This summer, Georgia’s craft beer industry finally got a break. The state legislature passed what brewers refer to as the “Beer Jobs Bill,” which allows breweries to give visitors beer to take home with them after they take a paid tour. The law, which passed in the final hours of the 2015 legislative session, took effect on July 1.
A September 10th CoreNet Atlanta event at Decatur’s Three Taverns Brewery featured three panelists who discussed the new legislation and the craft beer industry in general. Nancy Palmer, executive director of the Georgia Craft Brewers Guild; Trey Sinclair, owner and CEO of Dry County Brewing Company in Kennesaw; and Reid Ramsay, owner of Beerstreetjournal.com, all spoke about the current state of Georgia’s craft beer industry and the laws that govern it.
Strict Laws Dampen Growth
Even as Americans’ taste for craft beer grows, Georgia’s craft brewing industry has struggled due to strict laws that preclude breweries from selling directly to consumers. To survive, breweries usually charge for brewery tours and offer visitors “tastings” along the way.
Neighboring states with friendlier laws are outpacing Georgia in the growth of their craft beer industry. North Carolina and Florida have more than one hundred breweries each, while Georgia only has forty. Georgia’s brewers lobbied hard for the right to make direct sales, but beer distributors lobbied just as hard against them. The result was a compromise that allows brewers to give away up to 36 ounces (up from 32 ounces) for on-site consumption and up to 72 ounces (equal to a six-pack) for off-site consumption with a paid tour.
Making the Best of the Situation
Since they can only charge for tours, brewers have had to come up with creative ways to make money and sustain their business model. Since craft beer comes in many variations, some brewers are offering several different tiers of tours to allow visitors to customize their tour and souvenirs. SweetWater Brewing, for example, will offer 64-ounce “growlers” (brown glass jugs) that the brewer will fill from taps in the tasting room as part of the brewer’s new selection of tour and carry-out options. The new legislation also allows food vendors, including food trucks, to be part of the tour and tasting activities.
Winning Over Local Governments
Georgia’s brewers are hoping that state laws continue to loosen, but to protect their own interests, wholesale distributors are working vigorously to keep regulations tight. To exacerbate matters, local governments, lacking knowledge about breweries’ needs, sometimes impede their growth by raising their water rates and by penalizing them for dumping wastewater.
Some local officials, however, recognize the economic development breweries can bring to the areas they inhabit. Breweries draw tourists and can serve as a revitalizing anchor for abandoned industrial or retail developments. SweetWater Brewing is a notable example of this; the brewery attracts 150,000 visitors annually.
Finding the Right Location
To succeed, breweries need to be located strategically, in areas where they have a decent chance of attracting foot traffic and a beer-friendly clientele. Dry County Brewing Company in Kennesaw, for example, saw an opportunity in the local student population at Kennesaw State University and convinced local economic development officials to recognize the tourism and new business a brewery could bring to Kennesaw.
It takes time to build a craft beer brand, so brewers usually lease their space before buying. When leasing a space, brewers have specific requirements that landlords need to understand. Among other considerations, they often need 30-foot ceilings, a location that is zoned for industrial development, low-enough rates to allow them time to build their brand and business model, licensing contingencies for permitting, and a considerable tenant improvement allowance that will allow for utility upgrades, floor modifications, and more.
A Growing Industry
The craft beer industry represents some 11 percent of the $101.5 billion beer industry in the U.S. and is growing by a remarkable 440 percent a year. The craft beer industry is exploding in the U.S and Georgia lawmakers interested in economic development would do well to take another look at the opportunity the brewing industry offers to our state.
Blog contributed by Trevor Smith, Advisor, Cresa Atlanta. Trevor specializes in office and industrial tenant representation. Trevor is co-owner of Beer Street Journal and has experience in the brewery industry. For more information, please contact Trevor at 404.446.1571 or tasmith@cresa.com.