INDIANAPOLIS – Todd Antz is growing sales at his family-owned liquor store in New Albany by specializing in craft beers, but stocking an Indiana brew considered among the best on the planet has become a problem.
Demand for Dark Lord Russian Imperial stout -- or any beer with a Three Floyds Brewing Co. label –- is so intense that Antz limits customers to a six-bottle ration.
Some of Three Floyds’ cult-like followers accuse the brewery of artificially limiting production, but Antz, owner of The Keg, says the Munster-based company isn’t to blame.
The scarcity, he said, is due to laws that cap craft beer production in Indiana. Three Floyds sends about 40 percent of its beer to neighboring states as a result.
Antz thinks raising the cap would be a good thing for him and the state’s fast growing craft beer industry, but a proposal to more than double the limits is meeting resistance from others in the distribution chain.
Indiana now has more than 100 microbreweries on tap, with more in development. At Three Floyds, head brewer Chris Boggess said production caps, which he calls “stupid” and “arbitrary,” are hindering the brewery’s growth.
Three Floyds is poised to expand far beyond the 40,000 barrels it produced last year, with a $4 million investment in a new bottling line that could produce 150,000 barrels within five years.
“People keep saying, ‘Send us more beer,’ and that’s what we want to do,” Boggess said.
Standing in the way are alcohol distribution laws that date to the end of Prohibition. Designed to control an uncorked industry and collect millions in alcohol tax revenues, the 1935 liquor control act created a three-tier system that separated alcohol makers from retailers with a middleman - distributors.
Those influential wholesale distributors are wary of proposals making their way through the General Assembly that would raise craft beer caps and increase the amount of beer that brewers may distribute themselves.
Distributors say the state can better regulate alcohol sales by keeping tabs on them, a few wholesalers, instead of thousands of alcohol retailers.
“As a state, we created these tiers because bad things can happen with alcohol,” said Marc Carmichael, head of the Indiana Beverage Alliance, which represents the state’s 25 wholesale beer distributors. “We were created as a brake in the system, to avoid the unregulated flow of cheap and easily available alcohol.”
The law for craft brewers is complicated. As it stands, the small brewers can produce an unlimited amount of beer for sale, but once they’ve exceed the 30,000-barrel annual mark, they must forfeit their popular tasting rooms, on-site restaurants and ability to self-distribute.
Those amenities are seen as critical marketing tools for small brewers competing against big, national brands.
Only two of Indiana’s craft brews – Three Floyds and Sun King in Indianapolis – come close to the 30,000-barrel cap.
Three Floyds’ exceeds it, but exploits a loophole around it by selling beer in neighboring states. The brand’s popularity drives demand: For five of the past six years, Three Floyds’ beer has been rated among the best in the world by RateBeer.com, a consumer website with more than 1 million reviewers.
Other small beer makers aspire to those kind of results.
They’ve launched their breweries knowing the demand for craft beer is accelerating even as overall beer sales are falling nationally.
Roger Baylor, owner of The New Albanian Brewing Company in New Albany, said his industry is growing faster than Indiana alcohol rules can keep pace.
Last year, Indiana’s craft beer makers produced more than 120,000 barrels — a 76 percent increase from 2011.
“I tell people that the growth in the industry is like being in a bar that’s not crowded when you get there, but then all of sudden it is, and you can’t turn around without bumping into somebody and spilling your drink.”
All craft beers, made in Indiana and elsewhere, are still a fraction of the market, making up about 10 percent of all beer sales in the state. Indiana-made beers account for about 3 percent of beer sales.
The big domestic beer makers, by contrast, sold more than 4 million barrels of beer in Indiana last year.
Sen. Carlin Yoder, R-Goshen, and Rep. Ed Clere, R-New Albany, are among the legislators who think some barriers for small brewers can be removed without harming the state’s wholesale distributors.
Both have bills that would raise the production caps.
“It’s difficult to find examples of other small businesses whose growth is subject to arbitrary limits,” Clere said.
One scenario, he said, would be to lift production caps but with the caveat that small brewers must sell through wholesalers once their production reaches a certain level.
Yoder thinks the issue may force a larger debate over what he calls the state’s. “complicated and overbearing liquor laws.”
“Those laws were put there for a reason,” he said, “but this isn’t 1935 anymore.”