In the coming weeks, I have planned to write a piece or two comparing and contrasting the alcohol laws between North Carolina, South Carolina, and Virginia. I want to see if it is possible to discern how those laws have affected the craft beer industries in each of those states. I am currently in research mode meaning I’m reading and taking notes on the laws of each state. Let me tell you that is a ton of uninteresting reading. Here is a piece from the John Locke Foundation that studies this very thing.
If you are in North Carolina and are into craft beer you may know that there is a battle going on over how much a brewer should be allowed to distribute before legally having to go with a distributor. Currently, that number is at 25,000 barrels. That is a lot of beer and until recently no brewers in NC came close to that amount. However, there are around 3 brewers who could sell that amount this year if they wanted to or in their eyes allowed to. They are all independent breweries who self-distribute.
This law is silly and is propped up by the wholesaler/distributor lobby in NC that seeks to protect itself at the expense of common sense. This paper argues successfully that this is one of many in the laws that regulate the manufacture, sale, and use of alcohol in North Carolina that are silly and against all common sense.
When you look at these laws, the only people they protect are the people who distribute alcohol in this state and that includes the state-run monopoly on liquor, which makes it one of eight states with this peculiar law.
Back to the self-distribution fight in North Carolina. It doesn’t matter what the wholesalers say (including making specious health and safety claims) they don’t want brewers to be able to distribute more of their beer because the wholesalers don’t want to lose the money they get from distribution. I think they would lose contracts and money if brewers could distribute more of their own beer. However, it wouldn’t be as much as they seem to fear.
Why, distributing beer is hard and expensive. Small brewers and brewers who only want to distribute in a finite area put up with it because it is easier and cheaper to DIY it then to pay a distributor. However, at a certain point, a brewer is running two companies: a brewery and a distributorship. Most breweries won’t want that.
As a quick aside, another battle brewers should fight is to change the nature of the distribution contracts. The way the contracts work is all in favor of the distributor, particularly when the brewer is small. One tactic brewers in North Carolina could take is to make a deal on the distribution cap while getting concessions to equalize the power in distribution contracts.
I will say breweries also make specious arguments in calling for more freedom to self-distribute. One that makes me laugh is a certain brewery swears that going with a distributor would ruin their ability to create wonderful season beers. That is a load of crap because there are other factors that currently keep this brewery from doing more seasonal beers and none of those have to do with who is distributing their beer.
Look for more from on this subject in the next month or so.