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SC: Brewers question alcohol distribution system

SC: Brewers question alcohol distribution system


Post and Courier

By Hanna Raskin

August 31, 2015

Following the successful passage of the Stone Bill, which relaxed laws that limited craft beer operations in South Carolina, the state’s brewers are pushing industry supporters to reconsider the three-tier system.


“When you have a chance to change that law, help them out,” Richard Easterby, owner of beer retailer Craft Conundrum, last week urged a meeting of the West Ashley- James Island Business Association. The group convened a panel on “The Business of Beer,” in recognition of the sector’s local growth.


According to panelist Chris Winn, co-owner and head brewer of Tradesman Brewing, South Carolina is “about 15 years behind” other states in terms of industry development. But he stressed that “having the law on our side” can help close the gap.


Under the three-tier system, breweries are prohibited from directly wholesaling their product to restaurants and retail stores. Distributors function as middlemen, which brewers say comes with a cost that drinkers are forced to swallow, as well as a loss of strategic control.


“If you’re not selling my product the way I want it to be sold, I can’t back out,” panelist Chris Brown, co-owner and head brewer of Holy City Brewing, said of the standard distribution deals.


The three-tier system is not unique to South Carolina, nor are beer makers the only alcohol producers chafing at its tenets: Craft distillers and small winemakers have also complained that the current setup prevents them from placing their products in a select few stores or restaurants without facing financial consequences.


Still, some form of the three-tier system — which states adopted in the wake of Prohibition as a way of protecting their revenue streams and discouraging monopolies – remains in effect everywhere but Washington. That state formally took down its tiers after voters in 2011 supported an initiative forcing the state to surrender control of liquor sales.


Yet the system isn’t identical from state-to-state: In certain states, producers can assume distribution duties. By pushing lawmakers to modify the South Carolina system, brewers here are asking the state to make a sweeping change in hopes of attracting more craft breweries. And while that cause might seem antithetical to existing producers’ interests, Brown says the only serious competition he foresees is for tap handles.


“The cultural shift is occurring,” Winn says of circumstances contributing to craft beer’s recent surge. “If you just let us do what we’re doing, it’s going to keep growing.”