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Guinness Comes to America... And Finds a Fight

March 30, 2017

By Jake Emen, March 30, 2017

Visiting the famed Guinness Storehouse in Dublin, Ireland is on most everyone's beer bucket list. Even those who aren't devotees of the brand, or beer in general, flock to the site. In fact, it's said to be the most popular tourist attraction in Ireland, with nearly 1.5 million tourists flooding through the gates in 2015. If you've been thinking about buying a plane ticket to Dublin and visiting Guinness yourself though, you may just want to hold off a minute – a considerably shorter trip should be open by this fall.

Guinness is Coming to America

The ancestral home of Guinness is an alluring place, with its instantly recognizable St. James's Gate entranceway, and the fantastic origin story of Arthur Guinness leasing the site in 1759 for 45 Irish pounds per year – for 9,000 years. In addition to Storehouse, there's also the adjacent Open Gate Brewery, a hub for the brand's brewing experimentation.

Now, Guinness is saving you that trip across the pond by bringing the Open Gate Brewery concept to the U.S. for the very first time.

The chosen site for Guinness's coming to America journey may be somewhat of a surprise – Baltimore County, Maryland. However, Diageo has an existing facility in Relay, MD, which is also the site of the historic Calvert Distillery, which opened in 1933.

The area's brewing roots run deep, and Heavy Seas, the second largest craft brewery in Maryland, is located within shouting distance. The site is just outside of Baltimore city – right on your way to or from BWI Airport, as it happens – which also makes it accessible to Washington, D.C. as well, and an easy enough weekend trip for Guinness revelers hailing from say, New York or Philadelphia.

Politicans are eating up the $50 million project, thanks to its prospects for job creation, along with a surefire ability to generate huge tourism and hospitality dollars for the area. But beer lovers should rejoice too. The Guinness attraction will offer brewery tours, a chance for visitors to sample the experimental brews they're creating, and of course buy all the Guinness swag you can handle. While classic Guinness will continue to be brewed in Dublin, the Maryland facility will be the home for the wider range of Guinness beers created for the U.S. market.

Despite the broad enthusiasm for the project, there are those who are fighting it, or more accurately, fighting its potential favored-son status among lawmakers. The Brewers Association of Maryland, which represents over 80 operational or planned craft breweries in the state, stands in one corner. Opposite them is the Diageo-owned Guinness, with periphery forces joining the melee in the form of wholesalers and retailers, as well as bars and taverns, all of whom are scrambling to have their voices heard and interests served.

Guinness/DiageoAn artist's rendering of the coming attraction in Maryland.

The Barrel Cap

At the center of the fight is Maryland legislation which caps brewery taproom sales to 500 barrels annually. To make sense of that figure, consider that a 500-barrel annual cap is equal to about 125,000 pints, whereas the Guinness facility forecasts 300,000 visitors in its first year of operation. In other words, even if every person had just a single pint on their visit, the brewery would be dry to visitors by the end of May.

Diageo sought swift resolution to the cap by proposing two matching bills to the Maryland General Assembly, one each in the house and senate. Those bills though would essentially only increase the cap for themselves, while leaving other Maryland breweries in the lurch.

Meanwhile, the Brewers Association of Maryland had already been fighting to raise this cap to keep up with neighboring states. "If you look around at any of our neighbor states that have big breweries, which are hugely successful, and a huge tourism draw, there's no limit," says Kevin Atticks, executive director of the Brewers Association of Maryland. "No limits. It's not even a discussion point. Virginia, Pennsylvania, D.C., Delaware – no limits. North Carolina – 25,000 barrels."

Brewers in Maryland were therefore miffed at the idea of having big beer's interests met while their own were not. "Their original legislation was very narrow, so much in that it only applied to them," says Atticks.

According to Diageo, proposing their own bills was more about timeliness than the exclusion of craft breweries though. "The Maryland brewers bill would have solved our problems but it's a much more comprehensive bill, and comprehensive bills often take more than a year to pass," says Dwayne Kratt, senior director of state government affairs for Diageo. That timeline would scuttle Diageo's hopes of opening their site by October to celebrate the 200th anniversary of Guinness first being imported to the U.S.

Diageo and the Brewers Association have since come together to support a newer statewide bill which would hopefully appease everyone, and Kratt believes that the "momentum" of the situation now favors the passage of a statewide effort.

Guinness/DiageoBarrels, here shown in the proposed barrel room, are the key word in the fight.

Wholesalers, Retailers & On-Premise, Oh My

The barrel cap isn't the only issue at hand though, and here's where the competing interests from wholesalers, retailers, and on-premise establishments come into play.

"They've always said that if the barrel increase goes up, for tourism and other stated reasons that Diageo is promoting, and that we're promoting, then the hours need to come down," says Atticks.

The Brewers Association initially made a concession to bring brewery hours down to 10 p.m. for weeknights, and midnight for weekends, but the proposed bill making the most progress suggests a flat 10 p.m. closing time every night.

"I completely object to a restriction on hours that would make taproom hours different from whatever the serving hours are for bars in the county in which a brewery is doing business," says Jim Caruso, CEO of Flying Dog, which is Maryland's largest craft brewery.

And here's where craft and big beer align, because both Diageo and the Brewers Association downplay the notion of brewery taprooms as competition to bars and taverns. "What folks don't seem to fully appreciate is I can only sell my beer," says Kratt. "My beer, no one else's beer. No spirits, no wine. So to suggest that I'm a competitor of a beer, wine, and spirits tavern, I don't think is credible."

Successful Compromise In Sight?

Kratt believes that the Guinness brewery would offer a rising tide lifts all boats effect for others Maryland breweries. Craft brewers agree with that notion and support the presence of Guinness – as long as there isn't any legislative favoritism showed.

While the situation is fluid and evolving by the day, compromise appears within reach.”

"I am unequivocally committed to free enterprise," says Caruso. "I believe that if Diageo opens a brewery in Baltimore that it will benefit the beer industry in Maryland. More beer tourism for all breweries in the state and more people turned on to great beer... My singular objection would be to special interest legislation that benefits only one brewery, which is most definitely not free enterprise."

Atticks also points to the support voiced by Heavy Seas, the would-be neighbor of Guinness. "No one is happier than the brewery that's nearest to them, Heavy Seas," he says. "They're just about within walking distance, and you better believe Guinness will bring exponentially more customers to Heavy Seas with them being right next door. So no one is more excited than Heavy Seas."

April 10th is the end of the current Maryland General Assembly legislative period, and while the situation is fluid and evolving by the day, compromise appears within reach. "My hunch is the house delegation works out the deal, and then one of those bills turns into the vehicle for passing the barrel cap statewide," says Atticks. "It has to be statewide."

So what's the largest remaining hurdle to clearing this mess up? "A willingness and a will to get it done," says Kratt. "I'm going to be positive that that's going to happen, and that's what I'm working towards... I'm not even going to go into the what ifs."

While the situation isn't yet resolved, an agreeable win-win would allow Maryland craft breweries the opportunity to grow while enabling Guinness to plant its U.S. flag at the same time. Ultimately then, it's  beer lovers who will come out ahead.

The Guinness Storehouse should still be on your beer bucket list, but a Guinness brewery in your Baltimore backyard ain't a bad stand-in, either. And in that case, just be sure to put Heavy Seas, Flying Dog, and a few dozen other Maryland breweries on your to-do list too, while you're at it.

 

Thanks to Remo Remoquillo for the header illustration.

ZX Ventures, a division within AB InBev, is an investor in October
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