One Beer Article You Need To Read And Why, 2/3/17

Being able to sell the beer you make out of your own store front, what a novel concept.  The three-tier system is the way alcohol is made, distributed, and sold in the United States.  Under the 22nd Amendment and the federal laws that govern the sale of alcohol in this country, we have suppliers, distributors, and retailers.

Except, each state is empowered to create the details of this system as it sees fit for itself.  That means states can create exceptions to this rule.  Craft beer has grown in many states because those individual states have created rules that allow brewers to own and operate their own taprooms without having to go through a distributor or retailer and self-distribute their beer to bars and bottle shops.

North Carolina and Georgia are states that are very similar in demographics and economics.  They are mirror images of each other in many ways.  In 2015, North Carolina had 161 operating breweries producing 675.469 barrels. Georgia had 45 operating breweries producing 365,015 barrels. Per Brewers Association numbers.

The reason is very simple.  North Carolina’s laws, while still antiquated in many ways, allow breweries more flexibility in selling their own beer.  North Carolina allows for taprooms and limited self-distribution.  Currently in Georgia, if you go to a brewery, they can sell you a tour of the brewery that allows you free samples of their beer, but they cannot sell you beer.

For a couple of glorious months last year Georgia brewers could sell growlers to go from their breweries, but the Department of Revenue changed their interpretation of the law that was passed allowing those sales ending that glorious experiment.

Why is it so hard for states to pass laws that allow breweries to sell directly to customers particularly across the South?  The easy answer would be, “This is the Bible Belt and conservative legislators don’t want people being able to buy alcohol all willy-nilly.”

Many of the distribution laws currently governing some states were written in the 1970s or 1980s when there were only 5 breweries in the US.  Two of those breweries (Miller and Anheuser-Busch) were so big and powerful they didn’t (and still don’t) need distributors.  So, to keep them from purchasing distributors and selling their beer themselves, legislators passed laws to make it harder for brewers to self-distribute and leave distribution contracts.

Fast-forward to 2017 and those distributors who are now in bed with those same two large brewing companies use their power in state legislatures (many of the owners are in the legislature) to protect their businesses.  In North Carolina, for instance, craft brewers can’t get the self-distribution cap raised because they can’t get the legislation out of committee because the owner of one of the largest distributors in the state sits on the committee.

Currently, I’m reading the book “Bootleggers and Baptists” about how politician use the cover of morality to hide the amoral reasons they vote the way they do.  It has been very instructive and has illuminated many of the things I’ve seen in the past couple of years as I’ve worked on this blog.