By: Austin L. Ray
Georgia’s antiquated distribution laws are hampering small businesses and sending national brands elsewhere. Why is Georgia refusing thousands of jobs and millions of dollars from this homegrown industry?
Atlantan Byron Burroughs is passionate about craft beer. In 2007, he turned that passion into a bottle shop with a stunning selection, not only of American brews but imports too, alongside specialty liquors and boutique wines. In 2009, the shop expanded to include 200 bottles and 50 taps, which could fill growlers to go. In 2012, he added a brewpub to the mix, where he and his team could make and sell their beer alongside world-class brands. Their beer was good, so they sold a lot of it. Because it was such a hit, earlier this year they opened a production facility with a tasting room, so they could distribute their beer locally. You might say business is good.
Here’s the thing, though: Atlantan Byron Burroughs had to move away from Atlanta, indeed, Georgia altogether, to live his small-business dream. His once-humble project, Proof Brewing Co., has been thriving in Tallahassee for seven years now. In 2015, Proof will make more than 2,000 barrels (62,000 gallons) of beer. Proof is leading a craft beer renaissance of sorts in Tally. Since it opened in 2007, others have followed the hybrid business’ lead. Excellent beer bar Fermentation Lounge, which brews in-house, opened in 2008. Another production brewery, GrassLands, is on the way. A brewery that can sell direct, and have a brewpub, and have a bottle shop isn’t possible in Georgia, though, where the laws are too restrictive. So Proof started up in a different town, in a different state. There, it was a pioneer. There, it started a revolution.
“Being from Atlanta, we definitely considered opening there,” Burroughs says. “Unfortunately, there is such an antiquated system in place that seems resistant to change and positive growth that it seemed too much of a financial risk.”
Georgia is currently one of four states in the country, including Mississippi, North Dakota, and West Virginia, that don’t allow breweries to sell beer directly to customers. No pints on-premise at the brewery. No six packs, growlers, or cases to go. Georgia breweries may sell almost anything directly to their customers that isn’t beer, including glasses for beer, T-shirts advertising beer to wear while drinking beer, bottle openers for opening beer, koozies that hold beer cans, dog treats made from beer, etc. Breweries are allowed to give away for free the product they make, so long as they don’t give away more than 32 ounces per person and that person participates in an “educational” and/or “promotional” tour. The regulatory language is vague, perhaps purposely so, but it’s clear that breweries, unlike, say, wine makers or cheese makers (and many other Georgia small business owners), cannot sell their product directly to their customers.
The three-tier system of alcohol distribution was federally enacted just after Prohibition. The system splits the booze infrastructure into manufacturers, distributors, and retailers. Originally it was intended to prevent large breweries and distilleries from creating monopolies by opening saloons for their products and their products only. But each state can tweak the three-tier law as it sees fit, and Georgia grants sole sales power to the distributors. Instead of breweries serving all of their customers directly, they’re forced to serve one customer: the distributor. In Georgia, the system that was supposed to prevent monopolies by producers has created one for distributors.
“It’s a hindrance to the beer producers to not allow sales directly to consumers in Georgia,” says Sweet Grass Dairy co-owner Jessica Little. “I hope brewers are able to sell directly to consumers soon. I cannot imagine what our business would look like if we did not have the ability to do so. We value greatly the ability to share our cheese with the final customer. It keeps us connected to the product through the eye of the consumer, not just the middleman distributor.”
Steve Hindy, a former journalist and founder/president of Brooklyn Brewery, took to the New York Times‘ op-ed page in March 2014 to discuss franchise laws, another onerous aspect of the brewery/distributor relationship. But his words apply to Georgia’s fight for direct sales as well.
“Craft breweries may be a big story in the media these days, but they face much tougher challenges than most other small businesses,” he begins.
For more than 700 words, he discusses those challenges at length, starting in the 1970s, and tracing the industry’s growth to the present day. But he ends on an ominous note — one that he may not have meant for Georgia, but which applies nonetheless.
“As the craft-beer sector expands, states are waking up to the economic benefits it offers — in jobs, tourism and taxes,” Hindy wrote. “Many states now offer subsidies and regulatory assistance for new breweries. But too few states have taken on the tougher job of pushing against distributors and their lobbyists.”