Want to make people in North Carolina’s craft-beer world laugh? Tell them this:
In 2005, when the North Carolina legislature was considering a bill that would raise the limit on alcohol in beer, one of the sponsors said a microbrewing industry could potentially create 300 jobs.
That was off by 2,700 jobs. And that’s just the number working in North Carolina’s 132 craft breweries. If you add related jobs, including servers, delivery truck drivers, beer shop cashiers and hop and barley growers, Erik Lars Myers, president of the N.C. Craft Brewers Guild, says the number is closer to 10,000.
Two years ago, Mecklenburg County was grabbing attention with seven independently owned breweries. Today, there are 18. With estimates that at least 15 more are in the works, Fortune.com recently declared that Charlotte now contends with Asheville as the hub of craft brewing in North Carolina.
For the state’s exploding craft-brew industry, a special day is approaching. Thursday is the 10th anniversary of the date then-Gov. Mike Easley signed the legislation known as Pop the Cap, raising the alcohol limit on beer sold in the state from 6 percent to 15 percent and allowing the sale and creation of a full range of beer styles. That change, along with several adjustments to the distribution laws that let small breweries flourish, allowed North Carolina to join a fast-growing national trend toward artisan-style beers.
What has happened since then has stunned everyone. As a state senator, Charlotte Mayor Dan Clodfelter was one of the people who helped shepherd the bill to passage.
“I didn’t anticipate the absolute explosion of the industry,” he says. “You look back on stuff you’ve done over the years and the effect it had. I really didn’t expect what happened with craft beer.”
Sean Lilly Wilson owns Durham’s Fullsteam Brewery. In 2005, he was the spokesperson for the small group behind Pop the Cap, a grass-roots lobbying effort to change the beer law. It took 21/2 years to work through the resistance, from beer distributors who feared the competition, from public health organizations who feared underage access to higher-alcohol beverages, and from legislators who feared backlash from non-drinking constituents.
“Our part was navigating all that,” Wilson says. “It was fascinating politics. ...We just wanted six words stricken from the General Statutes: ‘and not more than 6 percent.’”
He knew they were making headway, Wilson says, when he overheard a conversation in the statehouse in Raleigh one day.
“I heard one of the good ol’ boy legislators say to another one, ‘What do you think about Pop the Cap?’ I heard that and I was like, ‘we got ‘em. They’re talking about us. We’re going to figure this out.’”
If Pop the Cap hadn’t passed, Todd Ford, the owner of Charlotte’s NoDa Brewing Co., says he wouldn’t even be in the beer business.
“Every time I see Sean, I thank him for doing this,” he says. “If it weren’t for this, I wouldn’t be a professional brewer. I wouldn’t have taken the leap.” After using their retirement money to start their small brewery on North Davidson Street, Ford and his wife, Suzie, have found wide acclaim and are now moving to a bigger location on North Tryon Street with more space for brewing and a new canning line.
Forcing out imports
Just after 7 a.m. on Aug. 15, 2005, Mike Brawley of Brawley’s Beverage sold the first legal higher-alcohol beer in North Carolina. He kept a bottle from that case, Samuel Smith’s Imperial Stout, and wrote the date on it. It’s still in his shop, in a former gas station on Park Road.
What Brawley wanted to stock in those days were imports, all those German, English and Belgian beers. What he got were two things he didn’t expect: First, an American beer selection that he says is now unrivaled in the world. And a statewide beer culture that is attracting national attention as the best in the South.
“What we have now is trying to whittle down the chase,” he says. “There’s just so much available to us. Back then, you could bring in every single thing available and not fill half my store.”
Before Pop the Cap, there were a few state brewers, like Weeping Radish in Manteo. In Charlotte, several breweries had tried, including Johnson Beer, Dilworth Brewing and The Mill, but they had all closed by 2001, leaving a few brewpubs that made beer they sold on the premises with food, like Southend Brewery, Rock Bottom and Hops.
Ford says that a lower alcohol level limited what breweries could make to the same American-lager styles made by the mainstream beer companies like Budweiser. Since the big companies could do it cheaper and afford the equipment that allowed them to do it consistently, local breweries couldn’t compete.
When the beer floodgates opened, what rushed in was a generation of young brewers who couldn’t wait to get creative. And the drinking public loved it. Today, supermarkets and bottle shops are crammed with choices, from the fresh, German-style Olde Mecklenburg to the tall cans of NoDa’s Hop Drop ’N Roll and Coco Loco. Craft styles from sour beers to goses, even mead, have bubbled up all over.
Even the N.C. Craft Brewers Guild has trouble keeping up with it all. They’re working on a new economic impact study, but Erik Lars Myers says craft brewing in North Carolina now brings in about $791 million a year.
“It’s just bananas,” he says. When Myers wrote his book, “North Carolina Craft Beer and Breweries” in 2012, there were under 50 breweries. He’s now working on the second edition and expects to add almost 100. At least 12 have opened in 2015 – “that’s 10 percent growth in a year,” he says.
There are several reasons why brewers have succeeded. One is state distribution laws that have been adjusted several times, both before and since Pop the Cap, by both brewers and wholesalers to make them more advantageous. Currently, as long as they make less than 25,000 barrels a year (a barrel holds 31 gallons), North Carolina allows small breweries to distribute their own beer to retailers. That means they don’t have to share profits with a wholesaler while they’re growing.
Georgia raised its alcohol limit for beer in 2004, a year earlier than North Carolina, but it hasn’t seen anywhere near the same growth. One reason is Georgia connects beer sales to food: You can’t sell on site unless you also sell food, so most Georgia breweries have to be beer pubs.
Sean Wilson thinks a big part is a population distribution that’s specific to North Carolina.
“When you think of Georgia, you think of Atlanta, Athens, maybe Macon. But after that, there’s a drop-off in the dense population centers. It doesn’t have the network of midsize cities connected by the good roads of North Carolina.”
That’s also brought an unexpected boon to smaller towns. From Fonta Flora Brewery in Morganton to Mother Earth Brewing in Kinston, even small towns have breweries, often in what had been unused old buildings.
Breweries are often located in former industrial buildings close to neighborhoods. So North Carolina breweries are community centers, places where you go to hang out.
In Charlotte, most weekend afternoons or weekday evenings finds breweries from NoDa to South End crammed with people, even families with kids and dogs. Free Range Brewing on North Davidson Street built in a kids play area, with shelves of books and games.
One of the biggest concerns about Pop the Cap was that higher alcohol limits would allow easier access for underage drinkers. The higher alcohol limit has also allowed sale of new products, like the sweet malt beverages nicknamed “alcopops” for their appeal to younger drinkers, and the state is launching a public-service campaign focusing on the dangers of underage drinking.
Craft beer, however, isn’t singled out as a target, and brewery owners say the craft products they make aren’t an issue because their beers aren’t attractive to young drinkers. They cost more, for one, but they also have big flavors that can challenge even mature drinkers.
The Rev. Mark Creech of the Christian Action League in Raleigh was one of the most vocal opponents of Pop the Cap. He’s still opposed to anything that involves drinking as a public health issue.
“There’s no way to determine every way that Pop the Cap had a negative effect on the state’s health,” he says. “When there’s a drunk driver, no one checks to see if they’re drinking a craft beer.”
Ford points out the people sometimes misunderstand the aim in raising alcohol limits. The idea wasn’t to make beers that get you drunk faster. The point is that to brew a full range of styles, some will be higher in alcohol.
Very high-alcohol styles, like Imperial Stouts, are difficult to drink in large quantities. And many of the craft beers are still close to 6 percent or lower. NoDa’s award-winning American IPA, Hop Drop ’N Roll, is 7.2 percent alcohol by volume compared with 5 percent for Budweiser.
“Obviously, underage drinking is a problem we take seriously, whether it’s a 4 percent beer or higher,” says Ford. “But the majority of people drinking our beers aren’t going to be underage. If you’re binge drinking, you’re going to do something that’s more available and is easier to drink.”
With a craft-brewing industry entrenched statewide, cities are developing bragging rights after their breweries, and the tourism dollars that accompany them. Asheville, with a population of 87,000, is a mecca, with 16 breweries and two more expected. Raleigh, with just over half of Charlotte’s city population of 792,000, has 18 breweries, with seven more expected. Charlotte has 18 with 15 more predicted by the Charlotte Chamber.
However, with a metropolitan population of 2.4 million, including Concord and Gastonia, Charlotte is similar in size to Denver, one of the nation’s major beer cities, with a metropolitan population of 2.9 million. Denver has 50 breweries, the national Beer Association says. If Charlotte does grow to 33 breweries, as predicted, that could raise the state’s ranking in a beer world still dominated by California, Washington State and Colorado. North Carolina brewers now dream of being the center of beer on the East Coast.
As mayor of a large city in North Carolina – and a craft-beer fan since he went to school in England – Clodfelter is enjoying those bragging rights.
He likes to call North Carolina’s brewing scene a “Craft Beer Alley” that runs from Asheville, through Charlotte to the Triangle.
“We’ll see more activity here, with large producers looking at us seriously as an East Coast hub.”
What’s next for brewers?
What will it take to keep North Carolina’s beer industry growing?
▪ Excise tax reform. Erik Lars Myers, president of the N.C. Craft Brewers Guild, says high excise taxes, which are worked into the cost of certain items, mean brewers get taxed at both the federal and state level. If brewers paid lower taxes, he says, they could buy more equipment and do more marketing, creating more sales that would come back to the state as sales taxes.
▪ Higher distribution limits. While brewers can self-distribute if they remain under 25,000 barrels, once they get bigger, they have to go through a wholesaler, which can add to their costs. Under North Carolina law enforced by the Alcohol Beverage Commission, those distribution deals are long-term contracts, designed to keep big companies, like Coors, from moving their business and sinking a wholesaler, who distributes to retailers. Small breweries would prefer more flexibility on both the gallons they can distribute and the contracts with distributors.