In September, craft brewers and beer distributors were knocking heads over state regulations some viewed as favoring the interests of large beer distributors over these small brewers:
North Carolina politicians in Raleigh like to say they’re pro-jobs and pro-business.
But what happens when lawmakers are forced to pick sides between new, small businesses growing jobs and big legacy businesses trying to hold on to the market share they’ve got? Would it help you to know that the big legacy companies give hundreds of thousands of dollars in campaign contributions and the new small businesses are not yet organized?
There’s just such a battle brewing in North Carolina over beer – and who gets to distribute and market it. It pits a growing number of small craft brewers against big distributors. And the big distributors who are among the largest campaign contributors have state lawmakers on their side. […]
Hmmm. During this debate, Thom Tillis was serving as speaker of the House, determining what DOES and DOES NOT get a hearing in committee and on the floor. While all of this was going on in Raleigh, cash from adult beverage distributors was piling up in the speaker’s US Senate campaign treasury.
On August 15, the Tillis Senate campaign got $2600 from the VP of Charlotte-based Adams Beverages of NC. On June 19, the campaign got $2000 from the chairman of Greensboro-based R.H. Barringer Distributing Company. On September 9, Tillis for Senate got $1000 from a Goldsboro-based board member of R.A. Jeffreys.
Tillis for Senate got two contributions from the president of Greensboro-based R.A. Jeffreys: $2000 on June 19 and $1000 on August 6. On August 29, Lou Cunningham of Charlotte-based Cunningham Wholesale donated $1000. On June 26, Leigh Fanning of R.A. Jeffreys donated $2600.
On July 30, the VP of Sales for Salisbury-based United Beverage Company donated $250. The Goldsboro-based CEO of R.A. Jeffreys donated twice: $250 on August 29 and $500 on September 9. William Kennedy of Smithfield-based Mutual Distribution donated $2000 on September 16. The EVP of Raleigh-based Long Beverage donated $1000 on August 15 to Tillis for Senate.
On August 6, the owner of Coastal Beverage Company in Wilmington donated $1000 to Tillis for Senate. On June 13, William Powell of R. H. Barringer donated $1000. On June 17, Dean Proctor of Hickory-based United Beverages donated $2600. On September 16, William Riley of Clayton-based Mutual Distribution donated $2000. On August 15, Larry Robinson of Newton-based United Beverage donated $1000.
On August 15, Hickory-based beer wholesaler Dana Truitt donated $1000 to Tillis for Senate. On August 26, Rebecca Ward of Hickory-based United Beverage donated $1000. On August 15, Salisbury resident Paul Weisler of United Beverage donated $1000.
But, wait. There’s MORE:
[…]The number of craft breweries in North Carolina is growing rapidly. The state ranks 10th in the country in the number of craft breweries (70) but drops to 19th in overall beer production. Some small brewers say they could grow faster and generate more local jobs in North Carolina if lawmakers weren’t forcing them to hire outside distributors.
Lawmakers capped the amount of beer brewers can make before they are forced to hire outside distributors to transport and market their product. The law sets the cap at 25,000 barrels per year or 775,000 gallons.
One Charlotte brewer is joining others in pushing back against the cap – saying it’s bad for business and a job killer.
John Marrino poured his heart, soul and a lot of his own money into Old Mecklenburg Brewery before it ever poured its first beer. He started distributing the beer with a $10,000 truck he bought on Ebay. He’s obviously proud of the product – all natural with no additives, preservatives or artificial coloring.
In a day and age of tech startups, brewing German beer in a warehouse in south Charlotte is decidedly old school. But John thought it was the American way. Work hard. Work smart. Build a small business into a big business. And everyone profits. “It’s a virtuous cycle,” Marrino says. Workers get jobs. Workers spend money. Government collects taxes. A little something for everyone.
But John Marrino and Old Mecklenburg Brewery are on track to bump up against the legislature’s cap and be forced to hire an outside distributor. As soon as he hits the cap, he’ll be forced to give up control of distribution. He objects: “You’re supposed to be able to build something and not have someone take it away from you.”
Marrino says there’s a place for distributors. He subcontracts with one to handled bottled beer. But he says it should be up to brewers. He doesn’t understand why lawmakers have to get involved and tell him who to use to distribute his beer.
“Why do I have to drive it down South Boulevard to a distributor so he can drive it around the corner to a restaurant?” he asks.
Beer is unique. The North Carolina law forcing brewers to hire a distributor to truck their commodity to market applies only to beer.
“The bakery doesn’t have to use a distributor,” John says. “He can distribute his own bread.”
Beer distributors don’t just truck the beer to grocery stores and pubs. They also take over the exclusive right to market the brand – to get it on the shelves or the taps.
“We have to basically sell them the rights to our brand in a local territory,” Marrino said.
Right now Marrino’s sales team sells only his product. But distributors can carry 40 or 50 lines.
“The Coke distributor doesn’t carry Pepsi,” Marrino said. “They’re carrying competing products.” […]