Beer Issue - There’s a tier in my beer
Georgia’s onerous distribution law stifles local brewing
There’s never been a better time to be a beer drinker in Atlanta. And no, I’m not saying that because I’m drunk.
I mean, yes, I am drunk, but no, that’s not why I’m saying that.
I say it because, in recent years, the number of high-quality macro- and microbrews available to Atlantans has blossomed. In stores and bars where Heineken, Bass and Harp were once the best available beers, local drinkers can now find a variety of rich ales, bright lagers and crisp pilsners from all over the United States and Europe.
For a generation, the metro area has been a magnet for the young and affluent consumers in whose bloodshot eyes brewers see dollar signs. If you want to sell beer, it makes sense to go where the drinkers are.
Speeding up the profusion of beer choices was legislation passed by the state in 2004 raising the alcohol-by-volume limit of beer sold in Georgia from 6 percent to 14 percent. Georgians were at last free to purchase so-called high-gravity beers (the P.C. term for higher-than-average-alcohol beers) that beer snobs in other states took for granted.
So, yes, it’s better than ever, but there’s a giant hole in our municipal beer résumé.
Compared with other similarly sized, similarly youthful, similarly affluent cities, Atlanta’s beer selection is limited. And the metro area produces very little beer of its own. While the number of breweries in the United States has grown from 44 at the end of the 1970s to more than 1,300 today, Georgia is home to only 17 brewers. Of those, 12 are brewpubs forbidden from selling their beer off-premises. The five brewers allowed to bottle and sell their beer are Sweetwater, Atlanta Brewing Company, Terrapin and industry titans Anheuser-Busch and Miller.
“There are more brewers in Portland, Ore., than in the whole Southeastern United States,” says Athens beer writer Owen Ogletree. “The beer culture out there has flourished.”
I checked. All that beer Ogletree drinks is not clouding his perception.
According to statistics published by the Brewers Association (and transformed into a handy map by a nameless beer freak on Wikipedia), Oregon has more than 20 microbreweries per million residents. Georgia has fewer than two per million residents.
Why does the city the Wall Street Journal says produces the best burgers in the country hardly produce any beer with which to wash down said burgers?
People in the local beer biz lay much of the blame on an ancient book of rules to which every successful politician in Georgia swears his or her allegiance.
The Holy Bible? Good guess, but no. I’m talking about the Official Code of Georgia Annotated – the compendium of every state law in Georgia. Within its pages reside state rules governing the so-called three-tiered system of alcohol distribution, the system that makes Georgia so inhospitable to craft brewing.
When the 21st Amendment to the Constitution ended Prohibition in 1933 and legal alcohol returned to the United States, states forced the booze biz into three distinct business tiers: manufacturing, distribution and retailing. The purpose of the three-tier system was to prevent large brewers and distillers from controlling alcohol retailing and opening saloons for their products on every street corner.
More bars in more places is great for today’s cell-phone users, but it was a nightmare for civic leaders in the early 20th century. The lawlessness associated with rampant saloonery was one of the reasons we had Prohibition in the first place.
Though the three-tiered system is found nationwide, each state is free to tweak the system as it sees fit. Georgia’s three-tiered system is peculiar in the way it concentrates immense power in the hands of distributors, a situation that makes Georgia inhospitable to small brewers.
State law stipulates that if a brewer signs with a distributor, the brewer is bound to that company for life. If a brewer wants to switch distributors, its only option is to go dormant for five years. That’s certain death for any small brewer.
Georgia’s distribution system is biased against small brewers because distributors have limited space in their warehouses and trucks, their sales people only have so much time to sell products to retailers, and retailers only so many taps and shelves. Distributors have little reason to devote resources to small brewers when they can make a lot more money from more popular, high-volume brewers. Furthermore, unlike with wineries, state law forbids brewers from bypassing distributors and selling directly to consumers. That’s why you never see esteemed local brewpubs such as Five Seasons or Twain’s pouring at local neighborhood or beer festivals.
“We’d like to pour at local festivals,” says Twain’s co-owner Ethan Wurtzel. “But to pour off-premises we’d have to sign with a distributor.”
“Once you sign a contract a distributor has you for as long as they want you,” Ogletree says. “You can’t say ‘I’ve found some other distributor.’ That’s what happened to Dogwood.”
Dogwood (1996--2004, R.I.P.) is the former Atlanta brewery whose dealings with Empire Distributors exemplify what’s screwed up about Georgia’s three-tier system. Upon starting up production, Dogwood signed with Southeastern giant Empire Distributors to get its brand into stores and behind bars.
Displeased with Empire’s work on his company’s behalf, founder Crawford Moran was nevertheless tied to Empire. By law, he couldn’t leave Empire once he signed with it. It’s as if Domino’s Pizza was prohibited by law from replacing delivery drivers.
Unable to switch to a distributor that he felt was better equipped to work with his upstart brand, Dogwood closed in 2004.
Who benefits from a legal system that mandates brewers and retailers do business through a fee-collecting distributor?
“The system definitely protects the distributor,” says a sales manager at a local alcohol distributor who spoke to me on the condition of anonymity. “And it’s not friendly to the little guy. Small breweries can’t stay in business.”
“A legal racket,” is how another distributor happily described it.
Twain’s Wurtzel says the state-mandated distributor stranglehold is costing mom-and-pop businesses a fortune. And that lost income is costing Georgia a fortune in potential tax dollars.
“It’s a 12 percent growth industry,” Wurtzel says, correctly citing Brewers Association stats off the top of his head like he’s friggin’ Owen Ogletree or something. “Why shouldn’t Georgia get on the right side of that?”