Help small business. Get government out of the way. Unleash the free market. Encourage entrepreneurs. Grow jobs. Make Georgia more competitive.
You’ve heard many a Georgia Republican pledge allegiance to these principles in many an election. So why is a bill that ticks all those boxes being held up without so much as a committee vote?
I’m talking about Senate Bill 63. The “Beer Jobs Bill” would allow breweries to sell direct to consumers visiting their facilities: up to 72 ounces for consumption on site, and up to 144 ounces to take home.
Almost every other state allows breweries to make on-site sales. Georgia already allows wineries to do so. So why not Georgia’s breweries?
The stakes couldn’t be higher for Georgia’s craft brewers. They’re operating in a capital-intensive, fiercely competitive market.
Today, a brewery must sell about 5,000 barrels of beer a year to hit the break-even point, says Crawford Moran, owner of Five Seasons Brewing Co. Other estimates put the number even higher. In Georgia’s three-tier system, those sales must go through wholesalers to retailers. The brewer can expect to get about half of what a six-pack will fetch at a supermarket or package store.
In states with on-site sales, though, Moran says brewers can turn a profit by selling as few as 700 barrels a year because the margins on those sales are so much higher.
“By being able to sell direct,” he says, “it just allows you to get to that (break-even) point so much easier. And that then allows you to take that profit and invest back in the business, instead of constantly having low, low-margin sales.”
While Georgia has seen more craft breweries open up, we still lag other comparable states such as North Carolina, where beer tourism is thriving. And that’s not the worst of it.
“If you look at the median volume of beer produced” by Georgia’s brewers, Moran says, “it’s below the break-even point. Do the math on that … most people aren’t making any money.”
As a result, he predicts, “I don’t think half of them are going to be around in two or three years.”
So, one last time: Why is pro-market, pro-small business, pro-growth SB 63 going nowhere?
As far as anyone can tell, it’s because the wholesalers don’t want it. And in Georgia, the wholesalers wield great political influence.
Last year alone, according to data from the National Institute on Money in State Politics, wholesalers gave over $950,000 to candidates in Georgia. The vast majority came from seven companies and their owners (e.g., Georgia Crown and the Leebern family, and General Wholesale and the Young family) plus two trade associations.
Almost $50,000 went to Lt. Gov. Casey Cagle, who of course has a lot to say about what does and doesn’t happen in the Senate. Donations to Gov. Nathan Deal hit nearly $112,000. Speaker David Ralston received $35,000. Those are big numbers for Georgia’s big three, but keep in mind their total represents only 20 percent of what the wholesalers gave to all candidates in the state.
SB 63 would not harm the wholesale beer trade; one industry executive told a Senate committee as much in a recent hearing. But it would be a big deal for the small brewers who could be growing their businesses and creating jobs, if only a Republican-led government would get out of the way.