About a year ago, some North Carolina craft brewers took on a couple behemoths in the state ABC system and a well-funded and entrenched network of wholesalers and distributors.
The brewers, in plain terms, were fed up.
They were tired of what they view as one-sided and interminable franchise contracts, sick of worrying about an arbitrary state ruling telling them they can produce no more than 25,000 barrels of beer each year without contracting with a distributor, who take control of their products and play no small role in decisions about pricing and placement.
House Bill 500 last year brought gave brewers some hope.
For a minute or two.
The measure would have raised that cap to 200,000 barrels, but the state’s distributors — who said the increase would place their own businesses in jeopardy — along with religious objectors who see alcohol as morally abhorrent — persuaded lawmakers to eliminate the provision.
Which they did.
“We’ve been at the table since day one, but you can’t negotiate with yourself,” John Marrino, who owns Olde Mecklenburg brewery in Charlotte, said at the time.
Let a judge decide.
The brewers’ complaint — filed in Wake County last year by Craft Freedom LLC, The Olde Mecklenburg Brewery LLC, and NoDa Brewing Co. — says the distribution cap and franchise laws injure and threaten to impose additional damage on the brewers.
Superior Court Judge Allen Baddour ruled the case will continue.
Baddour, who heard the complaint March 20, issued the ruling May 15. He denied a motion filed from the state saying the complaint should be dismissed with prejudice, and that the challenge, according to statute, must be heard by a three-judge panel of the Superior Court.
The plaintiffs’ brief included a deposition by N.C. ABC Commission Administrator Robert Hamilton and an affidavit from Dustin Canestorp, founder of Beer Army, LLC. The affidavit provides an account of a recorded phone conversation and email exchange between Canestorp and Freedom Beverage Co., a distributor, and the way Freedom has handled the distribution agreement. The statements in the affidavit border on shocking, and the language in the emails raw and sometimes sophomoric. Its contents, though, may offer some insight into Baddour’s thinking and the resultant decision.
Discovery will continue, subpoenas will be issued, and members of the N.C. Beer and Wine Wholesalers will be deposed.
The National Beer Wholesalers Association, interestingly, has recently launched a public relations campaign to, in its words, bring “attention to the scope of its industry … highlighting the many jobs it creates.”
“The organization,” a news release says, “that helps stock beer aisles in stores around the country wants to remind the world that the industry does more than deliver beer — it brings local jobs to local industries.”
The campaign, called Delivering Local Jobs, “draws attention to the 135,000 jobs the industry creates in multiple career tracks, including graphic designers, inventory specialists, receptionists, sales representatives, and truck drivers. Those jobs represent $11.2 billion in salaries, and in the U.S., the industry drives $70 billion in GDP, $180 million in community impact, and around $13 billion in tax revenue.”
The wholesalers make important points, and we mean in no way to disparage the people who work hard and do their jobs. Sure, beer and wine distributors offer an important service and, in certain aspects of the business, are indispensable.
In other aspects, particularly in regard to state control, the brewers see things quite differently.