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Looking To Increase Brewery Revenue by Selling Your Beer On Premises?

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Blog 10

As you can imagine, the federal government has an interest in this activity as it wants to make sure that the excise tax revenue generated under your Brewer’s Notice at your brewery is not at risk. Of course, others expand to allow for this type of activity and so can you. All you have to do is open a “tavern.” A “tavern” is described by the federal government as a part of the brewery premises where beer is sold to consumers. In addition, so long as you follow the rules, you may also sell tax paid wine, distilled spirits and food – all on your brewery premises.

The government has created special provisions for the purposes of allowing taverns on the premises of a brewery. Fundamentally, alternate uses of a brewery are generally highly restricted and like the proposal to operate a tavern, require prior permission before the use is allowed.

So what are the rules? A primary interest of the government is to make sure that your new activity does not put the beer at risk (or at least that the activity doesn’t put the excise tax payments from the beer at risk). So, you need to notify the government of your intended new venture by amending your Brewer’s Notice. It will be necessary to “show” the government how your brewery premises will be divided up to allow for the new tavern. You can prepare a diagram or a description of the boundaries of the tavern. You will have to identify the areas of the existing brewery that are accessible to the public and which ones are not. If you submitted a diagram of the brewery when you first acquired your Brewer’s Notice, and likely you did, then this is a great starting point as this is already part of your license application. Your updated diagram can reflect the new tavern area.

Your diagram, or explanation of the tavern area, should be specific enough to describe security measures that will be taken to segregate public areas from non-public areas. Again, think about protecting the “revenue” – aka the brewery and its production of beer for excise tax purposes. An open door policy between the tavern and the brewery is simply not going to be allowed. Given heightened interest in craft brewing, consumers enjoy learning about the brewing process. Therefore, glass partitions at your local brew-pub are all too common. Do note that those areas are not easily penetrated without some access to a key, code or other security device. Be prepared to describe what effort you will make to create this type of environment.

Your amended Brewer’s Notice seeking permission to open a tavern will also have to include a detailed description of the method you will use for measuring beer for tax determination, given the fact that there will now be consumption on premises. If you use one or more tanks for tax determination it will be necessary to identify those tanks as “tax determination tanks.” The taxes for the beer will have to be determined every time you add beer to the tank and you can never simultaneously pump into and out of a tax determination tank. Finally, you will have to identify areas of your brewery where tax determined beer will be stored.

Likely all of the above is very manageable and achievable in your brewery environment as long as it can be made accessible to the general public while securing the product. If you want to open a tavern and need some help with the regulatory approval of your new venture, feel free to give us a call. We would be happy to help.

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

We look forward to meeting/talking soon.

Sincerely,

Rick Laxague, Jacob Halls, and Beth Halls