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Guinness, craft brews and the battle between the free market and Md. liquor laws

Guinness, craft brews and the battle between the free market and Md. liquor laws.

There is virtually no doubt that the proposed Guinness brewery and taphouse in Relay would be a tourism bonanza for Baltimore County. Currently, the biggest attraction in the county draws about 30,000 people a year. Guinness parent company Diageo projects a quarter-million visitors in its first year of operations in Relay, and given that a similar attraction at St. James' Gate brewery in Dublin, where the stout has been produced since 1759, is among the top tourist destinations not just in Ireland but all of Europe, that may be conservative.

Who could oppose such an idea? Certainly not Baltimore County elected officials, who have been nothing short of ecstatic in welcoming the project, which represents a $50 million investment and a projected 70 new jobs. Not Maryland's existing brewers, who understand that proximity to the only Guinness brewery in the United States is going to bring them more customers, not fewer. No, the only voice against the proposal comes from the myopic and self-interested crowd at the Maryland Licensed Beverage Association, who have been using state liquor laws as a cudgel to protect their members from the forces of the free market for decades.

Diageo needs a liquor license to allow for the sale of beer for on-premises consumption, but the existing Maryland regulation for such a business limits sales to 500 barrels per year — a pittance compared to what other states allow and enough for only about a half-pint per projected visitor. It has proposed the creation of a special license (HB 1391) for the Guinness brewery that would allow on-premises sales of up to 5,000 barrels a year, which is more than Diageo officials expect to need but still only a fifth of the next most stringent cap in the nation.

Excited though the state's other brewers may be at the possibility of a major tourist draw for beer lovers, they object to the idea of carving out a special license for one new company rather than addressing the long-standing concerns of dozens of existing breweries across the state. They have been trying for the last few years to increase the 500-barrel cap because it is already impinging on the potential growth of their businesses. Some of the more successful Maryland breweries are already taking extreme measures, like limiting hours of operation or manipulating the release dates of new beers, to avoid hitting the 500-barrel limit, and they are curtailing their own investments in expansion because of it.

If the Guinness facility is as successful as backers expect, that problem is going to become much more acute. The Heavy Seas brewery, for example, is just steps away from the proposed Guinness site, and the potential for spillover business is obvious. But how could Heavy Seas capitalize on that if its sales are artificially limited?

Maryland brewers are backing legislation to simplify brewery licenses (there are currently three types, depending on whether a brewery also sells food or is part of a farm) and to allow a 4,000-barrel cap for everyone, not just Guinness. Diageo officials support that effort, but, being no fools, they aren't dropping their own legislation, which is considered a local bill and thus easier to pass.

The brewers' bill, HB 1420, has a real chance this year, though; it already has 50 co-sponsors in the House from both political parties. The only thing standing in its way is Maryland's liquor lobby, which has historically exercised a stranglehold on state regulations by policing any perceived deviation from the three-tier system of regulation as if those tiers (manufacturers, wholesalers and retailers) were on par with the holy trinity. The head of the state licensed beverage association actually argued against loosening the 500-barrel limit by citing the pre-Prohibition practice of brewers controlling taverns and dumping low-quality products on unwitting drinkers. This, apparently, was before Yelp.

What the debate is really about is one group of business owners who want to legislate against any business models other than the ones they have always provided, changing consumer preferences be damned. Their opposition to this legislation — and to any number of proposals pending before the General Assembly to add flexibility to Maryland's liquor regulations — center on a belief that they need to protect their piece of a shrinking pie. The market for mass-produced beers has been in rapid decline in recent years, but that's only part of the story. Craft beer sales are growing by double-digits annually. It's not deviation from three-tier regulation that threatens traditional players in Maryland's alcohol industry, it's an unwillingness to adapt to consumer preference.

Legislators need to ask themselves whether they want to be on the side of a futile effort to preserve a part of the industry that's shrinking or on the side of enabling the parts that are growing. We say yes to Guinness, yes to Maryland's existing breweries, and yes to letting consumers decide what succeeds in the market. We urge legislators to support HB 1420.

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