A North Carolina bill filed last week would quadruple the amount of beer a brewery in the state could make and self-distribute before legally having to sign on with a wholesale partner. If passed, House Bill 67 would raise the production cap to 100,000 barrels per year, enabling the state’s mid-size and larger breweries to operate outside the traditional confines of the three-tier system. Currently, only breweries that produce 25,000 barrels of beer or less are permitted to self-distribute.
WHY IT MATTERS
The battle for self-distribution is a repetitious tale at this point. The states change and the numbers fluctuate, but in the end, it’s more or less always a story about brewers facing off with wholesalers. You may be familiar with their arguments. Brewers and other advocates for change contend they should be able to sell their own product however they feel is best, and worry wholesalers are dealing with too many SKUs to dedicate proper share of mind to any one brand.
Case in point, here’s State Rep. Michael Speciale, speaking with the Triangle Business Journal:
“It’s a free-market issue for me… You get to 25,000 barrels and you’ve got to turn your business over to someone else. It doesn’t make any sense to me.”
And here’s Craft Freedom, an advocacy group in the state, noting that in 1996, North Carolina wholesalers were working with an average 190 SKUs while, in 2015, that number exploded to 981:
“How can a small, local brewery compete within a portfolio that large? Imagine a Wholesale salesman walking into a local bar with only eight taps. How does he fairly represent and sell over 900 beers to a handful of taps?”
Distributors, meanwhile, uphold that the three-tier system has been in place for decades and continues to work, pointing to the craft beer industry’s explosive growth as proof. They also argue that the status quo is never as bad as it seems, comparatively speaking.
Or, as Tim Kent, executive director with the North Carolina Beer & Wine Wholesalers Association, put it a few paragraphs down from State Rep. Speciale’s quote:
“We are supportive of the craft beer movement and the members I represent have helped dozens of North Carolina brewers build their brands and build their sales… But we think that—in fact, we know that—North Carolina has the most permissive beer laws in the South. It’s not even close.”
The only thing that seems to vary case by case is how each story ends. And that’s while we keep an eye on this one.
N.C. bill would raise production limits for small breweries [Triangle Business Journal]