A Montana Loophole Leaves a Bitter Taste With Bar Owners

Posted On April 24, 2013

Tony Demin for The New York Times

Jeff Grant, the owner of Draught Works in Missoula, Mont. Many of the state’s brewers have embraced a law as a chance to sell directly to the public.=

By JACK HEALY

MISSOULA, Mont. — It was Saturday afternoon, and that meant the pale ale was flowing inside Draught Works, the latest brewery to open in this beer-loving college town. People swooned over the Czech pilsner and the coffee stout. A string band plucked away. As parents ordered another round, their children darted around the tables like giggling schools of fish.It could have been a scene from any thriving upscale neighborhood brew pub. And that is precisely what has ignited a beer war in Montana.

Two decades ago, there were a handful of small brewers across the state. But as the American love affair with homemade beer and microbreweries spreads, Montana breweries have popped up from Wibaux to Whitefish, with frontier monikers like Blacksmith, Outlaw and Glacier.

Today, this state of wheat and barley fields has more than 30 small breweries, serving up pints for oil workers on the eastern plains, skiers in the mountains and summer travelers bound for national parks. It had the makings of a golden age for bars, beer makers and tipplers across the state.

Then things got ugly.

To entice customers and to promote their beers, many of Montana’s brewers have seized on a 1999 law that lets them open tasting rooms without having to buy a liquor license. There are strict limits — they can sell only three pints per person, and they have to close by 8 p.m. — but the brewers embraced the chance to sell directly to the public. They hired bands, sponsored art events and invited food trucks to park outside. Then they watched as the crowds came, with wallets out.

“It’s literally our billboard,” said Jeff Grant, 30, who opened Draught Works a year and a half ago.

Montana’s bar owners and their powerful tavern lobby howled in protest at what they called unfair new competition. Giving away a few thimble-size samples of amber ale was one thing. But the shiny new tap rooms were bars by another name, they said, and threatened to drain business from bar owners who had paid $100,000 or more for one of the state’s scarce liquor licenses.

“There are two different sets of rules,” said John Iverson, a lobbyist for the Montana Tavern Association. “We’re asking to be treated fairly.”

So they took the battle to the State House. Tavern owners proposed a bill that would limit breweries’ retail business to 10 percent of their overall sales. When that effort failed, they unsuccessfully urged lawmakers to require nearly all breweries to buy a liquor license.

“If you want to act like a bar, be a bar,” said Dax Cetraro, whose family runs the Rialto bar in Helena, the capital.

Montana’s brewers cast their fight in the Legislature as a hoppy version of David and Goliath, saying the laws could drive them out of business and would stifle a fast-growing industry that employs at least 320 people.

“We are not breaking the law,” said Tony Herbert, the executive director of the Montana Brewers Association. “We thought that when you created a $50 million industry, you’d get a pat on the back. Instead, we’ve had nothing but people coming in to stop it and slow it.”

But Mr. Cetraro said some of the breweries had not been playing fair. Some tasting rooms are now bigger than an average bar, he said. Other beer makers have stopped distributing their beer to him because they can sell it for higher profits from their own taps. He said he lost out on the chance to cater a wedding because a brewery in Missoula would not sell him the kegs his customers wanted.

The efforts by the tavern owners failed this year, but they may yet succeed in passing new limits in the next legislative session. For now, the small breweries appear to be winning the battle of public sentiment.

Back at Draught Works, the mood was decidedly more upbeat as the band tuned up. Mr. Grant’s father once ran a brewery in eastern Montana and gave his son a home-brewing kit when he turned 21. Mr. Grant served as an apprentice to an Arizona brewer, worked on an oil rig in the summers to save money and attended brewery school, all with the goal of being here, surrounded by silver tanks of Clothing Optional pale ale and Quill Pig pilsner.

Bottling and canning beer is expensive, and building a distribution network takes time. For now, Mr. Grant is selling all of his beer out of his shop. He said he had been overwhelmed by the business inside the tap room, more packed than just about any bar in town.

“Walk in here on a Friday night and see,” he said.