The craft beer scene in North Carolina exists because the NC Legislature over the past several years has dismantled old, dated and useless rules and regulations that held back small craft brewers (and those in related industries) from success. Other states near to NC, such as South Carolina and Georgia, aren’t experiencing the same renaissance of craft breweries opening up because their laws remain prohibitive.
I often tell people, a place like Carolina Beer Temple would not have been possible a few short years ago! If we were going to sell beer by the glass we would’ve had to have been a full blown restaurant where 50% or more of our revenue had to be generated by the sale of food. We could not have been a craft beer store with a craft beer bar.
Thankfully, the NC Legislature has made it possible for places like Carolina Beer Temple to exist and thrive! As well, the NC Legislature has also made it possible for breweries to exist and thrive! Just in the past few years laws have passed that have made it possible for breweries in North Carolina to sell their beer on premise, they can have a tap room, they can sell beer above 6% ABV and they can self-distribute their product (as long as their production remains under 25,000 barrels per year). Many in the Charlotte area remember the mini-boom of craft breweries that opened up in the 90’s. Very few of those breweries survived – in large part due to prohibitive laws and regulations that prevented all of the above.
Today North Carolina is making the case to become the craft beer capital of the south. Asheville has already been named Beer City U.S.A. on multiple occasions. In order to continue that success the passing of a NC House Bill 278 is critical.
NC House Bill 278 would increase the cap on self-distribution for craft breweries from 25,000 barrels per year to 100,000 barrels per year. Today, once a brewery reaches the 25,000 cap, they must cease the direct sale of their product to retailers and turn their distribution over to a beer distributor.
What does this mean for craft breweries?
Imagine that you started a small craft brewery on your own. You made a great product and drove it door-to-door yourself to sell your beers. As your beer grew in popularity you hired a sales force to sell your product and you invest in vans and other equipment to deliver your product to market. After winning a few nationally recognized beer medals demand for your product increases exponentially…you hire even more sales people, delivery drivers and you buy more trucks. You train your staff about the intricacies of how your beer is brewed and what makes your beer so much more special than others out there. You educate your staff on the medals you have won and teach them to share the successes of your beer with your clients. You build direct relationships with clients all over the region and have a rock-star sales force and delivery team that you give credit to for the bulk of your success! And then you hit the 25,000 barrel limit! Now what?
Now…by law…you must hand your sales and deliveries over to a third party (a distributor). A distributor carries dozens and dozens of other products. You will need to lay off most of your sales force, all of your delivery drivers and sell all of your trucks and any other equipment related to the sale and delivery of your product that you may have invested in (such as invoice printers, iPads or other mobile inventory devices needed for sales & deliveries). The distributor will be taking a cut of every keg, can and bottle sold – so your profit margins will decrease. And/or that cost will be passed along to your customers – so the price of your kegs, 6-packs and bottles will go up (which might push your product out of a competitive price point for some).
And as these jobs are all lost, no net new jobs will be created. The distributor will just absorb your product in with the dozens of others their sales reps have to represent. And they certainly will not add any more delivery drivers.
NC House Bill 278 will allow breweries to continue to grow and invest in their work force as the annual limit of beer production is increased from 25,000 to 100,000 barrels per year before self-distribution is no longer permitted. NC House Bill 278 is good for craft beer, it is good for jobs, it is good for the economy and it is good for North Carolina!
And then NC House Bill 625 takes it a step further (a bill we also support). NC House Bill 625 would exclude on-site beer sales from the 100,000 barrel limit proposed in NC House Bill 278. Meaning breweries could sell as much beer to consumers in their tap room as they wish without it counting against their 100,000 barrel a year limit.
Please contact your NC House Representative before April 30th and support NC House Bill 278 and NC House Bill 625!
For more information please see this PDF: http://www.natlawreview.com/printpdf/45191