style has its own rewards.

“They typically have a lot of flavor to it from the amount of malt used,” he said. “They usually age well because of the alcohol and the hops act as a preservative. It can be a fun style to lay down in a beer cellar for a while.”

If the law is changed, Nadeau said, he could create an array of new beers. Other brewers agreed.

“We will probably do maybe a bit bigger Belgian trippel,” said Morgan Wolaver, owner and president of Otter Creek Brewing in Middlebury. “We’ve done one before, we did it under 8 percent so we could sell it in Vermont.”

Otter Creek markets in other states, but Wolaver said 40 percent of its business remains in Vermont.

“If we cannot sell something in Vermont, typically we won’t do it,” he said.

The trippel came in at about 7.5 percent alcohol.

“We heard back from a lot of consumers who said, ‘great beer, but not the style,'” he said.

A small but hoppy state

For such a small state, Vermont has a strong presence on the American craft-brewing scene. When the Brewers Association, a national industry group, ranked the top 50 breweries in the country by sales in 2005, Vermont made the list three times. At the time, the country had 14,000 breweries. Thirty-one states didn’t even make the list.

According to the association, the state has 18 breweries producing a total of about 400,000 barrels a year. They employ about 700 people in all and pay an average of $472,000 each in combined taxes. The Vermont Brewers Association said its 16 members spend an average of $180,000 each annually on glassware and T-shirts supplied locally.

H.94’s lead sponsor, Rep. John Rodgers, D-Glover, said a constituent, Shaun E. Hill, inspired him to draft the bill. Hill, who was a brewer at Trout River in Lyndonville before he became the chief brewer for a beer company in Denmark, plans to turn his Greensboro family farm into a “farmstead brewery.” He hopes to grow hops and other ingredients for the beer on his own land.

Rodgers sees H.94 as way to encourage economic development and agriculture diversification in Vermont.

“Our microbreweries are doing a wonderful job making some great craft beers,” Rodgers said. “They say there’s quite a market for these stronger beers. I thought it was a no-brainer to let them utilize the same rights wine has.”

A teen temptation, or an acquired taste?

The state, however, doesn’t see it that way.

Michael Hogan, commissioner of the Vermont Department of Liquor Control, opposes the bill. He is concerned that most people, particularly teenagers, are unaware of “the potency of these products,” which he says would be increasing from a low of 5 percent to as high as 16 percent.

“We feel high-alcohol beers can be attractive to underage people,” Hogan said.

Hogan said he has offered brewers marketing opportunities in the state liquor stores. He would also back a provision allowing higher alcohol beer sales at the breweries.

The commissioner said passage of the bill could open the floodgates for out-of-state breweries. Hogan pointed to Anheuser-Busch’s product Spykes, which was pulled off the market last year, before it reached Vermont because of a public outcry. The flavored malt liquor bottled in 2 ounce containers had a 12 percent alcohol content. Anheuser-Busch was accused of targeting the beverage to teens.

“Those are the products we’re worried about,” Hogan said. “We’re not as worried about in-state brewers. (With) a change in the law these products can come in willy-nilly and we have no say-so over it. We just don’t think it’s a good piece of legislation.”

Rodgers says if another teen-targeted alcoholic beverage came on the market, the Legislature would respond quickly. He believes H.94 is specifically designed for Vermont’s small brewers.

“There are a lot of arguments made by the department that are like the witch trials,” Rodgers said.

He says the strong-flavored, hearty craft beers produced by local microbreweries wouldn’t appeal to young people.

“We see it as the same people who buy artisan cheese, fine wine or single malt scotch,” he said.

Miller said gourmet craft beer is an acquired taste that would be unlikely to attract young drinkers. It’s also expensive: A single bottle often sells for more than an entire six-pack of conventional beer.

“It’s not something kids are going to go looking for,” he said. “There are much cheaper ways for kids to get alcohol. It’s an acquired taste. … They’re specialty beers designed for connoisseurs, people familiar with the styles who know what they’re getting. They’re expensive to make and in turn more expensive for the consumer to purchase.”

At the Department of Health, deputy commissioner Barbara Cimaglio said she shares the Department of Liquor Control’s worry about minors and is concerned about how the beer will be identified.

“I think the major concern we really have is whether the labeling and presentation would be such that it’s clear to (the consumer) that this is a higher-alcohol product,” she said.

Cimaglio said she would not want people to drink the high-alcohol concoctions as they would regular beer.

“I think a lot of it comes to marketing and education,” said Wolaver.

Wolaver said Otter Creek would sell high alcohol beers in 22-ounce bottles priced at $6 to $7 each — others mentioned prices as high as $15. Consumers, he said, will likely wonder why the beer is so expensive and notice the higher alcohol content.

“When you taste the beer, you taste the higher alcohol,” he said. “There may be someone who chooses to ignore that, but I would think it will be fairly obvious this is a much larger beer.”

The bill is currently sitting in the Senate Economic Development, Housing and General Affairs Committee, which is scheduled to hear the bill a third time early this week.

“We’re hoping that in the next couple weeks we’ll have another hearing, get it voted out of the committee and onto the floor for a Senate vote,” Miller said. “Of the New England states, Maine, Connecticut and Rhode Island have no limit. New Hampshire is 14 percent. Massachusetts is 12 percent. Vermont is one of about four states that still has this low a limit.”

The bill should boost tax revenues, Miller said. Beers with a 6 percent alcohol level are already taxed at a higher rate, and H.94 would maintain that rate. However, it likely won’t be too much of a boost, as all the brewers interviewed said they would only make such beers in small batches.

“I’d go broke trying to make just these beers,” Wolaver said. “You’ll not find enough customers to drink this day to day.”

However, it takes a lot of talent to make these specialty brews, Wolaver said.

“It adds credibility to you as a brewer when you make these special styles,” Miller said. “It shows off the skill of your staff. The Vermont brewers are all craft brewers and very capable of making various types of beer and keeping them faithful to the style.”

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