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Beer Bust

How state laws leave Georgia microbrewers with a hangover


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On the last Saturday of September, the Brick Store Pub in Decatur hosted the first of several gatherings intended to honor Crawford Moran and the company he'd closed just weeks before -- Dogwood Brewing Co.

By the end of the evening, bartenders had drained the final kegs of Dogwood's last specialty beer, a rich lager called Octoberfest, leaving customers to ponder one of the unassailable laws of the beer business: A good beer does not guarantee a successful brewery.

In few places is that dictum more true than in Georgia. In a state with almost 9 million people, only three microbreweries currently produce and bottle their own beer. Compare that to Colorado, which has half our population and 25 microbreweries, or Oregon, whose 3.5 million residents are served by 29 microbreweries.

Industry experts float a lot of theories for the disparity, including the Southeast's unremarkable history of beermaking, hot weather that discourages darker brews, and fickle and unimaginative beer drinkers. But no single factor holds more sway over the fate of a Georgia microbrewery than state law.

"It's a disaster," Moran says. "I don't mean to sound over the top, but I truly believe this: We have men and women in uniform dying, sacrificing their lives in the Mideast and around the world in the name of freedom, but I don't have the freedom in my hometown of Atlanta to change the distributor of my beer. That doesn't make any sense to me. That's not freedom."

Indeed, in the beer and booze business, the notion of freedom -- as in a free market where competition rewards consumers -- is fiction. In Georgia, as in most states, brewers must sell their beer through a distributor and only through a distributor. A brewer isn't allowed to sell so much as a bottle from its brewery. And if the brewer is unhappy with the distributor, severing that relationship can be all but impossible. Thus, a brewery's fortunes can rise and fall on the quality of the distributor it chooses.

"Who is this system protecting?" Moran says. "It protects the big interests, and distributors donate a lot of money to state politicians. It's a racket is what it is."

The 36-year-old Moran traces his fascination with beer making to his 20s, when a love of beer led to the realization that he could actually make it himself. His first batch came after a friend coached him through the steps by phone. From there, it didn't take long. By his late 20s, he'd earned a master's in comparative literature from the University of North Carolina. But a weeklong course at the Siebel Institute in Chicago, one of the nation's two brewing schools, determined his destiny.

At 28, with $750,000 from local investors, he opened Dogwood Brewing. The local brewing scene was not so different than it is today - just a few breweries trying to find a toehold in a cautious market that favors Budweiser, Miller and Coors. But small brewers are inveterate optimists, and Moran's greatest pleasure was seeing the smile on a customer's face after taking a sip of his India Pale Ale for the first time.

Within a year, Moran's beers were taking home medals from competitions around the world. Weekly tastings at the brewery off Chattahoochee Avenue became pilgrimages. Fans would bring their own mugs. Not that Moran didn't have friends before, but the number multiplied when he opened a brewery. He remembers getting phone call after phone call one Super Bowl Sunday, everyone inviting him over to watch the game, and could he bring a few beers?

As a start-up brewer, Moran says, his most important decision -- more important than the design of his labels, the strain of yeast he used, or the varieties of beer he cooked up -- was choosing a distributor. In Georgia, as in most states, all alcohol must go through an intermediary -- a distributor -- on its way from the manufacturer to the store shelves. It's referred to as the "three-tier system," and it dates back decades.

The three-tier system draws hard and fast lines between those who make alcohol, those who wholesale it, and those who sell it to consumers. If you do one, you can't do either of the other two. The idea was to provide an orderly way to regulate a product that has traditionally attracted some unsavory characters.

Through the three-tier system, the government can track alcohol all the way from the distillery, brewery or winery right up to the grocery store shelf -- and can tax it every step of the way. Buy a six-pack at Green's, and the price includes not only sales tax, but taxes paid by the brewer and the distributor. The Georgia Beer Wholesalers Association estimates that $3.58 of every case of beer goes to pay federal, state or local taxes.


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