LOUISVILLE, Ky. — In 2020, Against The Grain Brewery in Louisville produced just over 4,000 barrels of beer. Normally, it’s twice that, said co-founder Adam Watson. However, pandemic or not, all of its beer is sold to bars, restaurants, and liquor stores via a middleman called a distributor because that’s the law.

“In my opinion, this is the single most important piece of legislation for the Kentucky brewing industry on the whole,” Watson told Spectrum News 1. 

That legislation is a bill, expected to be pre-filed during this year’s General Assembly, which would change two things.

First, the proposed legislation would allow breweries in Kentucky to self-distribute a limited amount of their own beer.

“We would join the 39 other states that currently have some form of self-distribution for breweries, including every state that touches Kentucky,” Watson said. “Many of those states, when they say limited…in Indiana‘s case 30,000 barrels; in Ohio‘s case, 1 million barrels. We are only requesting 2,500 barrels.”

The second change Watson said would make contracts between distributors and microbreweries fairer.  

“Certainly one of the most glaring is the termination abilities. You know, a distributor is allowed to leave basically on a whim, at any time. They can just say, ‘Hey, starting tomorrow you’re out, and we don’t carry you anymore,’ but for a brewer, in order to get out of the relationship, we are statutorily required to jump through a quite a large number of hoops,” Watson explained.

Besides co-owning a brewery, Watson is also the government affairs chair of the Kentucky Guild of Brewers that advocates for the Commonwealth’s brewing industry and is behind these changes. 

Executive Director Derek Selznick said most of the organization’s 68 members produce less than 500 barrels per year, so they want to be able to sell directly in their own backyard. 

“So, say if you’re in Lexington, you know, your beer has to go all the way up to Northern Kentucky and sit for 24 hours in a warehouse and come all the way back down to Lexington to go two doors down…there’s just no reason for it,” Selznick said. “The other thing is it really allows us to work on our specialty releases. So those fun, weird beers, you know, there may only be like three kegs that go out total in the state. We want to be able to take control of that business.”

Watson said if these proposed changes become law, it will also open doors for Against The Grain Brewery to expand further into the restaurant and bar industry without needing a microbrewery at a location in order to self-distribute its own beer. 

“Right now we’re fairly limited when we look at expansions because we have to look at places where we can fit a brewery, and that’s a significantly more daunting animal than just trying to set-up a restaurant or a bar or bottle shop somewhere,” Watson explained. 

Watson also explained that with self-distribution, breweries would be able to do something in the industry referred to as “hotshotting.” For example, if a customer runs out of a brand’s keg on a weekend, with self-distribution a brewery can sell and deliver another keg immediately versus waiting for a distributor to fill the order. 

Senate Bill 15 was introduced to the Senate to Committee on Committees on February 3, 2021. You can read the full bill here.

The Kentucky Beer Wholesalers Association also provided the following statement to Spectrum News 1 Kentucky regarding Senate Bill 15.