Local breweries face challenges: Issues range from rising costs to effects of a 1974 state law

Yahoo

19-03-2025

Mar. 19—OHIO — Ohio saw an 831 percent increase in craft breweries from 2011 to 2023, but not without its challenges.
Issues ranging from changes in consumer taste, fewer people going out to drink, post-pandemic economics and effects of a state law enacted in 1974 continue to create obstacles for the industry amid unprecedented growth.
Ohio Beverage Franchise Law of 1974
Nick Moeller, founder of Moeller Brew Barn at 8016 Marion Drive, Maria Stein, and Northwest Ohio Beverage Inc., are amicably working through ending their distributing contract.
Under Ohio's Beverage Franchise Law, breweries can sign contracts with wholesale distributors looking to access to the market and find new retailers.
"You have access to market, but our market has actually declined because sales guys don't sell more of our beer, they're selling what they're incentivized to sell," Moeller said in a March 4 interview.
Moeller did not share specifics about how the contract or how an agreement was made. The deal is not finalized.
"Even though I'm able to get out of a contract, the law is still unfair," Moeller said in a March 11 phone interview. "It's not that they're big bad distributors, it's just the rules of the game."
Under the law, a brewery cannot get out of a contract unless it either proves "just cause" or if either party enters bankruptcy.
Established in 2008, Northwest Ohio Beverage, Inc. is a local distributor that services more than 2,300 licensed retailers in 16 counties including Allen, Hardin, Putnam, and Van Wert, according to its website.
The Lima News did not receive a response from Northwest Ohio Beverage Inc. regarding the role of a wholesale distributor.
"We're committed to marketing our products in a way that is beneficial to its employees, customers, suppliers and valued consumers," the website reads.
The law was enacted in 1974 when there were approximately 116 breweries nationwide and 200 distributors throughout Ohio.
Distributors established the law for protection against breweries that could drop them for others.
The field has shifted over 50 years later.
"The law created these monster distributors," Moeller said.
Co-owners at 1820 BrewWerks Andrew Wehri and Butch Brinkman are content self-distributing their beer made from local ingredients until changes are made to the law.
"You get in that contract, you're done," Wehri said.
"We wouldn't have much say about whatever goes on back here," Brinkman said.
Brinkman travels in a 60-mile radius around Kalida self-distributing beer and finding future retailers for their product, which can present challenges.
"You get told 'no' more times than you get told yes," Wehri said.
1820 BrewWerks is open from 11 a.m. to 9 p.m. Tuesday through Thursday and 11 a.m. to 10 p.m. Friday and Saturday. The brewery also has a restaurant. For food, beer, liquor and other information, visit the website at 1820brewwerks.com.
Contracts within the law between small breweries and wholesale distributors can lead to unfair issues for breweries and small businesses.
"We both (distributor and brewery) operate in the same set of rules, but the 51-year-old franchise law puts us at a disadvantage," Moeller said via text. "The reform should be simple. It would allow our business contracts to be fair and negotiable."
Ohio Craft Brewers Association reform
The Ohio Craft Brewers Association is currently pushing Senate Bill 23 in the 136th General Assembly, aiming to amend section 1333.82 of the Revised Code to revise the Alcohol Franchise Law to allow breweries that make less than 250,000 barrels of beer per year to be able to walk out of contracts with distributors.
"These contracts don't work for small breweries," Executive Director of the Ohio Craft Brewers Association Mary MacDonald said in a phone call interview.
Effect on small businesses
Moeller has experienced challenges with the wholesale distributors, especially affecting the trust between the brewery and its retailers.
"When you have retailers contacting you saying 'We tried to buy your beer and the distributor says it's not available,' besides just being frustrating, it's bad for business," Moeller said in a March 4 interview.
"Now that retailer doesn't trust us as much. We need to be out of this to be able to rebuild those relationships with those retailers."
Moeller is hopeful the move will bring momentum to the brewery during the spring season.
"We have good potential. We're working hard on putting out a good product with our service, our food and our beer," Moeller said in a March 11 phone call interview.
Moeller Brew Barn will self-distribute in Allen, Hardin, Putnam and Van Wert counties.
"People at the wholesaler/distributors are good people. They just operate in a system that is very beneficial to the wholesalers and woefully unfair to 99 percent of the breweries in Ohio," Moeller said in a March 11 email.
Moeller Brew Barn is open from 3 to 10 p.m. Tuesday, 11 a.m. to 10 p.m. Wednesday, 11 a.m. to 10:30 p.m. Thursday through Saturday, and 9 a.m. to 9 p.m. Sunday. For more information, visit the website at https://bit.ly/4iTkre3.
The Met Restaurant, located at 306 N. Main St., Lima, is one retailer that features Moeller's beer at their restaurant. Owner Rob Nelson has a front-row seat to observe how laws and contracts can affect small businesses and small breweries.
"If we're about trying to fight for the small business, and help the small businesses, those contracts aren't very fair to the smaller brewers," Nelson said in a phone call interview.
"They both (Tailspin Brewing Co. and Moeller Brew Barn) make exceptionally good beer. I do know when I put those two local beers up against a macro beer, that in a blind taste testing, eight out of ten times those two beers always win."
Nelson planned to open a brewery at 330 N. Central Ave., Lima, around 2019 until a 75 percent increase in construction and maintenance costs after the pandemic caused Nelson's plans to come to a halt. Nelson remains hopeful about opening one in the future.
Economic hardships
Two local breweries, Outskirts Brew Co. & Dive, 2412 Cable Court, Lima, and Tailspin Brewing, 626 S. 2nd St., Coldwater, Mercer County, have had to end operations within the last six months due to ingredient shortages, rising costs and economic issues.
Outskirts shut down September 1, 2024. The owners, Carissa Reinicke and Marc Reinicke began with a wine shop, Vino Bellissimo, until a rebrand in 2022.
"We just have a passion for craft beer, and there was a void in the area," co-owner Carissa Reinicke said in a March 2022 story with The Lima News. A brewery, kitchen and full bar were introduced in the newly-named Outskirts Brew Co. & Dive.
A little over two years later, the doors shut for the final time.
"The pandemic hit our industry just like every other," said co-owner Carissa Reinicke via email.
"By the time we opened, breweries were struggling with ingredient shortages, rising costs for those ingredients, and significant increases in water and energy costs," Reinicke said.
"People still tell me how much they loved Outskirts, and that they miss the place," she said.
The Ohio Beverage Franchise Law of 1974 didn't impact the decision to close Outskirts, but Reinicke expects it eventually would have played a role.
Tailspin Brewing Co., announced via its Facebook page Monday, March 3 that operations are expected to shut down around May 2025.
"Economic headwinds and forecasts have brought us to the conclusion that our tailspin has reached an end, and it's time to straighten up and fly right!" said the post.
The Lima News did not receive further comment from owner Jack Waite regarding the closure.
Current brewery data
Six breweries operate in Auglaize, Allen, Hardin, Mercer, Putnam, and Van Wert counties, according to Ohio Craft Brewers Association data.
Additionally, two breweries are under construction in Ada and Van Wert.
According to the 2022 Economic and Fiscal Impact of Ohio's Craft Brewing Industry, 57 breweries operated in Northwest Ohio in 21 counties generating over 900 jobs and producing 23,000 barrels of beer.
Jobs contributed an estimated $22 million in annual labor income, $5.5 million in state and local taxes and $4.8 million in federal taxes.
For more information regarding the Ohio Craft Brewers Association and the Brewers Freedom Alliance visit the website at https://bit.ly/3FEdOxN.
The Lima News did not receive comments from Tailspin Brewing Co., Ottawa Brewing Company, or Second Crossing Brew Co.
Reach Cade Higgins at 567-242-0351
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