Why microbrewery sales “stink” in the Southern United States

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Posted Thu, Apr 25, 2013

“I don’t think you can make a good beer with water that tastes like sulfur.” — Stephan Gohmann, BB&T professor of Free Enterprise at the University of Louisville.

Dr. Stephen Gohmann speaks to students about the economics of beer Thursday April 4 at the Tivoli Student Union. (Photo By Scott Lentz ¥ slentz@msudenver.edu

Dr. Stephen Gohmann speaks to students about the economics of beer Thursday April 4 at the Tivoli Student Union. (Photo By Scott Lentz ¥ slentz@msudenver.edu)

Coloradoans  have been spoiled by the amount of quality microbreweries that thrive throughout the state. There are many reasons, according to Ghomann, as to why there is such a difference in the success of microbreweries throughout the country.

“The water tastes like sulfur,” Gohmann says half-jokingly when discussing beer production in the Southern U.S. But there are far more details that explain the struggle it takes to establish a successful microbrewery in some areas of the country, specifically the South.

A microbrewery is defined as a brewery that produces less than 15,000 barrels of drink per year, as soon as that limit is met, the brewery is placed in the Regional Brewery category.

New Belgium Brewing Co., producer of Fat Tire, is one of the most successful microbreweries in Colorado. Located in Fort Collins, they distribute to liquor stores, bars and restaurants throughout Colorado and a number of other states.  “They (the co-founders, Jeff Lebesch and Kim Jordan)  love it here, and the fact that Colorado has some of the best water in the country was just an added bonus for making great beer,” says Mothership Hostess Penelope Gilliland of New Belgium Brewing Co.

After prohibition it became the states responsibility to decide how they would handle some aspects of the beer sales. In most states there is a three-tier system, produce, distribute, sell to the consumer/consume. In this system the distributor charges the producer to take the brew from the production facility to a salable location. Some states allow for producers to distribute their own product, which benefits them; however some states require a middleman. Many of these states are located in the south, such as, Alabama, Georgia, Mississippi, Louisiana and more. Colorado allows for self-distribution.

“Then religion plays a role,” says Gohmann, “very religious areas are going to pass laws against alcohol.” For instance the sale of alcohol on Sundays is illegal in many southern states, such as Oklahoma, Alabama and Georgia. Having a whole day where your product cannot be sold is going to hurt the “little guy” more than the big business.

While Colorado is a little late to the game, it officially allowed for the sale of alcohol on Sundays by a bill signed on April 14, 2008. Gilliland says, “Sales have increased on Sundays since the laws changed a few years ago.”

There is also less incentive to open a brewery in Southern states because they typically have a higher sales tax on beer per gallon than other states, causing people to buy less. Tennessee has the highest sales tax at $1.17, with Alabama in third at $1.05, and Georgia in fourth at $1.01. Colorado sits comfortably at 45th with a sales tax of $0.08 per gallon.

Within the past few years the numbers have favored the microbreweries. In 2011, 250 opened, while only 37 shut down across the country. “Microbreweries respond to the institution, and as the rules of the game make it easier to open a business more will open.”

About Andrew Kral

My name is Andrew and I am a student at Metro State University majoring in journalism. I am looking to enter the reporting field and write for a paper in the future. I enjoy writing and feel that it is an important form of expression and fills a vital role of communication to the masses.

View all posts by Andrew Kral

2 Responses to “Why microbrewery sales “stink” in the Southern United States”

  1. Aaron Lambert Says:

    Good job! Cool subject matter, and an insightful and informative read.

    Reply

  2. Davy Says:

    Good story. Great quotes used.

    Reply

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