Soon 3.2 beer will be dead in Colorado, and the world of beer will never be the same again

Soon 3.2 beer will be dead in Colorado, and the world of beer will never be the same again

Things are about to get shaken up

VicesNovember 14, 2018 By Will Brendza

There’s a lot that’s about to change in beer in Colorado, and it’s going to happen very fast, very soon.

Last June, Governor John Hickenlooper signed a bill into law that will almost undoubtedly kill 3.2 percent beer in this state, along with many of your local, mom-and-pop neighborhood liquor stores. Hickenlooper, knowingly or not, pulled a thread that would unravel decades of status quo, and would set in motion a massive wave of alcoholic change in this state – from brewer, to vendor, to consumer.

Before unpacking the myriad of changes that are soon to start shifting things in Colorado, though, it’s important to understand how we got here in the first place.

So, we’re going to rewind the tape a little bit.

It was seventy-five years ago when Colorado legalized the sale of 3.2 percent beer. Back when bootleggers were still making a killing, and a loaf of bread cost 7-cents on the dollar.

It was a move made out of impatience. After all, this was 1933 – it was the end of prohibition, the worst year of the depression, the dust bowl was in full effect, and across the pond, Hitler was just starting his rise to power. People wanted their alcohol. And they didn’t want to wait around for The State to ratify the 21st amendment to get it.

So, Colorado (along with 18 other states at the time) passed a bill as soon as they legally could that made it okay to buy and sell 3.2 percent beer in grocery and convenience stores – what was known at the time as “non-intoxicating beer.”

That law survived. Outliving its purpose by generations, long after liquor stores had opened up with full-strength alcohol on their shelves. While it limited grocery and convenience stores to selling only 3.2 percent beer (and nothing stronger), it also provided a welcome source of extra income for those businesses. In fact, it was a significant source of income for them since they could sell that beer to anyone over eighteen, and since actual liquor stores were prohibited from staying open on Sundays.

But, in 1983 Colorado stopped selling 3.2 percent beer to minors so we could keep our federal highway funds. Then, in 2008, liquor stores got the green light to open up on Sundays. And, quite suddenly, grocery store beer aisles across Colorado became deserted and forgotten places, visited only occasionally by tourists who didn’t know any better.

It was around that time when the push to change the 3.2 law really started gaining momentum. Understandably, grocery and convenience store chains felt that they were being left out of the fun. They wanted a piece of that pie.

And soon, they’ll have it.

On January 1st of 2019, the law restricting grocery stores to selling only 3.2 percent beer will dissolve, and they’ll be able to stock their shelves with whatever they damn-well please – from full-strength craft beer, to Everclear.

Which, for consumers, represents a step towards convenience. Now, all of our groceries and all of our non-alcoholic and alcoholic drinks are in the same place – it’ll be a one-stop shop. And grocery stores are set to make bank off of it.

However, that local liquor store that’s been serving your neighborhood for decades, the one run by that sweet old couple that’s just trying to get by and pay rent, they’re going to be strapped. Many of their customers will simply disappear. Dust will start to collect on their shelves and on the bottles stocked there. They’ll start losing money. And they’ll sit there in that lonely, empty store until they’re forced to close.

That notion has put a lot of brewers in a tough spot.

Because, on the one hand they will likely be selling more of their product, supplying more beer to more distributers. On the other hand, though, any increase in sales that craft brewers will experience, is going to be at the expense of many locally-owned liquor stores. And that is weighing heavily upon many in the industry.

Doug Fenske is the ale ambassador of Bonfire Brewing out of Eagle, Colorado. He handles much of the brewery’s sales and distribution, which means he will see first-hand how this law is going affect small liquor stores. While Bonfire, for the moment, is not planning on selling their beer in grocery stores, Fenske says that day might come, and when/if it does, he’s going to be faced with some difficult challenges.

“Some of these relationships that I’ve built over the last three to four years, they’re going to be strained a little bit to say the least,” he admits. “A lot of liquor stores are more than likely going to be decreasing the SKU's that they purchase from the breweries that are selling to the grocery stores, since that is directly affecting their business.”

In other words, breweries that put their products in grocery stores stand the risk of losing business with smaller independent liquor stores, who might start stocking less of their beer, or even dropping breweries entirely.

And that’s a dark corner to be backed into.

“You want to do what’s right for your business and your brewery and sell as much as you can without selling too much or growing too fast,” Fenske says. “But a lot of these smaller guys, these liquor stores, they’re going to be struggling to keep their sales where they are.”

It’s a conundrum. After all, these independent liquor stores were the ones buying beer from craft breweries all along, stocking their products and getting their names out there – these were the small businesses that most Colorado craft breweries grew up with.

And now, they’ll have to watch as many of those liquor stores tank, to their advantage.

Brian Kreuger, the national sales and marketing director of Avery Brewing, says it’s a tricky spot to be in.

“That’s how our business was built, through those mom-and-pop independent stores,” says Kreuger. “That’s really what’s made Colorado the craft beer state that it is, because we had an independent liquor store environment that promoted variety and promoted local beers that you couldn’t get in other grocery stores.”

Without that, it’s debatable whether or not craft beer would have ever risen to such heights in this state. Now that that’s changing, there’s a lot going up in the air – a lot of unknowns that are sure to stir things up in the liquor business.

However, this doesn’t have to be The End for the little liquor store. In fact, it really represents a chance for those smaller stores to shine – to prove to consumers why they need them. A chance to change their modus operandi in some exciting ways.

“Those local stores, the ones that are going to survive are going to be the ones that have the variety that you can’t get in the grocery stores,” Krueger says. “That’s what the good ones do best.”

And, without the need to stock some of the bigger craft breweries (since they’ll be in grocery stores) liquor stores will have more room on their shelves for smaller local craft breweries. Which was something Fenske pointed to as an upside.

“Some of the smaller craft breweries that aren’t really distributing too much right now, are more than likely going to find more shelf spots than they have in the past,” he says.

Which, could play well for both small liquor stores and craft breweries.

If that’s the way this heads, everything might be okay in the end. If the grocery stores start selling larger, better-known breweries, and capitalize on convenience, while the liquor stores take on the smaller, more local breweries and go for greater diversity, things might even out over time.

And as for 3.2 beer? It’s probably on its way out. Who is going to buy watered down beer when, everywhere you go, you’ll have the option to buy full strength? For mega-breweries like Coors, this is going to take the wind out of their sails, leaving them high and dry with no real demand or purpose beyond beer pong and flip cup.

This could be the death of 3.2 beer as we know it – and that’s something we can all drink to.