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Sunday, 25 June 2017 20:00

Sour Grapes? Lawmakers again try to revamp alcoholic beverage industry council, but questions persist

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New legislation would expand the Michigan Grape and Wine Industry Council to include representation from other types of craft beverage makers in the state. However, some types of producers say they had hoped the legislation would give them a dedicated seat on the new Michigan Craft Beverage Council. Pictured is Vander Mill LLC’s new Grand Rapids cider production facility. New legislation would expand the Michigan Grape and Wine Industry Council to include representation from other types of craft beverage makers in the state. However, some types of producers say they had hoped the legislation would give them a dedicated seat on the new Michigan Craft Beverage Council. Pictured is Vander Mill LLC’s new Grand Rapids cider production facility. MIBIZ FILE PHOTO: JOSH VEAL

LANSING — A series of bills could open the Michigan Grape and Wine Industry Council to members from the distilling, craft beer and other alcoholic beverage segments. 

The legislation follows a wave of criticism over the council’s current funding structure. Under the existing model, licensing fees paid by brewers, distilleries and cideries are earmarked to fund grape and wine research at the council, even though those industries do not benefit from the research.

State Sen. Goeff Hansen, R-Hart, and Rep. Brandt Iden, R-Portage, first introduced legislation in 2016 to address the disparity and open membership to the council, but the bills failed to reach the governor’s desk before the end of the session. 

This month, the pair submitted updated legislation, Senate Bill 429 and House Bill 4667, and remain hopeful the changes will be enacted. 

“We want to give people the opportunity — no matter what they’re (making) — to fill out the application and be a part of the council,” Iden said. “I think it’s trying to make it as fair and balanced as we can to give equal representation to those new and emerging industries.”

While many in the state’s craft beverage industry regard the legislation favorably, they say they still have questions over the ambiguity of the council’s structure. 

The legislation calls for the industry group to be rebranded as the Michigan Craft Beverage Council and contain the following members: a brewpub; a brewer producing between 60,000 barrels and 1,000,000 barrels annually; a small distiller; a distiller producing more than 60,000 gallons annually; a winemaker producing a product from a fruit other than grapes, which could include cideries, meaderies or other producers licensed as wineries; two winemakers; two retail establishments; and a chairperson from the Michigan Department of Agriculture. 

Paul Vander Heide, CEO of Grand Rapids-based Vander Mill LLC, takes issue with the legislation, which does not specify that  hard cideries have a seat on the council. Since cideries are licensed as winemakers through the state, they could fill the provision for wine producers making a product from a fruit other than grapes. But Vander Heide, who also serves as the president of the Michigan Cider Association, contends the language means cideries would have to compete with other producers for the seat. 

“We were pushing to have cider specifically written in (the legislation),” Vander Heide said. “It’s one thing that we pushed hard for, but we don’t have the money to spend to lobby and get those words specifically in there. The absence of having apples and cider written in there previously kept us out of the group, so what’s to keep an administration from doing something different?”

STAYING NIMBLE

Sen. Hansen noted that including every specific category of craft beverage producer would simply make the council unwieldy.

“We didn’t want to make it too big,” Hansen told MiBiz. “You could put everyone on it, but then you have a group that’s too big to do anything. We tried to keep it in range to make it nimble enough to make changes.” 

The bills also include a provision for distilleries producing more than 60,000 gallons of spirits annually, but none of the sources interviewed for this report were aware of a Michigan-based distiller meeting that definition. Iden said the provision would allow a seat on the council for a “Michigan representative” from an out-of-state spirits manufacturer, including the likes of Bacardi, Jack Daniels or any number of large producers. 

“Michigan is a big market for these folks and they sell a lot of product in Michigan,” Iden said. “There are major opportunities for their product in Michigan, and I believe they need an equal voice.” 

Still, the legislation does not include a similar provision for large breweries like Anheuser-Busch or Molson Coors. 

Iden said the decision came down to a matter of the parties who expressed interest in being members of the council.

“It didn’t come up,” Iden said of outside breweries’ desire to be on the council. “It’s not something that I’ve heard from those folks and I didn’t want to put someone on there that didn’t want to be on there. Large distillers reached out with a strong interest to be on there.” 

‘A SEAT AT THE TABLE’

Jon O’Connor, co-owner of Grand Rapids-based Long Road Distillers Inc., called the decision to include large distillers “strange,” but applauded the legislation for expanding membership on the council. 

“As an industry, I feel that it’s good to have a seat at the table in terms of the craft beverage industry in Michigan having expanded beyond just the wine industry,” O’Connor said. “To have an opportunity to be a part of this and have some resources allocated to help do some additional research on how to grow our industries certainly provides some good opportunity.” 

Iden sees the legislation as a positive step in encouraging further industry collaboration among the state’s craft beverage companies.

“I understand that these industries are currently collaborating … but I think there’s more they can still do,” Iden told MiBiz. “As I look at economic growth and prosperity in all of these industries, this kind of collaboration is paramount.” 

Iden added that he’d eventually like to find a way for the Michigan Craft Beverage Council to be more integrated with the state’s tourism bureau. 

GROWING THE PIE

Under the legislation, the council would be appropriated approximately $800,000, half of which would be dedicated to funding operations, with the other half funding grants, research and the promotion of the various industry sectors. 

Companion bills in the state House and Senate would also allow the Michigan Liquor Control Commission to directly fund the Craft Beverage Council.

According to Iden, the hope with the legislation is that the funding would increase over time. 

“It’s not (a lot of money) — I recognize that,” Iden said of the $400,000 available to the council for research and promotion. “My intention with this bill has always been to grow the budget.”

Despite his criticism over the lack of a seat on the council specifically earmarked for hard cideries, Vander Mill’s Vander Heide is encouraged that his sector could have an opportunity to be involved, citing the “challenged relationship” that the industry has with the current iteration of the Grape and Wine Council.

“It’s definitely a better direction for those funds rather than how those funds have been used in the past,” he said. 

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John Wiegand

Staff writer

jwiegand@mibiz.com

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