WI: Craft Breweries And Tavern League At Odds Over Who Can Hold A Liquor License

Wisconsin Laws Make It Difficult To Open A Brewery With An Adjacent Tap Room

Wisconsin Public Radio

By Galen Druke

November 18, 2015

The growth of Wisconsin’s craft breweries has been lagging the rest of the nation. According to the latest numbers from the Brewers Association, the industry grew just 33 percent between 2011 and 2014 in the state, compared with 73 percent for the country overall.

For many craft brewers, it’s a sign that laws regulating whether breweries can hold a liquor license need to change — a stance putting them at odds with Wisconsin’s trade association for bar and taverns.

As it stands, if a location is designated as a “brewpub” — in other words, it only brews a limited amount of beer — it can hold a liquor license. However, if that establishment wants to expand into a “brewery,” it must give up its liquor license and the revenue that comes from wine and spirits.

“Basically, if you own a restaurant that has a liquor license, it’s hard to open a brewery now,” said business journalist Mike Ivey. “Conversely, if you own a brewery you can’t hold a liquor license.”

Ivey said many craft breweries depend on the revenue from adjacent tap room to stay in business, particularly when they’re first getting into business.

“If you’re not allowed to have a liquor license, it can cut into the amount of business that you can do at your tap room,” said Ivey. “For a guy just starting out, having a tap room where he can operate — in effect, have a bar along with his craft beer — can mean the difference between staying in business or going out of business when the margins are that tight.”

The current rules regulating the breweries were adopted as part of the state budget in 2011 and were backed by the Tavern League, which represents the bars and taverns that compete with breweries.

The idea behind the separation of the production and sale of alcohol actually dates back to the three-tier system that was adopted after prohibition. By distinguishing alcohol producers, wholesalers, and bar owners, the idea is that the state can then prevent a monopolization of the industry.

Ivey said the Tavern League is advocating for keeping that three-tiered system in place.

Meanwhile, despite the lower-than-average growth rate, craft brewing does not seem to be going away anytime soon in Wisconsin.

“Wisconsin still is real strong in terms of craft brewing,” said Ivey.

The numbers appear to bear that out: According to the Brewers Association, Wisconsin ranks 13th nationally in craft breweries per capita.