Not too long ago, we published a story about Idle Hands Craft Ales, a Belgian-inspired nano-brewery in Everett. Founders, husband and wife Chris and Grace Tkach, were just putting the final touches on the brewery. They invested their money into building the space and the equipment, most of which Chris designed himself. They had two beers lined up and ready for production–a Belgian Pale Ale and a Belgian Wit. They had their federal license and were waiting to receive their farmer-brewer license from the Massachusetts Alcoholic Beverages Control Commission before they could start brewing and selling beer.
Last week, they found out that their farmer-brewer license, which almost all breweries in Massachusetts are licensed under, was denied. The reason, according to the ABCC, was because “a farmer-brewer must “grow at least 50 percent, in the aggregate, of the quantity of cereal grains and hops needed to produce the anticipated volume of malt beverages.” While Idle Hands was sourcing malted barley from local farmers through Valley Malt and planning on starting a hops farm in Kingston, Mass., they did not meet the 50 percent threshold.
Idle Hands released a press release concerning the decision. Below is an excerpt.
“This decision redefines a long-standing license that a vast majority of production breweries in the state hold The ABCC explicitly stated in its decision to Idle Hands that, “the industry is put on notice that the Commission will be applying this ruling prospectively and, specifically, during the next annual renewal cycle to ensure that every applicant for a farmer-brewer license meets the state law definition of farmer-brewer by growing at least 50 percent…” Given the ABCC’s statement, all farmer-brewery licenses will come under the same scrutiny during the renewal time period (effective fall 2011 for 2012 licenses).
“While we are in the process of re-evaluating our business plan for the brewery, we are equally concerned with the potentially devastating financial impact this decision has on the entire brewing industry in the Commonwealth of Massachusetts,” said Chris Tkach, founder and head brewer of Idle Hands.
“A decision by the ABCC to force our farm to grow and malt grain will put our farm, and any farmer in the Commonwealth, out of the farm-brewing business,” said Bill Russell of Just Beer @ Buzzards Bay Brewing in Westport, MA.
If Massachusetts state breweries are unable to meet the 50 percent hurdle of the Farmer-Brewery license, they will need to acquire the only alternative, a Manufacturer of Wine and Malt Beverages License. The Manufacturer license, however, does not allow breweries to sell beer at retail or do tastings on site – one of the unique draws of the burgeoning craft beer market. It also forces breweries to utilize wholesale distribution channels which will result in potentially lower margins for the brewery (or higher costs to the consumer) and limited product distribution. Many small breweries rely on already tight margins and self-distribution in order to survive in an industry that favors more established and larger players.
Though this decision helps clarify a license that has been on the book for years, it sets a precedent that creates far-reaching effects on breweries, bars, restaurants, retailers and ultimately consumers. There are cost implications and more important issues relate to economic growth, industry innovation, and consumer access to a greater variety of local beers. These effects are further amplified as the brewing industry is one of a few growing industries in an otherwise struggling economy. Existing breweries of all sizes will have to adapt to the 50 percent requirements or apply for alternate licensing, and local entrepreneurs will have to determine whether they can invest in an industry that no longer supports growth and innovation.”
“We’re kind of knocked down, but not completely gone,” she says. “We’re still trying to find a way to make Idle Hands happen.”
“We are contemplating all options including applying for the manufacturer of wine and malt beverage license, moving the brewery out of state, or whether we can afford to continue with our entrepreneurial dreams,” says Tkach.
It would be nearly impossible for a brewery of Idle Hands size to meet the new regulations for a farmer-brewer, she says.
“We can’t get the 50%, we’re one of the smallest breweries in the state and we’d be looking at 11 acres,” she says. Right now, between their farm share through Valley Malt and their hops farm in Kingston, they are at 1 1/2 acres.
The Dig will be following this story and what it means for the many Massachusetts breweries that are planning to open in the next few years. For now, hold on tight to your pint glasses, it looks like it’s going to be an interesting ride.