LINCOLN, Neb. (AP) — Small, independent beer breweries could have an easier time gaining a foothold in Nebraska if some legislators have their way.
Three state lawmakers have introduced a legislative study to see what the state can do to help craft breweries expand in the state. A hearing will take place later this year, likely in the fall.
Nebraska imposes a three-tiered system in regulating alcohol — producers, distributors and retailers — but also lets brewpubs and micro-breweries sell alcohol at retail. A similar exception was used to help farm wineries in Nebraska.
Craft brewery owners say their ability to deliver the beer is limited because they generally have to work through distributors, which take a cut of their profit. The distributors provide important services for breweries and retailers, but small operations argue the distribution cost eats into their revenue, siphoning away money they would rather reinvest in their businesses.
Many craft brewers struggle to deliver their product because they're so small, said Paul Kavulak, co-owner of the Nebraska Brewing Company in Papillion and president of the Nebraska Craft Brewers Guild.
"Many of the laws were built around an industry that was quite a bit bigger," he said. "We're just trying to create a nurturing atmosphere."
The study will examine whether self-distribution could help startup breweries grow, and how they're taxed relative to larger brewers. Lawmakers will also look at a beer check-off program to promote Nebraska-made craft beers, and a possible truth-in-labeling requirement intended to keep major companies from portraying their beer as a locally made product.
Although the state relies on distributors to help the state track alcohol and collect excise taxes, some lawmakers have expressed interest in legislation that would help microbrewers, at least until they're large enough to need a distributor on a regular basis.
The study was introduced by Sen. Kate Sullivan, of Cedar Rapids, Sen. Colby Coash, of Lincoln and Sen. Russ Karpisek, of Wilber.
"I think it is feasible, and something we probably need to look at," said Karpisek, chairman of the General Affairs Committee, which reviews alcohol legislation. "It's just hard to have two different rules for the craft guys and for the big guys."
Karpisek said craft brewers and distributors were willing to discuss possible changes in the law that could help the smaller breweries.
Last year, Nebraska passed a law that doubles the production limit of microbreweries to 20,000 barrels of beer per year. One barrel contains 31 gallons, or about two kegs of beer.
Nebraska drinkers over 21 consumed 35.2 gallons of beer per person last year, according to a study released last week by the Beer Institute, an industry group. Nationally, the state ranked No. 8 in per-capita consumption.
One of the newest additions to the Nebraska craft brew scene is the Scratchtown Brewing Company, LLC, which is setting up shop in downtown Ord, a central Nebraska city of about 2,000 people on the edge of the Sandhills.
Co-owner Caleb Pollard said he works with a distributor based in Grand Island, 65 miles away, who is needed to ship his beer to locations in Ord. Many craft brewers produce such small volumes of beer that they sometimes have trouble finding a distributor, he said.
"It's harder to get recognized when you're producing 500 to 1,000 barrels, as opposed to 1 million," said Pollard, 33, who conceived of the business while drinking a homebrewed pale ale with friends.
Pollard, who previously worked as Valley County's economic development director, said the industry could flourish if smaller players were allowed to compete. Some already participate in Nebraska Passport program, the state's signature effort to encourage local tourism.
"People want to know the story and creative energy behind a business," Pollard said. "They want a quality beer, something that tastes better, and I think they're willing to spend more money for it."