Is South Carolina a good place to start a brewery? Many Upstate brewers say that state brewing laws have greatly improved in recent years, but regulations are still holding back smaller start-up companies.
And all agree that the beer tax of 77 cents a gallon is too high.
A new study from Clemson University says states that prohibit breweries from directly distributing their beers - such as South Carolina - are limiting industry growth and consumer choices. In the Palmetto State, breweries must use a distributor, and smaller brewpubs can’t distribute their product at all.
That includes Swamp Rabbit Brewery in Travelers Rest, which holds a brewpub license, though it doesn’t offer food. Owner Ben Pierson can only sell his ales and lagers in-house.
“If I could distribute, I would immediately start thinking about adding tanks and a canning line and more personnel,” said Pierson. “The laws here are not as progressive as in North Carolina,” where breweries can self-distribute up to 25,000 barrels annually. “It’s time to loosen up.”
In Anderson, Keston Helfrich hopes to get his Carolina Bauernhaus Ales brewery going this summer. Ideally, he’d like to self-distribute locally, but “we didn’t let that get in our way,” he said. “Other than North Carolina, this is the best state in the South for breweries.”
South Carolina breweries got a big boost from the 2013 “Pint Law” and the 2014 “Stone Bill.” The Pint Law lets breweries sell up to 48 ounces of beer to consumers in a 24-hour period. Previously, breweries were limited to just offering 4-ounce samples.
The Stone Bill allows breweries to get a food service permit and a retail permit and not have mandated limits on on-site consumption. Breweries also can have guest taps and sell wine.
Are laws preventing growth?
Clemson University economics Ph.D. candidate Jacob Burgdorf looked at brewery laws across the country from 1984, when craft brewers first started opening, through 2013. He says states that allow self-distribution had 75 percent more breweries opening than those requiring outside distributors.
South Carolina has 22 breweries and 14 brewpubs across the state. North Carolina has more than 120 breweries and brewpubs and allows brewers to self-distribute up to 25,000 barrels annually. A beer barrel is 31 gallons.
“The laws are still pretty restrictive” in South Carolina, said Burgdorf. “These laws were passed in the 1970s or even earlier before craft brewing existed. They were once about drinking too much, or to prevent Anheuser-Busch or Miller from getting too concentrated. They are limiting the control that brewers have over their own beer.”
South Carolina breweries could benefit if some state laws were relaxed, said Brook Bristow, director of the South Carolina Brewers Guild.
“Craft beer is all about innovation and we need to do the same with some of our laws,” he said. “Certainly, the excise tax is among the highest in the nation.” He would also like brewpubs to be allowed to distribute.
Deschutes Brewing of Portland, Oregon, and and Cigar City of Tampa, Florida, have eyed the Carolinas for an eastern expansion brewery. But they would have an issue in South Carolina if they wanted to operate both a brewery and a brewpub, Bristow said.
“The question is how they would move beer from a production brewery to a brewpub without having someone take it over there,” he said. “We need more flexibility. And we are so rigid that we can’t do that. We have made a lot of progress thanks to the work of a lot of people.”
Happy with distributors
Other South Carolina brewers say they are satisfied with their distributors, who handle the heavy lifting in delivering beer to restaurants, pubs and markets.
At Greenville’s Brewery 85, owner Will McCameron is hoping to soon be canning his beers for sale around the Upstate. He uses KW Beverage to distribute his products. “There are four of us working here, and I don’t have time to be in the market of selling beer,” he said. “My distributor does that for me, and it’s pretty much win-win.”
Quest Brewing of Greenville also uses KW to handle sales in the Upstate. In all, Quest has seven distributors in South Carolina, while in North Carolina, Empire Distributing handles those duties.
“Any sort of tax break would help smaller producers,” said Quest owner Don Richardson. “We would hope that those benefits would be passed along” to distributors and consumers.
John Bauknight, a partner at RJ Rockers brewery in Spartanburg, is generally satisfied with South Carolina brewing regulations since the Pint Law and Stone Bill were enacted. “Our current laws make it so much easier than when Rockers opened in 1997,” he said. “The only changes that we would like to see would be for brewpubs to have the ability to distribute through wholesalers.”
He would also like brewpubs to be able to produce more than the current 2,000 barrels of beer annually “to a more reasonable number or no cap at all.”
Bristow is optimistic that South Carolina brewing laws will continue to ease. “Those laws have an effect on who is opening and the number of jobs that are being created,” he said. “There is still work to do. Will it be soon? I hope so.”