Bunker Brewing Co. has been making beer inside a tiny, gritty brick building in a former industrial area of Portland known as “Yeast Bayside” because of the breweries and distilleries that draw a steady stream of visitors in search of fresh brews to taste.

But this summer, the 4-year-old brewer of Machine Czech Pilz is packing up its cramped shop in East Bayside and headed west – to a Libbytown warehouse, where it will triple its beer production and build a 1,000-square-foot tasting room so that more patrons can buy beer samples, relax and take in some occasional live music.

“It’s going to be more of everything,” Bunker co-founder Chresten Sorensen said.

The Westfield Street warehouse will be located near Thompson’s Point, where 3-year-old Bissell Brothers Brewing Co. will soon relocate from its cramped industrial space so it, too, can expand production and offer a larger tasting room to the fans who now line up in the brewery’s parking lot.

An explosion of microbreweries in Portland – and throughout Maine – is being fueled by a 2011 state law that allowed beer-makers to sell beer right at their breweries, in “samples” that can range from 4 to 16 ounces or more. The law gave birth to the modern craft brewery tasting room, an innovation that has pumped up revenues, expanded the market and attracted even more would-be brewers into the industry.

“It really revolutionized the way small breweries are able to grow their breweries in the state of Maine,” said Heather Sanborn, co-owner of Rising Tide Brewing Co., who helped craft the law in her capacity as a Maine Brewers Guild board member.

The phenomenon also is raising new questions from bar operators about fairness and regulation, and it may soon lead to Maine’s first licensing rules for brewery tasting rooms.

“It’s not a level playing field,” said Ted Arcand, owner of Dogfish Bar & Grille, a conventional full-service bar on Free Street in Portland.

THE ALLURE OF BIGGER PROFIT MARGINS

Before the law changed, breweries could only give away samples as part of a tour. Now, almost every brewer has a tasting room. They range from a nook with a couple of taps of beer brewed on site to large spaces with bars, stools and tables. Many resemble traditional bars, but without food menus or beers and liquor not brewed on-site. Tasting rooms typically have limited hours compared to bars. They’re busiest on Saturday afternoons, when beer lovers descend to try the new releases.

A tasting room allows the brewer to serve its beers at lower prices than traditional bars, while at the same time earning bigger profit margins. Some offer customers food from independent food trucks or caterers, avoiding the hassle and overhead costs of operating a brewpub. Some brewers even bring in live music, just like a bar.

However, they are not subject to the same types of licenses, fees, insurance and health inspections as bars or restaurants.

Small breweries that produce less than 50,000 gallons of beer a year only pay a $50 state licensing fee, while large breweries pay $1,000. Bars and restaurants pay thousands of dollars for local and state licenses.

Arcand said he pays $4,500 in annual licensing fees to the city and state for Dogfish Bar & Grille. He sees brewery tasting rooms as competition, because they serve full pints and offer live entertainment just like a bar.

“I’m completely OK with competition. It’s great for the city to have these new venues, but if you’re acting like a bar, you should have to go through all the hoops other bars have to in the city. It’s only fair,” Arcand said.

Sara Martin, who owns Bar Chocolate and chairs the Portland Downtown District’s Nightlife Oversight Committee, said the growth of tasting rooms, and how they are essentially becoming unlicensed bars, came up during a meeting in January.

“There are people wondering how they are doing this without a license,” Martin said. “This is a city that is not very lax on alcohol laws.”

The Portland City Council is being asked by city staff to create a new license, costing $500, that breweries would have to get to operate tasting rooms. The proposal is designed to level the playing field between breweries and bars. The council is slated to vote on the new license next month.

If it passes, it will be the first regulatory reaction in Maine to what is a growing national trend.

Sanborn said local brewers are “cautiously supportive” of the proposed license, although a lot depends on the implementation. “There’s always a cause for concern when you have to jump through regulatory hurdles to be able to continue operating as you have been,” she said.

‘VISITING WHERE THE BEER IS MADE’

Maine is one of a growing number of states that allow tasting rooms that charge for beer, and the popularity of sipping beers inside the breweries is helping fuel industry growth nationwide, said Bart Watson, chief economist for the Colorado-based Brewers Association, a national trade group. The practice even has a name: beer tourism.

“People like visiting where the beer is made, and they like having conversations with the people who made it,” Watson said. And for breweries, tasting rooms allow them to market their products and test new recipes, he said.

Breweries w/Tasting Rooms:
Austin Street Brewery
Bissell Brothers
Foundation
Allagash Brewing Co.
Rising Tide Brewing Co.
Bunker Brewing Co.
D.L. Geary Brewing Co.
Shipyard Brewing Co.
Tasting rooms w/No Breweries:
Oxbow Brewing Co.
Breweries w/ No Tasting Rooms:
Peak Organic Brewing Co.
Brew Pubs:
Gritty McDuff’s Brewing Co.
Liquid Riot Bottling Co.
Sebago Brewing Co.

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Click to see MaineToday’s most up-to-date list of all Maine breweries and wineries

Tasting rooms can be so lucrative some new breweries don’t even wholesale their beer to bars, he said. In California, for example, “about one-third of breweries sell every drop they make at their brewery now. That’s the business model they have.”

And, like Maine, other states are beginning to face questions about rules and licenses. “States that have tasting rooms are thinking about the proper way to incorporate them into the broader regulatory structure,” Watson said.

In Portland, the proposed license for tasting rooms comes on the heels of a separate review of city ordinances as city staff try to develop clear guidance about the types of non-beer items that breweries in industrial zones can sell.

That review came about after the city told Allagash Brewing Co. it could not provide pre-packaged snacks to its customers, because the zoning rules in the industrial park only allow the sale of items incidental to the production of beer. That interpretation also raised questions about brewery swag – such as stickers, T-shirts and pint glasses – which are sold by virtually every brewery.

The city ultimately reversed course, allowing Allagash to sell snacks, as well as other merchandise.

Source: Maine Brewer’s Guild, Brewers Association, Maine Liquor Enforcement Bureau
Interactive: Christian MilNeil
Note: no state data is available for individual years before 2011.

The tasting room is a big reason Maine has seen the number of breweries double in five years. There were 34 Maine breweries in 2011 and there are more than 70 now, according to the Maine Brewers’ Guild.

Maine ranked sixth nationally in 2014 for the number of breweries per capita. Portland has a dozen breweries and is often cited as one of the meccas of beer tourism, along with cities such as Portland, Oregon, and Asheville, North Carolina.

The growth in Maine reflects a similar boom nationwide. The number of U.S. breweries has doubled from 2,033 in 2011 to about 4,200 now, according to the Colorado-based Brewers Association.

‘HUGE OPPORTUNITY FOR THE STATE’

Tasting rooms allow brewers to elbow their way into a crowded market such as Portland’s, while also supporting breweries in rural areas – such as Amherst, the Forks, Lubec and Caribou, said Sean Sullivan, executive director of the Maine Brewers’ Guild.

“This is a huge opportunity for the state,” Sullivan said.

Rising Tide in Portland recently invested at least $160,000 to triple the size of its tasting room on Fox Street in Portland.

Its original tasting room was a small, standing-room-only space that would overflow with customers, especially on Saturday afternoons, when hordes of beer lovers hop from one brewery to another. After moving its dry storage to an off-site location, the brewery built a 25-seat bar and has a handful of picnic tables and a large flat-screen TV for patrons. During the summer, two garage bay doors open and there are live music and food trucks outside.

Sanborn said revenue generated from Rising Tide’s tasting room increased 50 percent in 2015, and she projects another 50 percent increase this year. “It’s become a major source of revenue and marketing for us,” she said.

The marketing appeal is so strong that Oxbow Brewing Co. describes its facility on Washington Avenue as a tasting room, even though it does not brew beer on site and has a Class A lounge license with dance and entertainment. The company brews its beer in Newcastle and ages, blends and packages its beer in Portland.

Sorensen, of Bunker Brewing, said local breweries are finding out they can make more money by selling their beers by the glass in their own tasting rooms, rather than by selling kegs wholesale to bars and restaurants.

“The margins are crazy,” Sorensen said. “Selling it out of here, you don’t need a middleman. It’s part of the new model. Even if you’re a small brewery, you can have a large tasting room and sell all of your beer at the tasting room.”

Watson, of the Brewers Association, said beer production costs vary, but the microbrew industry standard of 6 cents an ounce puts estimated production cost at around $1 per pint. That means breweries can easily triple, if not quadruple, their money by selling their beer by the glass.

COULD TASTING ROOMS REPLACE BARS?

On a recent Thursday afternoon, Rising Tide’s expanded tasting room in East Bayside was buzzing, and the din of the crowd mingled with the sound of soul music and beer-making.

The sprawling bar was nearly half-full and small groups of people were seated at picnic tables. A few others stood in line waiting to order or pay for bottles of beer to go.

Patrons spanned generations. There were two middle-aged women who worked at a local law firm, as well as two Brunswick residents warming up with a coffee porter after spending the day surfing at Pine Point in Scarborough. There was a family of four celebrating a 21st birthday, albeit two weeks late.

“It’s a great place to try a different variety,” said 23-year-old Mickeyla Murphy of Waterboro. “What’s great is you can come here and try something new. If you find a beer you like, the server can explain the process, ingredients and what makes it unique.”

Portland resident and middle school teacher Aimee Burgos, 24, was enjoying an afternoon of brewery hopping with four other friends, including some from Boston, during her February break. They began by visiting Bissell Brothers and Allagash Brewing Co. – two of a half-dozen breweries in the Riverside neighborhood that are a hop, skip and a jump away from one another. They had come to East Bayside, where they could sample brews from two breweries and a distillery.

“It’s awesome,” Burgos said of the growing brewery scene. “Every neighborhood is going to have its own place with completely different kinds of beers.”

Could brewery tasting rooms replace bars?

“Definitely,” she said. “It’s always a chill environment. All you need is good beer and a food truck outside.”

BEER TOURISM’S ‘QUITE THE THING’

Just around the corner from Rising Tide, 36-year-old Wes Sands of Bridgton was also playing tour guide for two friends visiting from Columbus, Ohio. The group was enjoying a pint at Bunker Brewing’s tasting room, which is so small that patrons have no choice but to drink their samples while standing next to stainless steel fermenters.

As the sun set, the hip-hop music thumped and the house lights were dimmed. The floor was still wet from that day’s brewing activities.

Although Dan Nutter, 35, grew up in and visits Maine twice a year, he was surprised by the rapid growth of the brewing industry. Carrie Henry, 36, knew exactly which breweries she wanted to visit after reading about them in travel guides.

“There is nothing like this in Columbus,” said Henry, who had also visited Rising Tide and Maine Craft Distilling. She equated Portland’s brewery scene to Napa Valley – California’s wine country. “I actually feel like I learn something when I drink, unlike a bar.”

While the tasting room has been a hallmark of the latest boom in craft brewing, some of the old-timers that opened in the 1980s and ’90s have resisted the urge to turn their traditional free tasting rooms into something resembling a bar.

At Shipyard Brewing Co. in Portland, the largest of the state’s 70 breweries, the tasting room offers free samples to anyone who comes for a tour and visit.

Fred Forsley, owner of Shipyard Brewing Co. in Portland’s India Street neighborhood, said the company frequently debates whether it should change its tasting room model to something more like a bar that produces revenue. So far, the staff has not wanted to take on tasks normally associated with bars, such as dealing with intoxicated people who are out for a night of drinking, rather than tasting.

“That’s been our reservation,” Forsley said.

David Geary, who opened New England’s first modern microbrewery in 1986 when he started D.L. Geary Brewing Co. in Portland, also resisted the change for a while. But Geary opened a new tasting room last summer, and now charges for samples of Geary’s Pale Ale and other staples, as well as a rotating batch of experimental brews only available at the brewery.

Like other brewery owners, Geary said the tasting room generates a “significant amount” of revenue during the busy summer months.

“It’s stunning what has been going on,” Geary said. “Beer tourism for Maine has become quite the thing.”