The e-mail was meant for employee eyes only.
It was sent by Chris Caffey, president and CEO of Greensboro-based Caffey Distributing (as well as Carolina Premium Beverage and Craft Central, their new craft-focused division). Caffey began his e-mail by explaining to his employees that two bills — House Bill 278 and House Bill 625 — would soon be considered by the NC House committee for alcoholic beverage control.
He asked them to visit www.ncbeerjobs.com and sign the petition, using their company e-mail address. They would later receive a “call to action” with further instructions.
That e-mail would eventually find its way out of the employee list and into the inboxes of several local brewers, who asked not to be identified. But on Tuesday, the word about www.ncbeerjobs.com was out. And some of the state’s brewers weren’t happy about it.
In recent years, brewers in states like South Carolina and Georgia have published similar sites (www.scbeerjobs.com and www.gabeerjobs.com, respectively). Those sites were done in the interest of the states’ brewers, advocating that they be allowed to sell pints directly to the public. On first glance, one might think the same of the similarly-named North Carolina version, which in large, block letters asks visitors to, “Protect North Carolina Beer Jobs.”
The jobs the site aims to protect, however, are not those of brewers but distributors. The website’s text alleges that House Bills 278 and 625 “are misguided attacks on North Carolina jobs and workers” that would create “an unfair, competitive advantage for a select few who want to do an end-around of the state’s regulatory system.”
At this point it is unclear who put up the site. Chris Caffey denies any involvement in its creation. Tim Kent, the executive director of the North Carolina Beer and Wine Wholesalers association, simply stated that the site resembled those campaigning for beer jobs in South Carolina and Georgia.
House Bills 278 and 625
In North Carolina, breweries are currently allowed to self-distribute their beer up until they reach an annual production of 25,000 barrels of beer. Once they eclipse that amount, by law they must sign over their brands to a wholesaler, who will then control the sales, marketing and distribution of their beers.
The bills in question would change that. If passed, House Bill 278 would quadruple the amount of beer a brewery could produce before signing with a distributor, raising the cap from 25,000 barrels to 100,000 barrels. House Bill 625 seeks to allow contract brewing in North Carolina and to allow breweries to serve unfortified wine, but there is also language in this bill regarding self-distribution. This bill would retain the current cap at 25,000 barrels, however it would make an amendment that would exempt any beer sold at the brewery’s taproom from counting against that cap.
“Our association is strongly opposed to the expansion of self-distribution,” wrote Kent in an e-mail.
The Select Few
Very few of the state’s 130 breweries produce more than 25,000 barrels a year, and most of those that do — brands like Highland Brewing, Natty Greene’s Brewing and Foothills Brewing — signed on with distributors well before reaching that cap. Many brewers prefer to focus on what they do best, and have someone else focus on the distribution side of things.
There are several breweries that could approach the 25,000-barrel production amount in the next year or so. The “select few” as referred to on the www.ncbeerjobs.com site might refer to breweries like Red Oak Brewery, Wicked Weed Brewing, The Olde Mecklenburg Brewery and NoDa Brewing Co. All four of these breweries have been outspoken in the past about the desire to continue distributing their beers even after hitting 25,000 barrels. NoDa Brewing is on track to produce 14,000 barrels of beer this year, and could hit 20,000 next year when they are operating out a new 32,000-square-foot production brewery.
“It’s a very inefficient way to distribute beer,” said Todd Ford, who owns NoDa Brewing in Charlotte with his wife, Suzie. “But what we lose in efficiency, we gain in customer support and customer knowledge. It’s so much better to deal with a person who has a name and a face. They know they can call my cell phone or Suzie’s and have a resolution right away, rather than someone who has 35 stops a day. Often distributors don’t understand all the products in the truck because they have so many brands to represent.”
Jobs in Jeopardy
Ford was taken aback when he first saw www.ncbeerjobs.com.
“I’m a realist,” he said. “I know how business works. I know how campaign contributions and lobbying work. But I guess what most disappoints me about this is that it’s so misleading. It talks about how my company and Red Oak, Wicked Weed and others are jeopardizing jobs.”
The site does allege that passing these bills would “create an unlevel playing field in an otherwise highly-competitive beer industry while threatening the livelihood of 1000’s of North Carolina workers.” It then goes on to mention the 544 workers employed at the MillerCoors plant in Eden.
That point was lost on Ford.
“How is it that me self-distributing jeopardizes the jobs of people that already work at MillerCoors?” he asked.
Ford began to talk about the implications on his own sales staff, which has grown tremendously since the business opened almost four years ago. With their new brewery opening later this year, they expect that number to only grow larger.
“Ultimately they’re the ones whose jobs are in jeopardy,” he said, before hesitating. “And I don’t even want to talk about that because I don’t want to scare them.”
That point is echoed by Margo Knight Metzger, executive director of the North Carolina Craft Brewers Guild. She notes that breweries like The Olde Mecklenburg Brewery in Charlotte have invested heavily not only in their staff, but in fleets of the delivery trucks they use to distribute their beer.
“When they hit that cap all of a sudden, what happens?” she asked. “Are they just supposed to liquidate it? Are they supposed to lay off all of those people? If you have to turn that business over, they’re going to lose their jobs. Craft brewers are the job creators in this state. Our breweries are growing by leaps and bounds, hiring people in communities across the state and contributing in a big way to our economy.”
Metzger also notes that distributors play a vital role for craft brewers across North Carolina.
“We’re not foes,” said Metzger. “Craft brewers have successful relationships with distributors all over the state. That’s been the case for 20 plus years. We commend them as our partners in helping craft beer grow in North Carolina. But there are several breweries that prefer a different business model. We feel it ought to be a business decision, not an arbitrary cap.”
And Caffey, whose distributorship represents a variety of craft breweries, agrees.
“I think there are some out there that want to make the story that beer distributors don’t want to grow craft beer or want to see craft brewers do well, that we’re trying to keep them down,” said Caffey. “That’s just not true. I think sometimes it gets blown out of proportion and taken out of context.”
North Carolina’s “Best in the South” Beer Laws
Caffey is quick to point out that he is not behind the NC beer jobs site, even if he shares some of the viewpoints voiced there. He echoes the site’s statements that North Carolina has some of the most favorable and progressive beer-related laws, and that these laws can be credited with helping many breweries succeed. He notes that the state has passed and amended many new laws in recent years, from allowing breweries to open restaurants to allowing breweries to opt out of distributor agreements.
The state also raised the self-distribution cap once back in 2003, largely at the request of Red Oak Brewery. The cap has been set at 25,000 barrels ever since, despite the state’s breweries growing at a rapid rate. North Carolina’s brewers have not been fighting the same laws that have plagued breweries in South Carolina, Georgia or Florida.
“Yes, it’s true that we have the best beer laws in the south,” said Metzger. “But why in the world would we want to be the best of the worst when it comes to that? We have the potential to be the best on the East Coast, but not if we sit here and are satisfied with being the best in the south.”
Like Caffey, she notes that the state does have some progressive laws in place for breweries, which is why businesses like Sierra Nevada Brewing Co. and New Belgium Brewing decided to locate their East Coast breweries in the state. But if breweries are to continue growing, she says, then North Carolina’s beer laws have to change with the times.
“We’re the best in the south because we’ve made some progressive changes,” Metzger said. “For our craft brewers who are working based on a set of rules and regulations that date back to 1983, we need our laws to evolve with this industry. When most of these laws were written, there weren’t many craft breweries in North Carolina. I think it’s fair for us to advocate for some measured changes that help craft breweries grow.”
When asked if more progressive laws could again lead to growth, Caffey paused for a moment before responding.
“Look, some of my distributor peers would cringe at me saying this,” he said. “But raising the cap? There’s not a strong argument against it as long as you maintain some of the integrity and ensure it maintains a competitive market.”
The Three-Tier System
The three-tier system — which delineates between breweries, distributors and retailers — was instituted after the repeal of Prohibition. The system was created to ensure a separation of those three parties, so that breweries couldn’t own bars (this was called a tied house) and so that distributors couldn’t sell the alcohol. The specific laws regarding this three-tier system vary from state to state.
Despite his obvious objections to House Bills 278 and 625, Caffey says he is not completely averse to allowing breweries to distribute past the 25,000-barrel mark.
“I’m a free market kind of guy,” Caffey said. “I think we’re the most efficient, best way to market for a brewer. I personally can’t understand why someone who wants to grow would choose a different route of market. If there’s a way to maintain the integrity of that system and allow them to supply their products if they want to, then have at it.”
Kent voiced some of those concerns in an e-mail: “The three-tier system exists to promote excise tax compliance, product safety, fair competition in the marketplace, and responsible consumption. Our association is firmly against the erosion of those principles.”
The integrity of that system is not in question, according to Metzger.
“We’re not interested in dismantling the three-tier system,” she said. “We just feel like 25,000 barrels is not sufficient and there has got to be some breathing room. Our laws need to evolve with this growing industry.”
The Future of House Bills 278 and 625
Suzie Ford of NoDa Brewing and John Marrino, the founder of The Olde Mecklenburg Brewery, have been vocal in asking for proponents of these bills to write into their elected officials, and Jonathan Wells has a form e-mail over at Creative Loafing.
Right now, both House Bill 278 and House Bill 625 have been referred to the committee on alcoholic beverage control. Any bills that do not move from committee and pass one of the chambers by April 30 will not be able to be passed this year, though they could be taken up next year.