Politics & Government

NC craft brewers poised to grow after compromise with wholesalers ends 2-year fight

Ending a two-year battle, North Carolina’s biggest craft brewers have reached a compromise with the state’s wholesale distributors that would let them and other large brewers at least double their annual production.

The compromise was introduced in the General Assembly on Wednesday in what sponsors promise will be bipartisan legislation.

NoDa Brewery founder Suzie Ford and Tim Kent, executive director of the N.C. Beer & Wine Wholesalers Association, applauded the deal in a joint statement.

“Today, the General Assembly honors the spirit of commitment and cooperation by filing the Craft Beer Distribution & Modernization Act,” they said. “We are confident that its passage will add additional opportunities for North Carolina’s beer industry. This measure will adjust existing law to create new options for growing breweries.”

Both sides plan a morning news conference at the legislature.

The brewers and distributors have been at odds for more than two years. That’s when Ford, her husband Todd and John Marrino, owner of Charlotte’s Olde Mecklenburg Brewery, began the fight for what they called “Craft Freedom.”

They wanted to raise the 25,000-barrel cap on craft beer production. Producing one barrel above that forces brewers into a costly contract with one of the state’s big distributors. What’s known as the franchise law then gives distributors control over sales, marketing, delivery, quality control and even pricing. And the distributor essentially controls the rights in perpetuity.

The effort pitted the fast-growing craft beer industry against wholesale distributors, a group that reinforced its clout with nearly $1.5 million in political contributions in the last four years. The state’s more than 200 craft brewers have an annual economic impact of $1.2 billion, according to the N.C. Craft Brewers Guild.

The two sides ended up in court after a House panel approved a watered down version of a bill to raise the cap. It would have raised the brewers’ annual production cap from 25,000 to 200,000 barrels before a brewery has to contract with a distributor.

The compromise announced Wednesday would create a new category of “Mid-Sized Independent Breweries” such as NoDa, Olde Meck and Red Oak. Theore ability to self-distribute would be raised to 50,000 barrels. The new law would allow mid-sized breweries to distribute “up to” 50,000 barrels a year.

Breweries would not lose that authorization if they exceeded 50,000 barrels. However, this new authorization would be limited only to those breweries that sell less than 100,000 barrels of beer per year.