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Changes to Iowa law help craft beer industry expand

Small breweries, big business

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A year ago, craft beer lovers could pick up Coralville-based Backpocket Brewing’s Slingshot lager in Davenport or Bettendorf. But across the Mississippi River, on the Illinois side, no Backpocket brews were available.

Not anymore.

Thanks to a change last year in state law making it easier for Iowa breweries to sell out of state, Backpocket beers are now for sale in Rock Island and Moline.

Read about the Corridor's newest breweries and what's brewing for 2016:What's brewing in 2016?

And the brewery is exploring options to expand distribution further into Illinois and other surrounding states. In fact, it recently hired a second sales and marketing staff member to focus on those possibilities.

The new law opens untapped markets for the brewery, which produced 8,000 barrels of beer — 248,000 gallons — in 2014 but has capacity to brew more.

“Obviously the more markets you have the better,” said warehouse manager Rob Strutt. “It definitely does have an impact on how we’re operating going into 2016.”

The law is one example of the ways Iowa legislators have been amending rules to help brewers keep pace with consumer’s growing thirst for craft beers.

The recent efforts began in 2010, when state law was changed to let Iowa breweries produce beer above 5 percent alcohol by volume for the first time since Prohibition.

Since then, the number of breweries and brewpubs in the state has almost tripled. In 2009, there were 22, while today there are around 60. About a dozen opened in 2015 alone, including four in the Corridor.

All of this is big business.

Iowa breweries

A study prepared for the Iowa Wine and Beer Promotion Board last year indicated the industry’s economic impact topped $100.2 million in 2014, generating 1,520 jobs.

J. Wilson, director of the Iowa Brewers Guild, said he doesn’t see the explosive growth slowing down anytime soon.

“People ask, ‘Is the market saturated?’ No, not at all,” he said. “There were 149 breweries in Iowa in 1875 — the high point before Prohibition. And of course the population was a lot smaller.”

Craft beer still accounts for only 11 percent of the market share nationwide and 6 percent in Iowa, he said. And Iowa-produced beers account for only 1 percent of the state’s market share.

In 2014, the state produced 41,000 barrels of beer, with projections to produce more than 146,000 barrels by 2019, according to the economic impact study.

But Wilson points to the amount of craft beer being produced elsewhere to illustrate how much the state’s industry could still grow. Boulevard Brewing Company of Kansas City, for example, produces 80,000 barrels of its flagship wheat beer alone.

Jeff Danielson, D-Waterloo, is chairman of the Iowa Senate’s State Government committee, which covers alcohol regulation.

“I’ve run an alcohol-related bill every year I’ve been in the Senate,” he said. “The marketplace is ahead of our laws.”

In 2015, legislative changes included allowing businesses with a class “C” alcohol permit, including convenience and grocery stores, to fill growlers with craft beer to go for customers. And years after they allowed craft beer to have a larger alcohol percentage, lawmakers changed the legal definition of beer in Iowa to match.

As the industry grows, lawmakers have a chance to be deliberate about helping it, Danielson said, even if it sometimes feel like they’re playing catch-up.

“It can be a good thing, because we think there are economic growth opportunities for Iowa that can still be done in a responsible, regulated way,” he said.

Wilson would like the law to change to allow native breweries to sell wine in their tap rooms, to be able to sell bottles on the spot to customers at farmers markets or other events where they hand out samples and for brewpub customers to be able to fill growlers to go.

Danielson said he would like to address the guild’s concerns, but in a comprehensive way rather than with continued piecemeal legislation. He plans to convene a meeting of stakeholders, including brewers, craft distillers, distributors and regulators, to discuss the laws, many of which date to Prohibition.

“It’s time to have the stakeholders come together and talk about changes we can make to ensure alcohol still is safe and regulated and at the same time capture some of the emerging markets,” he said. “I like ideas, and I like innovation and bringing some people in the same room who might not agree with each other to see what compromises there could be.”

More reading on local brewing:

Wilson's Orchard adding event center, hard cider house

Taste Turner Alley Brewing Company's 3 Old World-inspired beers

Iowa City Brewlab explores science of beer

ReUnion Brewery prepares to launch

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