New Jersey: Small N.J. brewers push for changes to state law

Source: The Star-Ledger

Sunday, August 14, 2011, 11:00 AM

There’s no denying the popularity of the beers at Trap Rock Restaurant & Brewery in Berkeley Heights.

Charlie Schroeder, the brewmaster, sells a lot of his JP Pilsner, Kestrel IPA, McClellan Stout and other varieties – about 480 barrels a year. That’s enough to fill a backyard swimming pool.

But Schroeder, one of a handful of craft beer producers in New Jersey, thinks he can sell a lot more through the seven other restaurants his bosses own. There’s just one problem: The state’s aging brewery laws won’t allow it.

“The owners of the business would love to be able to sell the beer I make here to the other restaurants,” Schroeder said. “Customers ask me about that all the time: ‘Why can’t you do that? That doesn’t make sense.’ “

Some lawmakers in Trenton agree. A bill proposed in the Legislature would revamp the rules governing brewpubs – any restaurant that brews its own beer – and microbreweries, stand-alone beer producers working on a smaller scale than the major companies.

The measure would bring New Jersey in line with neighboring states, supporters say. It has become a cause célèbre among the craft brewers here, who have tried for years to get the laws changed. Some in the liquor industry have reservations, though.

Right now, brewpubs and microbreweries face tight restrictions, even on things as mundane as what they can use their property for. Breweries in New Jersey aren’t allowed to host certain special events, something wineries can do. Visitors taking a tour can only buy two six-packs to take home.

“Those laws are unique to New Jersey,” said Greg Zaccardi, the owner of High Point, a 3,000-barrel-a-year Butler brewery focused on wheat beers. “We compete with brewers from neighboring states that have much more supportive laws.”

Assemblyman Craig Coughlin (D-Middlesex) first introduced the bill, but it has since attracted support from some big names, including Senate Minority Leader Tom Kean Jr. (R-Union) and Assemblyman Jon Bramnick (R-Union). Coughlin, who also introduced a bill to lift an oft-ignored licensing requirement for home brewers, believes the measure will receive bipartisan support.

The proposed bill would reduce fees and change some restrictions, such as increasing production limits to make room for future growth.

Brewpubs, currently capped at 3,000 barrels per year, would be able to produce up to 10,000 barrels. Microbreweries – in Jersey, that’s everything except Anheuser-Busch in Newark – would jump from 300,000 to 500,000 barrels.

But the bill isn’t without criticism, and one provision appears to be similar to a benefit wineries have that is the subject of a federal court case. The bill would allow New Jersey microbreweries to open as many as 10 “salesrooms,” intended to help market their products. Wineries already are allowed to have on-site retail sales, but that right is being challenged by out-of-state vintners that argue it discriminates against them.

The salesroom component is also gaining attention from the New Jersey Liquor Store Alliance, which represents 1,500 of the state’s 1,800 liquor stores.

Alliance president Paul Santelle, who met last week with supporters of the brewery bill, said allowing salesrooms could inadvertently hurt his industry and allow some companies to skirt a state law limiting the number of retail liquor licenses one company or person can hold.

He said his group still hasn’t discussed the bill, something they plan to do next month.

“We are committed to working with these guys and making sure we help them,” Santelle said. “But we don’t want to hurt ourselves in the process.”

Craft beer is all the buzz these days. As America’s biggest breweries have seen their shares of the market decline, small breweries have grown dramatically in recent years.

Some companies – including Brooklyn Brewery, Sierra Nevada, Dogfish Head and Samuel Adams – are reaching a wide market.

U.S. beer sales declined 1 percent last year and 2.2 percent in 2009, according to the national Brewers Association, the leading interest group for the craft beer industry. But those smaller beer producers saw a 12 percent bump in revenues last year, the group said.

“It’s definitely taking off,” said Paul Gatza, director of the Brewers Association. “Craft brewers are growing every year by double digits.”

New Jersey isn’t all that different.

Flying Fish, the state’s largest craft brewer, is undertaking a $5 million expansion of its Camden County operation that will allow it to produce up to triple the amount of beer it does now. Other brewers say they’re seeing continual growth.

A few decades ago, the state didn’t have a craft industry, said Gene Muller, founder and president of Flying Fish, which produces about 14,000 barrels per year. Now there’s nearly two dozen brewpubs and microbreweries. But New Jersey’s beer producers also believe that they could be doing much better and that their growth, though impressive, pales in comparison with what’s taken place in other states.

“It’s kind of depressing. New Jersey ranks 32 in the nation” for craft beer production, Muller said. “We can do a lot better than that