However, this ran afoul of a provision that was put into Scott Walker's and WisGOP’s first budget in 2011 which changed state law regarding the number of on-site brewing locations and brewpubs could be operated by one business, which had the effect of favoring large brewers at the expense of smaller ones. As a result, Gentry was forced to make a difficult decision when he wanted to brew more beer off-site.
But in order to legally contract brew under the new state rules, Gentry had to switch the official classification of his business from “brewpub” to “brewery” — a move that also forced One Barrel to give up its license to sell wine and liquor, although it can still offer beer. That change alone, Gentry estimates, will cost $15,000 in lost sales. Meanwhile, other breweries operating prior to 2011 are still permitted to hold the Class B licenses that allow retail liquor or wine sales on premise.Ivey's article says that this 2011 law is also causing snags for other Madison-area breweries, as the Wisconsin Brewery in Verona has a harder time hosting weddings and other occasions because it can’t serve champagne or wine along with its beer, and that Mob Craft brewery is having difficulty in joining up with Roman Candle pizzeria for a Milwaukee site, because it would expand on the number of places Roman Candle has a liquor license for (also a provision in the law).
Ivey notes that the law change (supported by the Tavern League of Wisconsin, who apparently fears the loss of business by brewpubs who also serve booze) expanded on old “tied house” laws that were intended to allow more competition at bars between various beer makers, back when “Schlitz Taverns” and “Pabst bars” were the general rule. By contrast, Ivey says that these new provisions are having the effect of holding back new brewers from getting into Wisconsin’s the industry, while other nearby states are adding brewers by leaps and bounds.
The three-tier system was adopted across the nation following the lifting of Prohibition in 1933 and was intended to prevent a return to the old “tied house” scenario where brewers could squeeze out the competition by forcing taverns to only serve their products. Each state enacted its own set of laws and a system to collect liquor taxes.The article also quotes a Breweries Association statistic that ranks Wisconsin 45th in the nation in the growth of craft breweries in that time period, a pathetic performance for a state that has been tied to beer-making (and consumption) for so long. But this type of pattern of blocking independent start-ups from arriving on the scene has been par for the course in a 2010s Wisconsin whose economic policies are being determined by the old-money, anti-innovation oligarchs at Wisconsin Manfacturers and Commerce and the Bradley Foundation. It helps explain why the Ewing Kaufmann Family Foundation ranks Wisconsin dead last for start-up activity, a situation that WEDC’s then VP of entrepreneurship and innovation acknowledged in 2013 by famously saying “We suck, we’re bad.” That same VP recently left WEDC to get back into the start-up game, and it makes you wonder what she saw at that
But rather than preventing large breweries from dominating local markets, the tied house laws today are obstacles to newer players looking to get started, says Bart Watson, an economist with the Brewers Association, which represents the nation’s 3,400 craft brewers. The trade group broadly defines “craft brewers” as small, independently owned operations producing less than 6 million barrels annually.
Wisconsin did see the number of craft brewers increase from 73 to 97 from 2011 to 2014, a jump of 32%. But other states like Minnesota, Illinois and Colorado have enjoyed three times that growth rate over the same period.
Then again, maybe that’s the way the puppetmasters like it in the Age of Fitzwalkerstan. After all, it’s easier to stay on top when there’s less of a chance of competition beating you and forcing you to keep your game sharp. And the Fitzwalkerstanis (along with those who vote for them) see no problem with having mediocre people with high status stay in those spots, no matter how much it holds the rest of the state back.