Each week, about 600 people line up outside Terrapin Beer Co. to sample some of Athens’ most recognizable hometown brews. From hops-heavy India Pale Ales to thick chocolate stouts, Athenians and University of Georgia students alike have been drinking at the craft brewery for nearly 13 years — but none of them have ever paid for a drop of beer there.
Georgia is one of five states in the U.S. that does not permit craft breweries to sell beer on their premises due to Prohibition-era regulations the government still enforces. Instead, companies such as Terrapin and Creature Comforts Brewing sell $10-$12 souvenir glasses in order to make money during the two-hour minimum they must remain open for public tastings.
Georgia beer companies are speaking out against the regulations, saying restrictions not only prevent breweries from growing, but also stagnate job growth and creative development. And this spring they’re taking action in the Georgia state legislature to put the Peach State on par with the rest of the country.
Last week, Sen. Hunter Hill (R-Smyrna) introduced Senate Bill 63 — colloquially known as the Beer Jobs Bill — to lawmakers after continued lobbying efforts by the Georgia Craft Brewers Guild to modernize state alcohol distribution laws. Under the proposed bill, which would repeal current regulations, both production breweries and brewpubs would be able to sell no more than a 12-pack of their beer directly to customers. It would also permit breweries to set their own hours and sell their beer up to the legal limit of 72 oz. per person, per day.
Nancy Palmer, executive director of the GCBG, said for the few craft breweries that have managed to set up shop in Georgia, the bill would make business easier while also providing tangible economic benefits.
“It’s very difficult for these 37 small businesses to make such a big change in such an old system, and there really does have to be a public outcry that says, ‘We’re ready as a state for this,’” she said.
An antiquated system
Although being ranked one of the most business-friendly states in the country, Georgia’s support of craft breweries is still stifled by nearly 80-year-old laws that prevent these small businesses from growing.
Palmer said the regulations that prevent breweries from selling samples and cases of beer were created during a time when monopolies and organized crime was rampant in the U.S.
“When the system was created, there were maybe all of 40 breweries in the whole country. The idea was to make it so that breweries didn’t have a whole lot of power,” she said.
Under the three-tier system which currently governs how craft beer is sold in Georgia, breweries must sell their product to distributors, who in turn sell it to retailers such as liquor stores and bars. In order to prevent monopolies, breweries were prohibited from selling their product to anyone but distributors. However, Palmer said the regulations that govern the system today actually do more harm than good for beer companies and those who run them.
“The reality of the market is that it’s tremendously different today than it ever has been,” she said. “Now that we’ve got all of these little craft breweries, a bill that was initially meant to protect the public is now actually hurting.”
With more than 3,000 breweries in the country, craft beer is a lucrative industry, making more than $14.3 billion in sales in the U.S. during 2013 alone. Should the Beer Jobs Bill pass, the GCBG estimates beer sales at breweries would pump $375 million into the economy while providing 1,459 direct jobs. Palmer said the potential for economic growth is enormous, as for every one job at a brewery there are three more to go with it in the other tiers of the system.
“What we need to do is encourage this growing industry,” she said. “This industry is growing hand over fist — multiple percentage points per year, making a lot of money, a bunch of inroads — and there’s no reason that Georgians shouldn’t be able to take advantage of that.”
Photo by Stephanie Lennox
Carmen Miranda-Fermin, the tours and events manager at Terrapin, works first-hand with both beer distributors and customers on a daily basis. She said although distributors get the better end of the deal by controlling the flow of alcohol sales, breweries could not survive without them and do not want to do away with the tiered system.
“We’re not asking to get rid of the system. We like our distributor partners; we need them to be successful,” she said. “But this system was set up forever ago in a climate where they were kind of trying to break up organized crime, in an era when they were trying to break up monopolies. Obviously, that’s not the era we live in anymore. So these laws are extremely out of touch with the way our economy runs now.”
Beyond restrictions on beer sales, Miranda-Fermin said Georgia’s craft brewery regulations oftentimes don’t make sense. She said breweries legally cannot provide or host companies that sell food during tasting hours, and, if customers call to ask where they can buy Terrapin beer, they cannot tell them because it is seen as “account favoritism.”
Miranda-Fermin said the problem isn’t exclusive to the traditionally conservative Deep South, either — every state neighboring Georgia has already modernized regulations to create a favorable environment for craft breweries.
“It’s not a party issue, it’s not a religious issue — it is literally just the influence of our distributor partners,” she said. “We’re the only state in the Southeast where breweries can’t sell a pint of beer at their brewery or a six-pack to go. When you think about it, if Alabama is more progressive than you, then you’re lagging behind.”
‘Asheville with crappy laws’
Because state regulations make it hard for new beer companies to start up, Georgia is ranked 47th in the country for the number of craft breweries per capita. But that still didn’t stop Chris Herron.
Herron opened Creature Comforts last April well-aware of the obstacles posed by Georgia’s strict regulations on breweries. For him, tapping into Athens’ potential to become a great craft beer city was too great a chance to pass up.
“This city is the perfect city for brewing. And that’s why we’re here. This is the perfect place for a brewery,” said Herron, Creature Comforts’ CEO.
Photo by John Roark
It wasn’t easy. Herron said given the strict nature of Georgia’s craft beer regulations, it takes a significant investment to open a brewery, sometimes costing upward of $2 million just to get off the ground.
But in the craft beer industry, brewmasters agree location is everything.
Leah Ashburn, president of the Asheville-based Highland Brewing Co., said the business — founded by her father in 1994 as the first brewery in western North Carolina since Prohibition — thrived largely because of the atmosphere the city provided.
“[Asheville] has a culture that is similar to the great beer cities out west that have really paved the way for craft beer nationally, like Portland and Denver,” she said. “There’s this amazing little pocket in North Carolina where there are a lot of similarities: mountains, love of the outdoors, a pursuit of quality of life. Those set the stage and my father had a great vision — he could see the possibilities here.”
Thanks to North Carolina’s relatively lax regulations, Ashburn said Highland and nearly 40 other breweries like it have thrived in the Asheville area for decades, providing both jobs for locals and a destination for tourists.
“We’re an economic benefit to Asheville because we’re sending our beer to other places and manufacturing it all here,” she said. “Since we were the first brewery in town, we’ve also started a trend where one small business now becomes an industry in Asheville. It’s really exciting to have a new industry pop up, and one that people are really excited about.”
Herron said if Georgia lawmakers passed the Beer Jobs Bill to create laws similar to North Carolina’s, there is no reason Athens couldn’t get another three to five more breweries in the next couple of years and compete with other big craft beer cities.
Photo by Stephanie Lennox
“With the law changes, it’s going to be a lot easier to physically open a brewery because you’re able to make money early on without having $1.5-$2 million in investment, and with that comes tourism,” he said. “Athens is Asheville with crappy laws. This place with different laws, I believe this could have the same kind of environment that you see in Asheville.”
Palmer said if the government adopts laws that are more favorable for craft beer companies, Georgia’s multibillion-dollar tourism industry would grow significantly, as visiting breweries is becoming increasingly popular, especially among younger demographics.
“Tourism is a huge piece of the cultural shift we’re going to see; more people coming in to visit breweries, to see breweries, so they can buy that souvenir package to go,” she said.
Brewing better beer
Beyond the monetary drawbacks to strict brewing laws, local brewmasters say imposing strict regulations on breweries does not serve the interests of those who enjoy craft beer.
If the Beer Jobs Bill was passed, Herron said craft breweries in Georgia may be likely to take more risks when it comes to creating new varieties of beer for their customers.
“[The law] doesn’t really incentivize breweries the same way that you would in Asheville to be super creative, and it also means then that people don’t necessarily come back as regularly as they would if we were able to put new stuff on tap all the time,” he said. “We can brew small batches of stuff if we really need to, but there’s no way to make any money on that because we can’t sell them to a customer who walks in the door.”
Innovation is increasingly becoming the name of the game for success in the craft beer industry. At Highland, Ashburn said part of the key to their success was their ability to innovate and create cutting-edge beers that set them apart from competitors.
“I think you have to have good beer. That’s becoming more and more of standard,” she said. “20 years ago, the beer didn’t have to be good to survive for a while. Now — with over 3,000 breweries in the country — you need to make good beer, and it needs to be consistent.”
At Creature Comforts, only four beers are consistently on tap during tasting hours. While Terrapin has slightly more, Miranda-Fermin said the goal of any craft brewery is to educate people about the benefits of craft beer, not simply to get people drunk.
“We don’t just want to be a place where you belly up to the bar and sit there for five hours getting drunk with your friends,” she said. “The ultimate goal is just to sell beer, but to the end of furthering craft beer.”
Photo by Stephanie Lennox
Herron agreed, saying the purpose of staying open for more hours during the day is not to make a profit off Athenians’ drunken antics, but rather to create a culture where beer is celebrated as a commodity.
“They’re going to have an appreciation for what they’re doing and they’re going to look at beer as a real consumer product, hopefully the way they look at a fine meal as opposed to getting fast food,” he said. “The more breweries you have, the better you help combat binge drinking as well because it’s more opportunity for people to get educated.”
Herron said if the Beer Jobs Bill fails to pass this term, Georgia will ultimately be left behind by states that are more willing to embrace craft beer as a means of promoting small business.
“At the end of the day, this is about much bigger than individual breweries. It’s about business and small business and making an environment for small business to succeed,” he said. “As a guy who grew up in Georgia my whole life — who’s paid taxes in Georgia my whole life, who votes and elects officials since I was allowed to — it’s disappointing to feel like we’re passing on an incredible opportunity to create more jobs, to increase tourism, to invest in an industry that’s growing.”
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