Cary Breweries Weigh In on Raising Cap on Distribution

Cary, NC – Breweries have taken off quickly in North Carolina and the Triangle in particular. And new legislation proposed by the General Assembly would change the way these craft breweries can distribute their product, in a way those in the Cary area support.

Growth of Beer in Cary

According to the North Carolina Craft Brewers Guild, there are 203 breweries in the state, including three here in Cary. What you might not know is, in North Carolina, these breweries can only self-distribute their beer up to 25,000 barrels (one barrel is roughly 31 gallons).

House Bill 500, in its current form, would raise that cap to 200,000 barrels before a brewery would have to start using a third-party distributor instead, in addition to other omnibus changes to alcohol law in North Carolina.

The head brewers at Fortnight Brewing and Bond Brothers Beer Company in Cary both say they support raising the cap.

“Brewers are business owners and you wouldn’t tell a baker to turn over profits to hire a distributor,” said Derek Garman, head brewer at Fortnight. “No other business does this. Only brewing.”

Whit Baker, head brewer at Bond Brothers, said “weird” distribution laws such as the one in North Carolina date back to the post-Prohibition era and still carried much of the same mindset of the time.

“It’s fairly old-school thinking,” Baker said. “And this is not even talking about lifting the cap. It’s just saying that breweries at that 25,000-barrel level can grow eight times in size before they need an independent distributor.”

Baker also said, with the way breweries sell their product, raising the cap would create more work for businesses such as Bond Brothers.

“Both breweries and distributors have a sales force and if there’s overlap in who you’re selling to, then it isn’t resulting in any extra hires,” Baker said. “But with a brewery, as you’re self-distributing, you start hiring drivers and investing in cooling trucks and other infrastructure.”

 

At Pharmacy Bottle + Beverage in Downtown Cary, owner Tyler Watt said he can see both sides of the debate as a retailer. For him, it does not always make a difference if a brewery is using a distributor or doing it themselves.

“The difference is when they are doing a special release and it needs to stay fresh. Self-distribution can get it to you the freshest,” Watt said. “The other difference is distance. A small brewery can’t go all over the state.”

This is the reason Fortnight uses an independent distributor. Garman said because of this, the laws related to the cap would not actually affect them.

“For us, we did a lot of different packaging formats and six packs sell the best,” Garman said. “The need to get those into grocery stores would mean needing a whole fleet to distribute and we decided to go with an independent distributor.”

Size Matters

Currently, none of the breweries in Cary, from Fortnight to Bond Brothers to Jordan Lake Brewing Company, are close to the 25,000-barrel limit. Baker said they produced 1700 barrels in their first year and Garman said Fortnight is currently between 3000 and 3500 barrels.

“Only four or five breweries in North Carolina are close to or above that,” Garman said.

Among those breweries are Foothills Brewing in Winston-Salem.

“Foothills is way beyond it so by law, they cannot sell their own product and have to use a distributor,” Watt said.

Some breweries that are close are Red Oak in Alamance County and Olde Mecklenburg and NoDa in Charlotte. Olde Mecklenburg in particular is a case study in how the current law is affecting breweries, according to Watt.

“They pulled out of the Greensboro market because it meant they were hitting the 25,000 limit and they wanted distribution to stay in-house,” Watt said. “But locally, no one is in danger of hitting that limit.”

Baker said this affects how a brewery can get its product across the state. He gave the example of NoDa in Charlotte.

“If your favorite bottle shop wants NoDa, they have to drive down to Charlotte and pick it up themselves,” Baker said. “And it won’t be fresh riding in a hot car from there to the Triangle.”

But as Baker argued, once a brewery is hitting the 20-to-25,000-barrel range, they begin spreading across the state and can use cooling trucks that get beer around fresh.

At Bond Brothers, Baker said he prefers self-distribution because there is no mark-up with a distributor and they are able to talk to customers directly.

“We’re able to do what we want with our label and go to the customer directly,” Baker said. “It’s worth it to represent our own brand.”

And while Watt said he sees both sides of the beer cap issue, he said if he had to be pushed one way or the other, he would support raising the cap for this reason.

“I prefer working with a brewery directly,” Watt said. “I want to create a relationship.”


Story by Michael Papich. Photos by Hal Goodtree, Michael Papich and Bond Brothers Beer Company.

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