BROOKINGS – Among area states that limit microbrewery – aka craft brewery – production, South Dakota has the most restrictive limit: 5,000 barrels per year. 

Senate Bill 169, promoted by Gov. Dennis Daugaard, would increase that to 30,000 barrels. (An industry-standard “barrel” holds 31 gallons of beer.)

“South Dakota’s statutes limit the ability of our homegrown craft breweries to grow and thrive,” the governor said in news release. “Whenever it is practical, our state should minimize government regulation and look to free enterprise to promote economic growth.” 

By comparison to South Dakota, the present annual barrel-cap on similar breweries in other area states is: Montana, 60,000; Wyoming, 50,000; North Dakota, 25,000; and Minnesota and Nebraska 20,000 each. Iowa has no limit.

At Wooden Legs Brewing Company in downtown Brookings, Seth Koch – wearing three hats: one of three co-owners, general manager and head brewer – will be watching the bill with interest, because it addresses other issues in addition to increasing the barrels limit.

“In Brookings, I don’t get close to that, anywhere near that,” he said. 

Wooden Legs brews on-site about 250 barrels a year. However, Koch did note that there are some South Dakota breweries approaching that present annual 5,000-barrel output. 

He also noted that “in a national grouping of craft breweries (microbreweries) that includes the 50 states plus Washington, D.C., South Dakota ranks 51st in the production of crafts beers.”

In the world of brewing beer, size matters. 

“The brewers association, which is a membership organization that represents small independent brewers, they use the term ‘craft brewery,’” Koch explained. “The U.S. government uses, I believe, ‘microbrewer.’

“The U.S. Government labels microbreweries up to a certain volume amount. Past that the brewers fall in a different tax bracket. Those are the big multi-nationals.” Examples would be giants like Pabst and Anheuser-Busch. 

Koch takes a “real, holistic approach to craft brewing.” One piece of SB 169 that he likes would also allow microbreweries to sell their products directly to retailers, such as restaurants and grocery stores.

“Of course, I don’t want to do this across the entire state,” Koch explained. “But there are some really strategic things that would help our business grow, just in our current footprint, that could really increase the amount of beer that I would need to make in a year. It would increase the number of employees that I would need to have. It would have a big impact on me. That element would.”

Planned with growth in mind

Koch explained that Wooden Legs was designed five years ago with the capacity to expand on-site.

“We had kind of this vision that we may need to grow into the space that we have,” he added. “That’s kind of how we started. We’re nearing our five-year anniversary, mid-May of this year.”

But in planning and launching their establishment, the trio of owners did not envision that the small/craft/microbrewing industry in South Dakota would grow as quickly as it has.

When Wooden Legs came on line, it was the fourth or fifth brewery in the state, according to Koch; now there are about 12 or more.

“I guess we’re a pathfinder,” he said.

He admits that the licensing procedures for South Dakota breweries can get a bit complicated. 

“My license allows me to do ‘on-sale’ and ‘off-sale’ to consumers,” he explained.

As a “brew pub,” Wooden Legs promises its patrons and drop-in visitors an “industrial-style taproom offering on-site brewed beers, creative pizzas and deli sandwiches.” And more.

“If somebody comes in here, they can enjoy the beer here,” Koch said, adding, “or for their own use we do have the ability to fill a ‘growler’ (a 1.89-liter bottle that is capped and sealed before it leaves the premises) that they can take away. And we have six-packs for them to take away.”

Engaged in the community 

But what Wooden Legs cannot do right now is “sales directly to a retailer.” In what he called a “convoluted process that adds cost” and a middleman, Koch can sell to a distributor who can then sell to a retailer. 

Koch said Wooden Legs could double its on-site production of 250 barrels a year to 500 barrels a year. 

“We have the equipment and ability to do that,” he explained.

Additionally, Wooden Legs could expand the output of its own specialty beers – such as its Small Town Pale Ale – by using its own grains and recipes and brewing at other larger off-site facilities.

But the company does not intend to ever grow in beer output to the point that it would become what Koch calls a “malt beverage manufacturer,” with no brewpub, no taproom, no on-sale. “Then you’ve become an industrial storefront,” he explained.

He said craft brewers in many instances want to be “engaged in the community where they locate.”

“They built downtown because they want to be part of the community,” he added.

Asked if he was happy with where Wooden Legs is right now, Koch replied, “I am. Our model has always been ‘Brookings-based, Brookings first.’

“We’ve really enjoyed serving and becoming a community member here. That was why we landed here. We like Brookings. That’s why we stuck in Brookings.”

And where would he like Wooden Legs to be in five years? 

“I would like to double our capacity. I would like to have the ability to: No. 1, be able to serve more here, because we do run a limit; there’s a shortage. We don’t do nearly as much business on (sales) just because of our size.

“And I would like to continue to grow our brand in the local community. I think there’s a lot of value in the local beers at the restaurants and at the Swiftel Center events. I think that’s cool.

“If in five years everybody knows who Wooden Legs Brewing Company is and everybody has the opportunity, regardless of if they’re sitting here or any place, to try a local beer and every bartender says, ‘I have something you can try that’s made right here in town,’ I think that’s cool.”

Above all, Koch wants people to see Wooden Legs as “the local Brookings brewery, able to do what people have come to expect from a brew-pub.”

He added that he already sees some of that as “people have come from Watertown and Minnesota and Sioux Falls to try us out.”

When people talk about Brookings as the home of the Campanile, the Children’s Museum of South Dakota and Nick’s Hamburgers, he wants them to also talk of Brookings as the home of Wooden Legs Brewing Company.

Contact John Kubal at jkubal@brookingsregister.com.