Fairhope Brewing Company will increase their capacity by 600% thanks in part to the economic benefits of a taproom. Fairhope’s capacity is currently 700 barrels a year; by the end of 2015, they will exceed 4,000 barrels. Alabama’s beer laws allow breweries to sell directly to the consumer under strict limits and conditions: namely, they can only sell samples for on-site consumption to consumers, and all other sales have to be through a distributor and the three tier system.
Jim Foley, Fairhope’s managing partner, told the MBG, “Without an on-premise sampling room, it would be virtually impossible to make a profit on a system of our size (ten barrels). The tasting room provides us with somewhere around half of our total revenue (including beer and merchandise sales as well as private event fees), but only accounts for some 20% of our total volume of beer sold.”
As a result, in two years of operation, Fairhope will sextuple its capacity, and double its number of employees. This expansion was made possible in large part due to the revenues coming from direct sales to its taproom patrons, which was done without without undercutting their local retailer, or damaging the three tier system. According to the 2013 Alabama Brewers Guild Survey, year over year direct sales decline as a percentage of overall sales, and are expected to decline as packaging breweries are able to sell more of their product through traditional retailers.
As much as we love Fairhope’s beer here at the MBG and applaud their success, we deeply regret that these opportunities just don’t exist for Mississippi’s breweries. We’ve already lost one Mississippi brewery, due in part to the restrictive marketplace conditions in Mississippi. Help us grow from a fledgling manufacturing industry; join the Guild and spread the word!