Louisiana craft brewers face competition, slowing sales
NEW ORLEANS (AP) — It’s 3:30 on a cloudy Wednesday afternoon and a surprising number of patrons have taken up spots at the long bar inside Mid-City’s Wrong Iron. They’re all drinking beers, sweating in pint glasses.
On the other side of the bar, the wall is lined with three TVs, 50 taps and three video screens playing a scrolling list of the available beers coming from those taps. Abita Big Easy IPA . . . Gnarly Barley Jucifer . . . NOLA Blonde . . . the list goes on and on.
Craft beer from New Orleans and elsewhere in Louisiana is a big hit at Wrong Iron. The bar can expect to go through 75 to 80 kegs on a given weekend, a manager said.
“Draft beer is No. 1,” general manager Nick Shultz said, “especially the local beers.”
Business, fueled in large measure by Louisiana craft beer, is good at Wrong Iron. But across the state, the future of craft brewing is hazy.
To be sure, Louisiana craft beer is not going away — a glance at the tap lineup behind most bars will testify to that. Its craft breweries produced more than 7 million gallons of beer in 2018, ranking the state 24th in the U.S., according to the Brewers Association. The trade group pegs the economic impact of Louisiana’s craft breweries at $740 million.
“I think it’s grown tremendously in the past few years. We should celebrate that,” said Leah Jensen, owner and founder of the microbrewery Parleaux Beer Lab in the Bywater. “The beer industry has grown and become educated. Likewise, the consumer has become educated.”
But there are signs of a slowdown, some say. Last year, six breweries opened but four closed. So far in 2019, one brewery has closed and none have opened.
“I’m fearful that we are not keeping up with the rest of the states in the economics of craft breweries,” said Cary Koch, executive director of the Louisiana’s Craft Brewer’s Guild. “They’re having a boom in craft beer.”
Koch says brewers can expect a long, difficult road to success.
“They wear so many hats. They turn the lights on. They brew the beer. They work the taproom,” he said. “The thought of being the next Abita? It’s a longshot.”
Even Abita, the dean of the state’s craft breweries and the one with by far the widest reach, has seen the slump.
“The craft market isn’t growing at all,” Abita Brewing Co. President David Blossman said. “But the overall beer market is in a similar or worse position than the craft market.”
U.S. beer sales fell almost 1% in 2018, according to the Brewer’s Association. Craft beer sales increased 3.9% nationally, but most of the beer consumed comes from giants such as Budweiser, Miller or Coors.
In 2015, state laws were changed to loosen restrictions on taprooms, onsite bars that only served beers made on premise. The breweries were allowed to sell in their taprooms either 250 barrels per month or 10% of their productions. The taprooms provided extra income to established breweries, which could sell their beers for much higher margins in the onsite bars. They also allowed for tiny, neighborhood breweries to open, such as Parleaux in Bywater and Miel Brewery and Taproom in the Irish Channel.
As more breweries open in Louisiana, however, it’s become harder for new ones to find a place on shelves and barroom taps. Competition has gotten stiffer.
“It used to be, if you brewed it people would come. Now people have options and they want to drink quality beer,” said Jacob Landry, founder of Urban South Brewery.
Urban South, since launching out of New Orleans in 2016, has grown rapidly. Landry predicts that by next Mardi Gras, it will be the second largest Louisiana brewery after Abita.
In the South, craft beer still only makes up a tiny percentage of beer sold and there is room for growth. Landry, however, doesn’t have plans to distribute Urban South beyond Louisiana.
“People want local beer. Sending distributed beer out of state isn’t a long-term, viable strategy,” he said.
Instead, Urban South will open a second brewery in Houston this fall. In Texas, the brewery will only sell its beer on site, either in pints or in cans to go.
What some Louisiana craft brewers say the industry really needs — and what they will continue to strive for — is the ability to sell their product directly to retailers, “self-distribution” in industry parlance.
State law requires breweries to contract with distributors, who market and deliver the beer to stores. Some craft brewers, such as Blossman of Abita, say the arrangement has worked out well for his company.
“I can’t speak for everybody, though,” he said.
Others say the law has unnecessarily held back the industry.
“We’re one of eight states that don’t allow self-distribution,” Koch said. “So, a place like Gnarly Barley can’t deliver their beer around the corner.”
Koch agrees some craft breweries are happy with their distributors, but he said others want the ability to sell their own beer. It’s sometimes hard for a small brand to become a priority for a distributor handling other brands as well, Koch said.
“Let the breweries market themselves and prove their brand,” he said. “They have the most self-interest.”
For a smaller brewery like Parleaux, self-distribution would target a hyper-local area. If it wanted to sell beer to a nearby restaurant — a block away at The Joint barbecue restaurant, for example — Parleaux would have to strike a deal with a distributor to pick up beer from the brewery, take it to a warehouse and then deliver it to the restaurant, Jensen said.
“We know it’s going to happen eventually,” Jensen, of Parleaux, said about self-distribution. “We’re one of only a handful of states that does not have this in place.”
Efforts to change state law to allow self-distribution, however, have not gotten far. Koch and some craft brewers said the Beer Industry League of Louisiana, who represent the beer distributors and large, macro breweries, has pushed hard against any changes in the distribution law.
Indeed, changing state law involving beer and liquor can be fraught with challenges.
Take, for instance, a bill the Louisiana Legislature considered this year. It sought to allow tap rooms to host events in which caterers would be allowed to serve wine and sparkling wine from other manufacturers.
The bill’s sponsor, state Rep. Scott Simon, R-Abita Springs, and craft brewers thought its passage would be simple. They stressed the breweries wouldn’t be selling the outside alcohol; it only permitted caterers to handle the other brands.
For example, it would allow a champagne toast at a wedding reception held at a tap room.
But a Beer Industry League representative testified before the House Judiciary Committee on April 25 that such a measure would allow the tap rooms to act as barrooms. Beer League Executive Director John Williams told lawmakers his organization supported legislation in 2016 that opened the way for tap rooms at the breweries, but they were solely intended for the promotion of their products — not outside alcohol.
Efforts to contact Williams were not successful.
The committee eventually amended Simon’s bill to allow only 12 such events at tap rooms annually. It helped the bill sail through the House without opposition but never quite sat right with craft brewers, Koch said.
Simon deferred his bill during a Senate committee hearing, basically killing it for this session. Koch said it was better to wait and try again another time.
“We’re moving in the right path,” Koch said. “As an association we’re starting to make our mark. And we’ll be back.”