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What Does the Change of ABC Leadership Mean for NJ Breweries? How Did We Get Here?

David Rible has stepped down as ABC Director to “pursue other opportunities” and will be replaced by James B. Graziano on November 26th, 2018.  Graziano is a founding partner of Graziano, Piasecki & Whitelaw in Green Brook, where he specializes in civil litigation involving personal injury and employment claims. He also serves as a municipal court judge in Metuchen Borough and formerly served as the attorney for the Metuchen Parking Authority.

Rible had been under public scrutiny after the release of the Special Ruling on Limited License Breweries on September 21st that caused a ground swell of support for local breweries and associated businesses. This ruling, which would have made big changes to the way breweries could operate, has since been suspended pending “further review”.  The Independent Craft Brewers of NJ, a cooperative partnership formed by a group of New Jersey Brewers in the late Summer of 2018, collected a petition with over 30,000 signatures from state residents in the days following the ruling which, in addition to several state and local politicians voicing their opposition, no doubt was a factor in the suspension of the ruling.

Sean Galie, owner of Lower Forge Brewery who is also a member of the Independent Craft Brewers of NJ and the New Jersey Brewing Association told us, “I think that Director Rible was sincere when he said he thought the Special Ruling would be a good path forward for us, but he had a view of the industry that was already obsolete – and of course that led to the petition and public outcry.  Hopefully, a refresh in leadership will also bring updated views on the craft brewers and how we’ve grown and defined our market to compete with out-of-state and big multinational brands.”

The reaction among State Legislators was pretty immediate as well with Assembly Bill A-4594 sponsored by Assemblymen Joe Howarth (R) and Wayne Deangelo (D) which was introduced on October 17th, and Senate Bill S-3154 sponsored by Senator Vin Gopal introduced last week.  This is a complex issue as the ABC Director had full authority to make the Special Ruling, but the reaction from State Legislators has made it seem as if the new rules will be legislated.

The legislation will be a welcome sight to add clarity to the 2012 amendment to NJ Law 33:1-10 that the breweries are currently bound to.  There have been several different interpretations of the 2012 amendment about what can actually occur at a brewery such as, “What is a tour?” ” Can we have food trucks?”  “Are we allowed to have entertainment and, if so, what kind?”  The 2012 amendment was definitely a benchmark ruling when enacted and was a result of collaboration between both the state and the brewing industry.   One of the major parts of the ruling allowed breweries to sell beer in their tasting rooms which was huge as, up until the ruling,  they were giving it away for free when patrons toured their facilities.  In part, because of this extra revenue, breweries were able to hire more employees, expand distribution, and grow their business as the craft beer boom started to take hold here in New Jersey.

Fast forward to 2018 and the craft industry in New Jersey is growing at an exponential rate.  Cities are actually recruiting breweries to open in their municipalities, we have even seen them welcomed in what were formerly “dry” towns such as Pitman and Haddonfield.  These towns want to take advantage of not just the business that the breweries bring, but also other businesses that thrive when a brewery opens in their town.  Restaurants, food truck vendors, local musicians and artists, and many other unique businesses benefit from a brewery opening as it gives them another venue to interact with consumers.  Many restaurants have formed symbiotic relationships with the breweries offering food created with the local beer and, if they have a liquor license, having the local beer on tap.  Most breweries are open limited hours and cannot offer food,  so this relationship has been a win for many bars and restaurants that have embraced craft beer by offering local craft beer for patrons looking for something to eat or to get fresh local craft beer when the brewery is not open.  This all sounds great, right?

The contrarian view is that some breweries are operating their business as “sports bars” and it is not what the spirit of the 2012 ruling was about.  The opposition views include several practices that they feel should not be allowed in a limited license brewery such as music (live or recorded), entertainment such as Quizzo, or having a food truck on or even near the licensed premises. The guidance offered to the breweries is a “best practices” document the Brewer’s Association negotiated in 2012 and followed on a voluntary basis by breweries to police themeselves so that he ABC did not have to step in if they felt that breweries were getting out of control.

We could also certainly debate who is behind these views.  We know that big beer is clearly losing market share to craft beer, their pockets are deep, and they have a large lobby.  We also know that there are some bars and restaurants that feel breweries are overextending themselves in the way the run their tasting rooms, especially since they have paid a ridiculous amount of money to have a liquor license which is another huge issue here in New Jersey.  Without a doubt, there are also towns that have made it hard for breweries in response to owners of bars and restaurants exerting pressure on the mayor’s office.

Director Rible’s intention with the special ruling was to bring clarity to the 2012 law, but clearly the ruling was very harmful to the brewery side of things putting a stop to just about everything that they are doing in their taprooms (see the article HERE for the complete ruling).  One other factor that makes this even murkier is that the states 100+ breweries are in different stages of development.  The bigger breweries such as Cape May Brewing, Flying Fish, and Carton were not as affected as the smaller breweries just starting up who are using their taproom to bring in revenue to be able to grow to the size of the aforementioned breweries.  Director Rible met with several breweries and spoke with many stakeholders and implemented the short-lived ruling.

We reached out to Alexis Degan, the Executive Director of The New Jersey Brewer’s Association, an independent trade group whose goal is to support industry-wide growth and beer appreciation throughout New Jersey for comment and she told us, “I want to wish Director Rible the best in his future endeavors. I did not have the opportunity to work with him directly, but I give him a lot of credit for bringing stakeholders to the table to discuss the issues facing breweries in our state. I look forward to continuing that conversation with James Graziano as he takes the mantle.”

We have also spoken to many people in the business since this latest announcement and there is a growing sense of optimism that the rules that govern limited license craft breweries in the state will legislated in a way that is fair to all the concerned parties it will affect.  Sources from both sides of the issue have told us that they know that neither will get everything they want, but they are sure that there is a happy medium that will satisfy a majority of  the businesses involved in this debate.

Clearly there is not an easy answer here.  Our best guess is that the issue will eventually be legislated and both sides are going to have to make some concessions without slowing the growth of what is one of the fastest rising businesses in the state.  We also would hope that some dispensation would be made to the many small businesses that have arisen as a result of the success of local breweries.  One of the biggest pieces of collateral damage from the Special Ruling was that many of these small businesses would not be able to continue to run without pivoting to a whole new business plan.  These small businesses are great for the community, allowing people to supplement their incomes and offer events that are unique and offer something different to the community.

This is a very complex issue that has no easy answer.  People on both sides of the issue have invested large amounts of money and sweat equity in building their businesses and we don’t want to see any of them hurt.  But the simple fact is that there will likely be concessions by both sides .  All we can do as consumers is to patronize these businesses and show your support by reaching out to your local legislators and making your voice heard.

We will continue to cover the story as it develops…

 

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2 Comments

  • Reply
    What does the ABC Director change mean for NJ breweries? – Independent Craft Brewers of New Jersey
    November 12, 2018 at 1:58 pm

    […] up a great summation of the dramatic changes late last week with our state alcohol regulators, “What does the change of ABC leadership mean for NJ breweries? How did we get here?”.  It’s been seven weeks (or forty-nine days to sound dramatic) since the craft beer world in […]

  • Reply
    Chris
    November 14, 2018 at 3:52 pm

    Great, now maybe my application that I put in back in March will be looked at…

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