The Death of Three-Tier: Update 2?
Source: Beer Business Daily
March 29, 2017
In our ongoing series on how the lines are increasingly blurring between the formerly state-mandated three tiers in the bev-alc industry in the U.S. — and not due to Granholm or direct shipping wineries as we once thought — we now present the North Carolina news.
NORTH CAROLINA CARVE-OUT. The executive director of the North Carolina Craft Brewers Guild, Margo Knight Metzger, and a handful of representatives from the Tar Heel State gathered around a podium at the NC General Assembly yesterday to introduce their “modernization” bill aka House Bill 500.
The legislation is “wide-ranging,” including a dozen provisions that they believe will “update” the state’s alcoholic beverage laws, per NC Beer.
200k BBL CAP ON SELF-DISTRIBUTION. Chief among these provisions is a huge hike on the state’s self-distribution cap (they want to raise the cap from 25,000 barrels to 200,000 barrels) and edits to the state’s franchise requirements.
As you may know, the state currently holds a carveout for brewers that produce fewer than 25,000 barrels, meaning these brewers are able to terminate a distribution agreement with or without cause as long as they give five days’ notice and pay fair market value.
With HB 500, the brewers want to see this carveout apply to all brewers producing less than 200,000 barrels (this threshold is what HB 500 deems as a small craft brewery in the state). Additionally, the legislation says determining fair market value is “challenging, costly and time consuming” so they’ve revised the franchise law to allow for the compensation question to go to arbitration if parties can’t come up with a price within 12 months.
Tim Kent, executive director of the NC Beer & Wine Wholesalers Association, tells BBD that “the brewers and their bill sponsors did not seek any advice, input or comment from the NC wholesaler community prior to filing this bill.
“Suffice it to say, we are opposed,” Tim said with typical understatement.
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