Hartford Business Journal

8 Hartford Business Journal • July 22, 2019 • www.HartfordBusiness.com FOCUS: Manufacturing By Joe Cooper jcooper@hartfordbusiness.com T hree of Connecticut's 20 largest craft brewers are expanding their operations in response to recently passed legislation that some industry experts call the most significant liquor reforms since the Prohibition era. Bloomfield-based Thomas Hooker Brewing Co., Hartford's Hog River Brewing Co. and Manchester's Laby- rinth Brewing Co. are among the first brewers adding square footage, new equipment and selections, in part, because of last month's passage of Senate Bill 647, which more than triples the amount of beer a customer can purchase at breweries for off-site consumption, allows the cross-selling of in-state alcohol products like wine, liquor, meads and hard ciders, and con- solidates the liquor permitting process. Collectively, the brewers are invest- ing millions of dollars and each plan to increase their staff in the months ahead. Several craft brewers told Hartford Business Journal they have no plans to expand their manufacturing or taproom footprints, while others were waiting to see how the market reacts to the law changes. Gov. Ned Lamont, legislators and brewery advocates celebrated the bill's final passage over beers last month in Milford, claiming it will spur new opportunities for Connecticut's 92 operating breweries, which contribute an estimated $3.1 billion annually to the state's economy. "This sets a large precedent on our beer industry to provide a larger economic impact for the state that fa- cilitates business growth, job growth, long-term sustainability and both in- and out-of-state tourism," said Sean O'Neil, co-founder of Tribus Beer Co., which hosted last month's bill signing ceremony. "We are more than pleased to see this step in the right direction." The reform talks took place earlier this year with an unprecedented, even awkward meeting at Thomas Hooker Brewery's Hartford taproom at the Colt Building between brewers and special interest groups representing distribu- tors, wholesalers and restaurateurs. The parties, like in other states, have been at odds for years, unwilling to compromise on legislation that would revamp Connecticut's outdated, and often restrictive, liquor laws. But the brewery industry had more leverage this year due to its recent growth, among other factors, accord- ing to Phil Pappas, executive director of the Connecticut Brewers Guild. Connecticut breweries cur- rently support more than 21,000 jobs in the state and generate a large source of revenue for wholesalers and distribu- tors, industry experts say. Beer production has also soared from 23,372 barrels in 2011 to 213,606 in 2018, accord- ing to the Brew- ers Association, which represents 62 breweries in Connecticut. And those tallies are expected to get bigger. There are more than 100 Alcohol and Tobacco Tax and Trade Bureau permits pending in Connecticut, which experts say indicates how many entrepre- neurs are planning new brewery sites. "The ability to sell more beer and have more licenses were such a huge win," said Thomas Hooker Brewery owner Curt Cameron. Industry concerns persist Although Connecticut's brewery industry is peaking, some brewers fear the market is becoming oversaturated as the state quickly approaches 100 operating brewers. Meantime, some brewers are con- cerned about the added costs they will incur as a result of the new law. Mark Szamatulski, who owns Vera- cious Brewing Co. in Monroe with his wife, Tess, said he may close his tap- room within the next year because the new liquor law will force his brewery to shoulder an additional $3,800 in annual costs. That's because the law gradually increases fees under a new permitting structure, which consolidates four manufacturer beer permits into one and establishes a "Connecticut cafe permit" allowing the cross-selling of alcoholic products. The law also adds a new alcohol excise tax of $7.20 per barrel (typically 28 gallons) for taproom sales on amounts over 15 barrels. Breweries were previ- ously exempt from paying that tax. The changes were part of several com- promises the Connecticut Brewers Guild agreed to in exchange for allowing brew- ers to increase from nine liters to nine gallons the amount of beer they can sell individual customers daily for off-site consumption. Scaled permit costs were also meant to create a more level playing field with the restaurant industry. "We didn't need a cafe law," said Szamatulski, who was already allowed to sell out- of-state liquor and wine under his current permits. "I would love to keep the brewery going but I have real doubts about what bills are coming up next year. I have to renew my lease eventually, and I don't know what I want to do." Pappas says the benefits of in- creased beer sales far outweigh the additional costs from scaled per- mitting and the new excise tax. After all, Con- necticut ranked No. 48 in the U.S. for the amount of beer breweries could sell to pa- trons for off-site consumption prior to the law change. Meantime, states like Maine, Massa- chusetts and Vermont have no limits. "We are still toward the bottom, but obviously we have a lot of people to think about when we are increasing sales limits," said Pappas, who sug- gested brewers will likely push for higher off-site sale limits next legisla- tive session. "We will see how it goes, and see how it impacts the market. I think it will be good for all parties." Expansion plans Anticipating major liquor reforms, Cameron, of Hooker Brewery, has BY THE NUMBERS Booming Beer Industry 48th Connecticut's national ranking for the amount of beer breweries were allowed to sell customers for off-site consumption prior to the passage of Senate Bill 647. 25th Connecticut's national rank for number of per-capita breweries (3.2). $1.1B The estimated annual wages and ben- efits paid to workers in Connecticut's brewery industry. 813% Brewery barrel production in Connecticut has soared by about 813 percent from 2011 to 2018. Untapped Growth CT brewers expanding in wake of historic liquor reforms Curt Cameron, owner of Thomas Hooker Brewing Co., is investing a combined $1.85 million this year to expand his brewing enterprise. In the photo, Cameron stands outside of his second taproom in Hartford at the Colt Gateway building. HBJ PHOTO | STEVE LASCHEVER

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