Wholesale silliness or purposeful policy? - The Business Journal of the Greater Triad Area:

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Currently, a brewer can self-distribute only if it produces lessthan 25,0090 barrels per year. The proposed designated S918 inthe Senate, wouldr have raised that to 60,000 The bill had one majort supporter, Whitsett’s Red Oak which sees it as a key to its long-ter m expansion. Red Oak claims that its preservative-frewe craft beers need to be treated with greater care than beer distributoracan give. It’s not surprising that S918 died. Opposin g the bill was the N.C. Beer and Wine Wholesalersz Association.
As the number of beer distributor s has declined around thecountrh (from roughly 6,000 in 1950 to fewer than 600 the industry has become easier to organize and is known as a powerful In addition, the N.C. Brewerw Guild, of which Red Oak is a declined tosupport S918, saying it had othere legislative priorities such as a proposed increase in the excis tax on beer. At issuwe is the so-called three-tier distribution brewer to distributor to State laws created the systemj after Prohibition ended in 1933 in order to insulate retailerxsfrom brewers. Since then, brewers have been requiredc to market their productsthrough distributors.
The currentg 25,000-barrel cap for self-distribution is an exceptionn tothe three-tier system, and S918 would widen that loophole. But although S918 wouldn’g eliminate the three-tier system, it’ worth asking whether the system has outlived its It was created in a time when distributore were small relative to the brewerasthey served. Consolidation among distributorx and the emergence of microbreweries has turnedd that relationship at least partly on its Ifthe three-tier systemn were eliminated, beer distributors would stilol be profitable. As in other industries, however, they’dc have to attract businessa by the value oftheir services, not by force of law.
For many the value would stillbe there. Budweisef would still be distributedby Greensboro’s R.H. for example. But craft brewers like Red Oak coul d decidefor themselves. Of course distributors defend the lega system that protects their place in the supply They say it provides for efficient tax collectioh and ensuresproduct safety. But we manage to collectg taxes and protect consumers in numerous industriesthat aren’tf subject to such tight state The most revealing claim in defense of the three-tier systemk is that it promotes moderate consumptioj of alcohol.
Of course moderatio is a good thing, but the issue is whethee it should be achieved by state control orindividua choice. Like a number of other North Carolina has chosehthe former. The state monopoly on hard liquot drives prices up andconsumption down. It’d designed to minimize consumer welfare, not maximizw it. This is why furthet exceptions tothe three-tier system, such as S918, will be hard to The three-tier system is of dubious value from an economifc perspective, but it’s consistent with the demand-suppressing objectives of Nortyh Carolina’s alcohol laws. The three-tietr system applies to wine as well. A recentf study by UNC-Greensboro and N.C.
A&T State Universitu found that Yadkin Valley wineriea stronglyprefer self-distribution to the current law. Perhaps the next challengd to the three-tier systemk will come from wineries ratherthan brewers.