There’s a rapidly emerging on-premise player that’s winning over beer consumers in markets across the country: brewery taprooms. According to the Brewers Association, approximately 5 percent of all on-premise beer volume is sold directly to consumers through taprooms and brewpubs. And with the growing number of craft brewery start-ups, that share is likely to increase. “The percentage of microbrew taprooms is on the rise,” says Bart Watson, chief economist for the Brewers Association, noting that nearly all new craft breweries include taprooms where legal. In California, some 36 percent of the hundreds of licensed breweries sell all of their beer on site.
These venues appeal greatly to beer lovers. “Our taproom seems more like a neighborhood hangout than a production brewery,” says Mike Stuart, director of people and social strategy at MadTree Brewing Co. in Cincinnati, Ohio. MadTree’s taproom, which opened two years ago, is separated from the brewery by a 4-foot-tall metal mesh barrier, which offers guests a close connection to the source of beer production. The Brewers Association’s Watson points to the ability for patrons to interact with the people who make the beer and engage with staff who have a high level of beer knowledge. They’re also able to sample beer at its freshest. Harpoon Brewery president Charlie Storey, whose company operates tasting rooms in Boston and Windsor, Vermont, notes guests’ appreciation of the opportunity to sample brews that are only available on-site.
The feedback breweries receive about new products is one benefit of the taprooms, the Brewers Association’s Watson says. He also points to the high margins from direct-to-consumer beer sales. MadTree’s Stuart agrees. “The success of the taproom has provided a mechanism for growth, both financially and from a portfolio perspective,” he says. MadTree’s taproom serves 17 different beers on draft, priced from $5 to $7 a glass, and the brewery is considering an expansion that would include a larger taproom. Harpoon—which has operated a tasting room in Boston since 1987—completed a substantial renovation on that 6,000-square-foot space two years ago, while its Vermont indoor-outdoor beer garden has also been expanded in recent years.
But taprooms present their share of problems. “Staffing is a challenge,” Stuart concedes. “You want to stay efficient and keep the employees well-tipped, but you must ensure that you aren’t short-staffed when there’s a surge in customers.” Harpoon’s Storey adds that it’s important for breweries to guarantee a positive experience for tasting room guests. “You’re exposing your brand to consumers in a very intimate fashion, and every impression will have an impact,” he explains.
Additional challenges include the scrutiny that taprooms can receive from others in the beverage alcohol business. In some markets, on-premise operators have pushed for restrictions and even bans on brewery taprooms. Montana, for example, limits the amount of beer a taproom can sell to a consumer in a 24-hour period and mandates that taprooms close by 8 p.m. John Iverson, lobbyist for the Montana Tavern Association, says his organization has been working on legislation that would grant breweries enhanced retail abilities and also allow tavern operators to add brewing facilities to their venues. However, he believes brewers shouldn’t be given a free ride on direct-to-consumer sales. “If any business is looking to compete with bar owners, they should make the same investment in full tavern licenses,” Iverson says.
Craft brewers say they’re careful not to undercut on-premise partners. “Bars help spread the beer to a much larger footprint,” MadTree’s Stuart says. Storey notes that Harpoon tries to steer clear of competing with other on-premise venues by forgoing entertainment options like televisions and serving only pretzels.
Taprooms are likely to endure and become a bigger factor in the on-premise world. The Brewers Association’s Watson points to the popularity of locally produced brands among consumers today. “Local is huge,” he says. “What’s more local than going to a brewery and buying a fresh beer?”