Friday, January 18, 2013

Kettlehouse restructures business to acquire beer and wine license

Posted By on Fri, Jan 18, 2013 at 4:24 PM

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Last November, we touched base with Kettlehouse Brewing about the changes on tap at the Myrtle Street location. Co-owner Suzy Rizza confirmed for us at the time that the brewhouse would be moving to an adjacent building, freeing up space for a bigger bar and more standing room for all us thirsty regulars. But the big news didn't end there. Earlier this week the Missoula City Council referred to committee a proposal to allow a new company—Myrtle Street Taphouse LLC, established late last October—to acquire a non-gaming beer and wine license for the current Myrtle Street location.

According to the application, signed by Kettlehouse co-owner and Myrtle Street Taphouse LLC general manager Tim O'Leary on Nov. 16 of last year, it's "critical" that the city approve a conditional use permit for the proposed beer and wine license as the Kettlehouse Brewing Company will otherwise "not be able to continue to grow and add jobs, payroll, and property tax income to the Missoula community." O'Leary offered the following regarding the need for the council's thumbs-up:

In order to grow their brewing operation, add jobs, and meet the wholesale demand for their popular beer brands, the Kettlehouse must close its sampling taproom. Helen S. O'Leary of Helena, Montana has entered into a purchase agreement to acquire a Beer and Wine License in order to continue operating the property as a community taproom where our neighbors can continue to enjoy fresh brewed beer made in a separately leased and owned facility adjacent to the property. This will create the illusion of a brewery taproom while also providing Kettlehouse customers with the experience they have come to expect since 1999.

The conditional use permit application goes on to note that the proposal "will not have an adverse impact on the general welfare of the neighborhood or community," considering the beer and wine license will simply allow the continued sale of beer at a location that's been a craft brew hub for more than a decade.

Now, the license issue is a complex one for craft brewers like Kettlehouse, as O'Leary pointed out on the company's website last March in the wake of withdrawing wholesale distribution from Kalispell, Great Falls and Helena. "It is illegal in Montana for brewers to own any other kind of license to retail beer," O'Leary wrote. "There are partnerships that have formed where a bar owner sets up next to another unrelated brewer and they have a brewpub. But if we did this we’d be giving up control of our taproom to someone we hardly know." O'Leary added that the move would also be extremely costly, and a retail partnership could force the brewery to expand the business dramatically. "We feel that is WAY too risky for a mom and pop operation like ours," O'Leary wrote.

O'Leary has since found a solution to those problems. The beer and wine license will be held by Myrtle Street Taphouse LLC, of which Helen O'Leary—Tim's mom—is the registered agent on file with the state. That company will operate out of what is currently Kettlehouse's Myrtle Street taproom, and Kettlehouse will run its brewing operation out of the newly acquired adjacent building, thus occupying a separate physical address. O'Leary told the Indy today this is a business model similar to what's been used by other breweries in the state including Red Lodge Ales and The Front Brewing.

"The major difference is the brewery will be owned by me and the beer bar will be owned by Mom," O'Leary wrote in an explanation titled The Plan: Operation "Close our Taprooms," posted on Kettlehouse's Facebook page this afternoon. "We don’t expect to change our serving hours or quantities drastically. In fact we may not even serve wine. That is an option that the proposed license allows but does not require. Our goal is to maintain the atmosphere at 602 Myrtle that our longtime customers have come to love."

Meanwhile, the Northside location will become the Northside Brewing Company, owned solely by Rizza, who is O'Leary's wife. The location will continue to operate as is. And the best news of all, for those of us who can't get enough of our favorite Kettlehouse brews? "Since the Kettlehouse Brewing Company will no longer be operating a taproom, we will be able to produce as much beer as we can sell," O'Leary writes. "That means we are not bound by a 10,000 barrel limit to sell beer in a taproom."

The Missoula Plat, Annexation and Zoning Committee is scheduled to discuss Myrtle Street Taphouse's permit application Jan. 28 at a Jan. 23 pre-public hearing discussion at 11 a.m. The full council has a public hearing Jan. 28 during its regular 7 p.m. meeting. Kettlehouse is encouraging folks to show up and support the restructuring.

This story was updated Saturday, Jan. 19 to include the pre-public hearing.

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