Montana-based brewery forced to pull back sales to stay under barrelage cap

kettlehouse brewing logo(Missoula, MT) – Yet another state with a ridiculously low barrelage cap on production breweries that also run a taproom…

It means that KettleHouse Brewing has to “sell-in” as they put it. Read on…

We have recently made the terrible decision to pull out of the Helena, Kalispell, and Great Falls markets. Our draw down will start in March. The reason is we’re selling so much beer in bars, restaurants, and stores in Missoula and Bozeman that we can’t keep ourselves under the10K bbl limit that allows us to operate our taprooms and charge for beer. We are unwilling at this time to close down our taprooms and risk alienating ourselves from our core market of Missoula supporters who got us here in the first place. I call it “selling in”. If we closed our taprooms, our Missoula base could say we “sold out”.

So instead of raising prices exorbitantly to slow down demand, we made a harsh choice. It’s interesting that our growth is on fire in our wholesale markets. We are the #1 selling craft beer with our distributors. We felt that we didn’t want to raise prices too high, as we are committed to selling the highest quality Montana made beer for a fair price. Some might suggest that we close our taprooms and keep the beer in Helena. We built a great community around our taprooms, and we’re not going to turn our backs on our neighbors.

For the remainder of the year, I’ll be working to collaborate with our trade partners to improve the business climate for mid-sized and established Montana craft brewers. I’m looking forward to meeting with all interested parties to discuss what we can do to remove the 10k bbl limit in the next legislative session. I think it encourages taproom startups and discourages mid-sized packaging brewers like us from expanding to fill the growing demand for craft beer in Montana. I believe there’s a way we can fine tune that law so that Montana wholesalers, tavern owners and brewery owners can work together for the benefit of all tiers. I have a dream for Montana that Montana-made beer accounts for 20 percent of the market share by 2020. Crazy? Maybe. Doable? I believe so. If we can remove this 10K bbl hurdle, we’ll get back into these markets and even expand into Billings and eastern Montana. And we’ll commit ourselves to helping Montana brewers reach that 20%.

Sorry for the bad news,
Tim O’Leary
Founder of the K-Hole

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3 thoughts on “Montana-based brewery forced to pull back sales to stay under barrelage cap

  1. Tim,
    I applaud you! What a stand you are taking for “the ones who brought you there.”
    Hopefully you and others can successfully lobby for the laws to changed.
    Do you have a “lobby” that represents Montana craft brewers interest?
    You may know of Alabama’s “Free the Hops” lobby and Mississippi’s
    “Raise Your Pints” lobby.
    They have been amazinglly successful in changing archaic and stifling laws. Perhaps they could give some assistance in your direction too.

    Best to you!

    David
    Black Bucket Brew Inbox Magazine Editor

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