Taproom Regulation Challenges in the Midwestern Untied States
Hannah J. Davis, MPH, RS
Food Standards Compliance Officer, Minnesota Department of Agriculture
International Food Protection Training Institute (IFPTI) Fellowship in Food Protection
Abstract
Today’s food industry is rapidly changing, including the brewery business. From 2012 to 2017 in the U.S. there was a 16% increase in the number of breweries including microbreweries, regional craft breweries, and brewpubs (Historical U.S. Brewery Count, 2018). In addition, there has been growing consumer interest in breweries with taprooms. This study used an online survey of the twelve state food regulatory agencies in the Midwestern United States (U.S. Census Region 2) in order to examine the perceptions, processes, and challenges related to the regulation of breweries with taprooms. The study found that all the agencies regarded beer as a food product, and they believed that beer should be regulated in the same manner in which other food products are regulated. However, there were significant differences among the agencies regarding legal authority, licensing, inspection processes, and understanding of the food safety risks associated with beer. The study recommended that the agencies develop criteria for identifying beer as a food product; standardizing regulation, licensing, and inspection regarding breweries with taprooms; and developing educational outreach materials to improve industry understanding of the food safety reasons for regulation of beer and other alcoholic beverages.
Keywords: breweries, taprooms, brewpubs, Midwestern United States
Background
The number of breweries with taprooms in the United States is growing at a rapid pace. Many breweries, which were once largely manufacturing facilities providing products through distributors and retailers to consumers, now encourage consumers to visit and offer retail services such as taprooms. A taproom is an extension of a brewing manufacturing facility that distributes the finished product to outside vendors and directly to the consumer (Historical U.S. Brewery County, 2018). In the late 1990s there were fewer than 1,500 taprooms and brewpubs in the United States. At the conclusion of 2017 there were approximately 6,372 reported throughout the country; the rate of growth from 2012 to 2017 was 16% (Brewers Association, 2018).
Some of the challenges associated with operating a brewery with a taproom are due to the number of regulatory agencies that are involved in a variety of capacities related to public safety, tax, and food oversight (Sullivan, 2012). For example, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) is tasked with ensuring that only qualified individuals are engaged in the manufacturing of alcohol containing products. For a brewery to add a taproom, approval must be gained from the TTB before any purchasing, processing, or sales can begin (Alcohol and Tobacco Tax and Trade Bureau [TTB], 2018).
Additionally, there are agencies within each state in the Midwest that are responsible for maintaining public safety regarding the sales of alcohol containing products. An example of a Midwestern state regulatory agency is the State of Minnesota’s Department of Public Safety’s Alcohol and Gambling Enforcement Division (AGE). The AGE is responsible for issuing licenses to alcohol manufacturing businesses like breweries. They also approve a brewery’s ability to wholesale their product. Most importantly, the AGE reviews and approves retail licenses for breweries with taprooms to serve their product to the public (Minnesota Dept. of Public Safety, 2018).
The rapid increase of breweries with taprooms presents a particular challenge for regulators who need to adapt their regulatory regimes to the rapid growth of these types of businesses in order to ensure a safe food product is provided to consumers. The fast rate of change in the brewing industry makes it difficult for food safety specialists in the regulatory agencies to properly understand the food safety risks that are present in the brewing process and to adapt their existing food safety laws and regulations to the processing.
In addition, the failure to adapt efficiently to existing regulations by operators of taprooms in a growing craft brewing industry presents a major challenge to the food safety regulators as majority of the operators in this industry do not believe that the products they produce are food and believe they should not be regulated as such. This challenge is especially magnified by the complex regulations for tax and public safety in place by TTB and AGE equivalent agencies (Burgdorf, 2016).
Problem Statement
Midwestern United States food regulatory agencies’ region-wide understanding of the perceptions of operators of breweries with taprooms regarding the regulation of their products as food, is not known.
Research Questions
Are products produced by breweries regulated as food by state food safety regulatory agencies in the Midwestern United States?
What food safety concerns regarding breweries have been noted by state food safety regulatory agencies in the Midwestern United States?
How can regulators improve their understanding of the operation of breweries with taprooms?
Methodology
The project began with an analysis of publications and websites in order to develop background. Examples of articles and websites that were reviewed included governmental pages for the TTB and the AGE for information; current regulations for breweries with taprooms; and, the Brewers Association website to collect data about the specific numbers of these facilities that are operating in the Midwestern United States. The Brewers Association also provided information growth patterns in the industry over the past ten years. Finally, other professional websites were consulted to locate articles with information regarding the relationship of breweries with taprooms and regulators. These materials documented the challenges and legal concerns with implementing regulations of breweries in 12 different states.
In order to develop a comprehensive overview of the regulatory patterns, an electronic survey was developed and distributed in order to gather information about how breweries with taprooms are regulated in the Midwestern United States. The survey was administered to representatives of 12 state food regulatory agencies who were contacted in advance and agreed to participate in the study.
The survey consisted of three sets of questions (see Table 1) that each contained items that would analyze the perceptions, processes, and associated challenges faced by each of the 12 state food regulatory agencies while regulating breweries with taprooms.
Table 1
Results
The data from the survey was compiled in a spreadsheet format and analyzed. There was a consensus among the surveyed state food regulatory agencies regarding their perceptions of how beer is currently regulated. All 12 respondents agreed that beer is a food item and should be regulated as such. While a clear agreement was noted on whether or not beer is a food item, there was a difference of opinions as to whether or not beer has the same risks associated with food borne illness as other food items. 5 out of 12 survey respondents agreed that the same risks are present, 3 out of 12 disagreed, and 4 out of 12 were unsure. Finally, while 9 out of 12 survey respondents believe that regulations set forth by agencies like the TTB or AGE do not provide adequate food safety regulations, 3 out of 12 were unsure (see Figure 1).
Figure 1. Perceptions of how beer is currently regulated.
A majority of survey respondents reported that their state food regulatory agency regulates and licenses breweries with taprooms. 10 out of 12 responses stated that their agency does regulate and license these types of facilities, while 2 out of 12 responses stated that their agency does not. In addition to licensing and regulatory authority, 10 out of 12 state agencies responding to the survey have the authority to act on food safety issues as they occur, and 2 out of 12 do not (see Figure 2).
Figure 2. Specific regulations present in each food regulatory agency.
Conclusions
Midwestern regulatory agencies regard beer as a food item that should be regulated the same as other food items. However, there is a wide variation among the agencies regarding the degree of food safety risks posed by breweries that have taprooms.
The study results indicate the need to bring about uniformity among agencies regarding their responsibilities for breweries with taprooms. For example, two surveyed states do not have the authority to regulate breweries with taprooms for food safety concerns in their state. Addressing the responsibilities of all agencies that are involved with breweries also will allow for more effective collaboration and communication among regulators.
Clear guidance on the rules and regulations for both regulators and the regulated industry could provide a significant amount of assistance to breweries with taprooms in helping them operate in an efficient and safe manner.
Recommendations
The Midwestern states as a group should develop a clearly defined set of criteria for how to identify beer and other alcoholic beverages as food items. The criteria should include a list of all products that could fall under the classification as alcoholic beverages like beer, spirits, wine, and more.
The Midwestern states as a group should develop a model regulatory program for the regulation, licensing, and inspection of breweries with taprooms. This standardized program should include a set of food safety regulations that are specific for all alcohol manufacturing facilities with tasting or taprooms, including breweries, wineries, and distilleries. Additionally, this program should include specific licensing categories for breweries, wineries, and distilleries so all firms can be reviewed on the same regulatory level. A standardized inspection program should include in depth guidance for regulators that identifies the specific processes used in alcohol manufacturing firms with tasting and taprooms. This inspection program should also aim to educate the industry on the specific food safety risks that are associated with alcohol containing products.
Fact sheets should be developed and distributed to create a mutual understanding of the reasons for food safety regulation requirements between regulators and the industry. These fact sheets should outline the production process for how alcohol containing products are made, basic food safety sanitation practices, and the suggestions for a successful regulatory inspection.
A guidance document for distribution to all food regulatory agencies and the industry should be developed by the Association of Food and Drug Officials. The guidance document should clearly address definitions, regulatory requirements, risk factors associated with food products containing alcohol, and suggested interventions to reduce or eliminate those risk factors.
Acknowledgements
This study was carried out as a component of the International Food Protection Training Institute’s Fellowship Program. I would like to express my gratitude to my fellowship mentors, Doug Saunders and Paul Dezendorf whom provided vital guidance and direction during the process of conducting this study and the development of the research article. The Acting Division Director for the Minnesota Department of Agriculture, Katherine Simon encouraged my participation in this program and also provided the vital survey responses as the representative from the State of Minnesota during the second phase of this project. Her guidance and support during the duration of this program has been essential to my success. Finally, I would like to thank the other fellows in this cohort for their unwavering professional encouragement. I gained eleven new friends and colleagues from this experience, for that I will be forever grateful.
References
Alcohol and Tobacco Tax and Trade Bureau (TTB). (2018, October 2). TTB regulated industry – beverage alcohol. Retrieved from https://ttb.gov/alcohol/bev-alc.shtml
Brewers Association. (2018). Historical U.S. Brewery Count. Retrieved from https://www.brewersassociation.org/statistics/number-of-breweries/
Burgdorf, J. (2016, September 19). Craft breweries abound in states with fewer regulations. Retrieved from https://fee.org/articles/craft-breweries-abound-in-states-with-fewer-regulations/
Minnesota Department of Public Safety. (2018). Alcohol and Gambling Enforcement (AGE). Retrieved from https://dps.mn.gov/divisions/age/Pages/default.aspx
Mitchell, M., & Koopman, C. (2014, June 3). Trouble brewing for craft beer. U.S. News. Retrieved from https://www.usnews.com/opinion/economic-intelligence/2014/06/03/craft-brewing-industry-stifled-by-regulation
Snider, B., Kelleher, E., & Hinman, J. (2016). Booze Rules Blog [Blog Description]. Retrieved from https://www.beveragelaw.com/booze-rules
Sullivan, L. (2012, June). Trouble brewing: The risk of running a craft brewery. Risk Management Society Publishing, Inc, 59(5). Retrieved from http://go.galegroup.com.ezp3.lib.umn.edu/ps/i.do?id=GALE%7CA293108570&v=2.1&u/