GREENSBORO, NC – In mid-March, lawmakers will introduce a bill that could give North Carolina craft breweries more freedom.
Currently, breweries producing over 25,000 barrels a year must use a third-party distributor. This means, once a brewery hits that cap, they must pay a distributor to sell their beer to pubs, venues, stores and so on.
House Bill 67, co-sponsored by Representative Pricey Harrison (D-Guilford), raises the cap to 100,000 barrels a year. But, the bill has been stalled and Harrison believes it won’t go anywhere.
So, she is co-sponsoring a bi-partisan bill with Representative Chuck McGrady (R- Henderson}, which will raise the cap to 200,000 and tackle other restrictions on craft breweries.
“There’s growing pressure to nip this cap in the bud,” Harrison told News 2 over the phone. “I don’t agree with the cap at all and I don’t know why there’s a limit because breweries should have more freedom.”
Harrison explained once the 25,000 cap is reached, a brewery must distribute all of their product through a third-party, not just the barrel amounts over the cap. She called this restriction and third-party distribution contracts unfair.
Some breweries would agree. If you drive on I-40, you’ve probably seen a huge digital billboard, courtesy of Red Oak Brewery. It displays different messages, such as “Let Craft Breweries Control Their Destiny” and “Free Beer. Lift the Cap.” Harrison said breweries in Charlotte have also been vocal about their distaste for the cap.
In Greensboro, locally owned microbrewery Pig Pounder produces well under the current cap and they’ll probably keep it that way.
Master Brewer Kalif Mathieu explained Pig Pounder’s business model will keep them at around 7,000-10,000 barrels a year.
But, he personally believes breweries should have the elbow room to self-distribute and understands the frustration of breweries like Red Oak
“It does affect a lot of local breweries that service a high concentration of people who really like craft beer,” said Mathieu. “When you have almost 200 breweries in North Carolina alone, the market seems pretty diverse. So, I’m not the spirit of the regulation really applies anymore.”
The brew master explained a third-party distributor can be highly beneficial for companies looking to expand outside of local markets, as it simplifies the sales and shipping processes. However, a third-party is in control of where the beer is sold, how much is sold and eliminates the brewery from some of the decision making.
“Sometimes the relationship can be pretty good and other times it can be a little tricky.”
It can also cut into profits.
“(You) sell your beer to the distributor and they sell your bill a second time to pubs and stores and things like that,” said Mathieu.
The market for craft beer has steadily grown in the last ten years and Mathieu said there’s no slowing down.
“I got into craft beer myself as a drinker. It’s on a different level than some domestic, generic type beer. Maybe it’s a millennial type thing but I feel like everyone is on board with craft beer.”
The new bill is expected to be introduced to the House on March 23rd.