NC Craft Brewers Want Freedom from Wholesale Cap
CHARLOTTE, N.C. – A debate is brewing in North Carolina's growing craft-beer industry, just how much can independent brewers sell on their own, before they have to use a wholesale distributor?
The current limit is 25,000 barrels a year, and while that may seem like a lot, several craft breweries say it's limiting their growth potential, including Red Oak and NoDa in Charlotte.
Rep. Pricey Harrison, D-Greensboro, is a co-sponsor of House Bill 67, which would raise the limit to 100,000 barrels a year that breweries can sell without hiring a distributor.
"We ought to be removing restrictions that are unnecessary," she said. "The cap is all about helping the beer and wine wholesalers and, if you look at the campaign contributions, you'd see pretty significant amounts going to House and Senate members."
A recent analysis by Democracy North Carolina found that wholesalers gave almost $1.5 million to state political campaigns and party committees. Almost $1 million came from about 40 families who largely control beer distribution in North Carolina.
Beer and wine wholesalers say they provide a much-needed mechanism for delivery across the state. On average, distributors receive between 25- and 40-percent of a brewer's sales, which can be tough for smaller breweries with tight margins.
Rep. Harrison points out that North Carolina law allows distributors to prevent craft breweries from getting out of their contract if they feel their product isn't being well represented.
"You get stuck in these relationships and then, you're stuck in it for the life of your brewery, basically," she added. "As somebody who believes in some free market here, I think a brewer ought to be able to distribute his or her own product."
Last week, Grover Norquist, founder of Americans for Tax Reform, jumped into the debate. He sent a letter to North Carolina legislators asking them to end what he calls the state's "protectionist, anti-consumer restriction" on craft breweries distributing their own wares.