Six local breweries are seeking removal of the 2015 “growler cap,” legislation that prohibits breweries that have reached a certain level of success from selling large containers of beer directly to consumers. The recently formed Alliance of Minnesota Craft Breweries, including Schell’s, Surly, Castle Danger, Fulton, Indeed, and Lift Bridge, aims to remove the 20,000-barrel cap on selling growlers, calling it a punishment against Minnesota small businesses for succeeding.
The law requires Minnesota breweries to either sell growlers on-site and keep production small or continue to grow, but curb direct sales to consumers. The first brewery to smack into these restrictions was Castle Danger up the North Shore.
The brewery is the embodiment of many homebrewers’ dreams. First opened in tiny Castle Danger, Minnesota, the brewery quickly grew beyond its three-barrel brewhouse capacity. In 2013 the business expanded to nearby Two Harbors. One way word was spread about the fabulous beer being made so far north of the Cities was through growlers, 64-ounce to-go jugs that are filled right from a brewery’s taproom and put into the hands of consumers.
This ended for Castle Danger in October of 2019 when the brewery surpassed producing 20,000 barrels of beer per year and thus could no longer sell the 64-ounce growler containers to go. “We saw a year-over-year decrease in sales of approximately 30 percent. That’s not just Castle Danger, that is the area of businesses as well,” said Lon Larson, the vice president and co-owner of Castle Danger. With revenue decreasing and nowhere to turn, jobs had to be cut. And this is all before COVID hit in the spring of 2020, where things seemingly went from bad for worse for the celebrated brewery. “Because we are one of five breweries that cannot sell to-go beer, we have no to-go options, and we lost 100 percent of our taproom revenues,” Larson said.
Jim Diley, COO of Fulton, another brewery unable to sell growlers, sees these types of losses all too clearly. “What puts Fulton, as well as some of the other alliance members, in a different position is that where a lot of breweries could push and say, ‘We’re closed now for everyone’s safety, but come drive up and we’ll bring you out a growler to your car,’ we didn’t have that option. We had beer that was in kegs that could have been diverted to growlers and crowlers, and now we’re destroying beer rather than selling it.”
Complicating matters for breweries is a long-standing three-tier system for selling alcohol in Minnesota. Producers sell to distributors, which sell the product to retailers, which then sell to consumers. The practice dates back to Prohibition and has also created problems for other businesses during the pandemic.
The alliance doesn’t oppose the three-tiered system, but as Tom Whisenand of Indeed Brewing said, “There are states that we would consider to have much friendlier laws to breweries, and if you look at those states, the sky hasn’t fallen. Distributors are doing fine, bars are doing fine, restaurants are doing fine, grocery stores are doing fine, and breweries are doing fine.”
It seems clear that states who shake up the three-tier system haven’t devolved into total chaos. “If you allowed these five breweries to sell growlers,” Larson said, “the amount of volume of beer that we’re talking about is one-twentieth of 1 percent of the total beer that flows through Minnesota.” And what seems like a drop in the bucket in the grand scheme of things can mean everything to a brewery looking to stay afloat.
With the 20,000 barrel limit, Indeed has had to slow production to ensure that they can still sell growlers from the taproom. “It only took about two weeks, and we were matching the revenue we were making in the taproom through the pandemic purely by selling growlers and crowlers,” Whisenand said. “It literally saved 30 jobs at the brewery.”
Todd Tibesar of St. Paul’s Barrel Theory Beer Company said, “All those wonderful people that take the extra time to come directly to a brewery to pick up beer, it’s kept us, and many other breweries, afloat during this time. Small breweries like us have always depended on draft beer sold in our taprooms to make ends meet, and putting everything in a crowler/growler/bottle causes a huge loss.”