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A few weeks ago at the Arizona Legislature, hundreds of Arizonans banded together to support their favorite local brew vis-à-vis bill SB 1030. What’s at stake? The current law caps production microbreweries at 40,000 barrels. Additionally, once this cap is met, microbreweries would be forced to apply for a producers license, and shutter their local tasting rooms and restaurants. The proposed changes in SB 1030 would still force microbreweries to apply for a producers license, but allows them to keep up to seven restaurants and tasting rooms.
It Affects Everyone
The Brewers: With fierce competition to get started in the beer business, microbrewers usually start as your backyard brewer. In addition, microbrewers utilize tasting rooms and local restaurants to bring the community together, while penetrating the market. Microbrewers, like FourPeaks, have used this grassroots style marketing to build their brand, build community, and develop a sense of what the customer wants through the use of brew pubs—a pub attached to the brewery. Indeed, even former-microbrewer turned highly sought after national brand DogFish Head utilized their attached brew pub to research customers’ palettes. Success ensued.
The Drinkers: With the late 2000s came a new style of beer. Attached to it was a new way to drink it—at your local tavern with the local community. But, the current law—if unchanged—has the ability to destroy this new found “togetherness.” Drinkers choose brew pubs, because they represent their community. Not only that, the grassroots marketing system employed doesn’t just seek the drinker’s input; it implements it. Because of this, the drinker feels like there is a place “where everybody knows your name” with a common goal—community. With the current punitive law looming, it might have the effect of uprooting the local drinker from their seat, while possibly riding the community of more than just a local brew-pub—its identity.
The Economy: Arizona brew pubs are abound with 57 microbreweries in the state. FourPeaks has three locations, while SanTan has one. Those numbers don’t seem alarming, but in SanTan’s one brew pub, in accordance with the current law, they would have to lay-off 120 employees. Thus, assuming similar numbers for FourPeaks, the two brewers would have to lay-off nearly 500 local employees. Not only that, given microbrews’ success is largely dependent on the local communities, the ripple effect of laying-off local employees could be catastrophic to the brewers. Additionally, and independently, craft brewers have seen double digit gains for over 10 straight years. These gains have attracted cities and businesses alike seeking to increase their cache, consequently increasing tourist activity, and happiness amongst locals. Curbing this sort of economic boom, again, seems to frustrate the exact purpose of a free and capitalist market.
The Story Goes On
In an odd paradox, successful microbrewers are finding that current law can actually be punitive for being too successful. Moreover, microbreweries may be forced to shutter their doors to the community with whom a relationship has been built. In so doing, the backlash from local communities may destroy the brewery all together. In the end, Arizona’s legislature will make a final decision on SB 1030. The legislature’s decision encompasses every element of the craft beer making process from brewer to community to economy. Most concerning, though, are the effects of not passing SB 1030 may have on the local communities: loss of jobs, and identity. In a positive sign, the bill passed the Senate Commerce Committee with a 6-2 vote late Tuesday.
Authored By: Jonathan Cianfaglione, Law Clerk with the Law Offices of Michael Cordova