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Fast-growing wine, craft beer industries generating supportive legislation throughout Midwest

by Carolyn Orr ~ March 2015 ~ Stateline Midwest »
In the not-so-distant past, “non-existent” would have been an apt term to describe the Midwest’s farm winery and craft beer industries. As recently as the year 2000, only 300 acres were in grape production.
But today, ethanol isn’t the only alcohol being produced in this region. There has been big growth in the beer and wine industry, a trend that is allowing for more diversity in farm production and helping expand local and statewide agri-tourism.
The winery and craft beer industries are moving out of the hobby stage and making an estimated $10 billion contribution to the economies of Midwestern states. More than 12,000 acres of grapes and 600 craft brewers now call the Midwest home. This growth has been fueled not only by the development of winter-hardy varieties of grapes, but also by more-supportive government policies.
Michigan is a case in point of how the industry has grown, as well as how state laws are being re-examined. In 2013, it became one of the first states in the nation to pass legislation (SB 27) that allows for the tasting and sale of wine at farmers markets.
“Farmers markets benefit from having a diverse array of products, and producers benefit because alcohol tastings improve [their] ability to promote and increase sales,” explains Jen O’Brien, executive director of the national Farmers Market Coalition.
About 50 percent of Michigan’s farmers markets have now opened to winery sampling and sales, according to Linda Jones, executive director of the Michigan Grape and Wine Industry Council.
“Fifteen small wineries have taken advantage of the opportunity,” she explains.
Under the current law, the farmers-market option is limited to wineries producing less than 5,000 gallons annually. Legislation has also been introduced to allow microbrewers to serve samples at farmers markets.
The Grape and Wine Industry Council itself, in fact, is an example of the states’ increased role; it is an 11-member group established by the Legislature to promote Michigan’s wine and grape-growing industries. SB 27 also begins to address one of the obstacles that smaller brewers and winemakers across the country face in trying to market their products.
Under the three-tiered marketing system that developed after Prohibition was lifted, producers typically sell to distributors, who then sell to retailers. Smaller producers often don’t produce enough volume for wholesalers to carry their product.
Farmers markets, then, are an example of how to facilitate a direct producer-consumer connection. In Michigan, too, small wineries have become part of regional wine trails that attract out-of-state visitors — another way to facilitate a producer-consumer link.
And last year, Michigan lawmakers passed a series of bills designed to expand the state’s craft beer industry. For example, the production threshold for microbrewers was doubled, to 60,000 barrels per year (one of the highest caps in the nation). The statutory changes also relaxed limitations on dual ownership of a brewpub and microbrewery and allowed for microbrewers to self-distribute.
Other Midwestern states are also making efforts to support local alcohol production and sale. For example, direct-to-consumer shipment of wine is now legal in most Midwestern states (in Indiana, the consumer must purchase the product in person), and in Nebraska, farm wineries that use at least 75 percent state-grown grapes and other fruits pay only 6 cents per gallon in state excise taxes, compared with 91 cents per gallon for other wineries.
This year, just about every Midwestern state is considering legislation changing some aspect of beer and wine sales, marketing or production. The industry has come a long way in 15 years.

 

Article written by Carolyn Orr, CSG Midwest staff liaison for the Midwestern Legislative Conference Agriculture & Natural Resources Committee.