Small Brewers’ Big Mistake in Colorado

In Colorado, the only place one can purchase alcoholic beverages over a strength of 3.2 percent alcohol by volume to take home is in a licensed liquor store. This is something that grocery store owners and beer lovers have campaigned for over the course of several years without any success. In February of this year, the latest attempt to allow full-strength beer in grocery stores died in committee. But proponents aren’t going away. The Colorado legislature is likely to take up the issue in the next session, in part due to public outcry.

After a bill that would allow full-strength beer in grocery stores died in committee, proponents of the bill were successful in amending a bill that would force the state to enforce the letter of the liquor law. That letter, as it turns out, means that light beers under 4 percent abv cannot be lawfully sold by bars and restaurants in the state. Colorado lawmakers will likely address the grocery store beer issue when they seek to amend the state law that has two definitions for beer depending on the alcohol content.

Opponents of full-strength beer in grocery stores

The most fervent opposition, unsurprisingly, has come from the liquor store owners who want to protect their monopoly on the sale of full-strength beer. What is surprising is that the loudest and perhaps, most effective opposition is coming from small brewers in the state. Colorado, which hosts the Great American Beer Festival, is thought of as one of the most vibrant craft brewery scenes in the nation. Small brewers fear that the “big beer” companies will strike deals with grocery and big-box stores, keeping craft bottles off the shelves. At the same time they worry that customers who purchase beer at grocery stores will no longer visit liquor stores, which in turn might drive the stores out of business for lack of customers, leaving small craft brewers with no place to sell their product.

Small craft brewers have it all wrong

First, allowing more places to sell beer will not result in disappearing shelf space; it will only increase the likelihood and opportunity for small breweries to get their products in front of new customers. Even if grocery stores do decide to exclusively stock mass-produced beers, liquor stores will become a haven for the ever growing craft beer market. If liquor stores decided to specialize their beer selection to local and craft beers, this would actually result in increased shelf-space for microbrews in the same establishments where they previously had to compete with the “big beers”.

Second, that Colorado has a vibrant craft brewery scene is undeniable. However, this variety is not due to the lack of availability of beer in grocery stores. Many states around the nation allow beer to be sold in grocery and convenience stores and they arguably have a more vibrant beer scene than Colorado.

One can use many characteristics to base a determination of what makes a good beer scene, but let’s just look at the distribution of breweries and brewpubs, large and small, in relation to states populations and their treatment of beer sales.

Lug Wrench Brewing Company Online did an analysis of the concentration of breweries in each state, compiled using the U.S. Census Bureau estimates for population in 2009.  Here we can see that Colorado is not even one of the nation’s top five states with the highest concentration of breweries:

  1. Vermont: Vermont, which allows for the sale of beer in grocery stores, had the highest concentration with 2.734 breweries per 100,000 residents. According to of the state’s 17 breweries, microbreweries number at 5.
  2. Oregon: Oregon also allows beer sales in grocery stores and has a concentration of 2.640 breweries per 100,000 residents. Of the state’s 101 breweries and brewpubs, 10 are microbreweries.
  3. Montana: Montana also allows the sale of all beers in grocery stores  (though it caps the alcohol to a max of 14 percent abv).   Montana has an average of 2.564 breweries per 100,000 residents. Of the 25 breweries and brewpubs 13 are microbreweries.
  4. Maine: Maine also allows the beer to be sold in grocery stores and has an average of 2.503 breweries per 100,000 residents. Of the state’s 33 breweries and brewpubs 9 are microbreweries.
  5. Alaska: Which also allows the sale of beer in grocery stores has an average of 2.148 breweries per 100,000 residents. Of its 15 breweries and brewpubs 7 are microbreweries

Colorado came in at #6 with an average of 2.070 breweries per 100,000 residents. Of the state’s 104 breweries, only 13 are microbreweries.

More shelf space for all

While there are many factors that play into the number of breweries in an area and microbreweries, limiting sales to liquor stores clearly does not correlate with a higher concentration in any given state. Allowing beer in grocery stores will simply open up more shelf space for small brewers in the state, not less.  Even if grocery stores choose to only stock the most popular beers, it will not erode the increasing contingent of craft beer lovers who will continue making trips to liquor stores. Smart liquor store owners will recognize the opportunity to capture the craft beer drinking market, and reduce their stock of popular beer and create more shelf space for craft beers. The result is cheaper popular beer in grocery stores and more opportunity for craft brewers in liquor stores. Small brewers should welcome the deregulation of liquor sales and fight for new avenues for liquor sales whether that is grocery stores, bars, or direct sales.