One Beer Article You Need To Read And Why, 2/2/17

Outside of the fact that they North Carolina legislature is a mess that can barely pass a budget so that the state can function on a yearly basis, the attempts of North Carolina breweries to get rid of the self-distribution cap are interesting.

I will state up front, I believe the cap to a bad idea.  It was a law instituted at a time when there were two beer companies in the US and NC was trying to force them to use distributors even though they had the means and infrastructure not to.  Fast forward to 2017, the law is now being used by distributors to force small craft breweries to sign with distributors or artificially stunt their own growth.

The distributors are holding on to every penny they can as the world changes around them.  Do you have any idea how much 25000 barrels is?  That is the current cap.  And do you know how hard it is to deliver that much beer in a year?  By the time a brewery gets to the point where they self-distribute 25000 they are pretty much running two businesses: their brewery and a logistics and delivery business. Some brewers will gladly choose not to have that second headache.  They started brewing beer just because you wanted to brew beer, not be UPS?

Forcing breweries to sign over a percentage of their profits to a third party is wrong.  Breweries should have the choice to use a distributor or not.  However, I think the percentage that would choose to sign with a distributor won’t change significantly with the change in the law.

To me, the more fascinating thing is how the craft beer industry has matured to the point where you have different segments of the business with different wants and needs.  The concerns of Olde Mecklenburg, NoDa, or Red Oak who are all right at the 25000-barrel limit are not the same as a brewery that just started 18 months ago, and is pushing it to get to 3000 barrels per year. To them, something like the amount of state and federal excise taxes is of greater immediate importance to their growth.

The bigger breweries keep playing on our romantic ideal of the cool brewer just making beer for people to enjoy. However, as craft beer matures it must be seen in part as a business that that in 2015 accounted for over $22 billion in sales.

I worked at McColl Center for Visual Arts, an artist-in-residence program, as a fund raiser for a while.  One of the things learned about art and creativity from the artists is that the most creative and successful artists were also some of the smartest business people.  Romance and business are not mutually exclusive.

In the future, a mature craft beer business won’t castigate brewers simply because they choose the smart business move.  I keep saying and I keep coming back to this:  The liquid in the glass is all that matters. As craft beer grows bigger and matures that becomes more important to remember.