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Wednesday, May 11, 2011

Why Lifting Beer ABV Restrictions in Colorado Can Help Craft Brewers

In Colorado, since the repeal of Prohibition in 1933, the sale of beer with higher alcohol content has been limited to liquor stores, restaurants and bars. Meanwhile, beer with less than 4% alcohol by volume (ABV) can be sold only at supermarkets and convenience stores. Now, these stores want the opportunity to sell stronger ABV beers. According to the Wall Street Journal article, Colorado Abuzz of Beer Bill, Colorado's 130 craft breweries are fighting to keep the status quo because the brewers prefer to market their beer to independently owned liquor stores instead of competing with larger brands for shelf space. Also, the liquor stores assert that the grocery stores will take away their business.

All industry reports are showing that craft beer is showing year over year growth throughout North America. So I don’t understand why brewers want to keep their product in an isolated niche marketplace rather than adding more brand and sales exposure. The worst case is that so many people want their product that breweries can’t keep up with demand without either raising retail prices or expanding production and therefore expanding business. To me, it seem likes a good problem to have people wanting what you’re selling. Furthermore, with session beers increasing in popularity, craft breweries will not have to adjust their recipes to meet the regional ABV regulations in order to sell their craft beer in the independent liquor stores. Finally, states such as California demonstrate that enormous liquor stores such as BevMo can co-exist successfully with grocery stores, each selling craft and mass-produced beers without causing the financial disaster asserted in the WSJ article.

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