Although North Carolina has the most breweries in the South, the region still lags behind other parts of the United States in the number of craft breweries per capita.
Stephan Gohmann, a professor of free enterprise and economics at the University of Louisville, recently published a report about the lack of breweries in the South. Gohmann said the work was prompted when he went on beer rating sites and saw that Southern states were rarely ranked in the top.
It prompted a research question: why does the South have fewer entrepreneurial brewers?
“The answer is simple economics," Gohmann said in an email. "The costs are higher because there are more regulations that make it difficult for microbreweries to succeed."
Bart Watson, chief economist of the Brewer’s Association, said regulation such as excise taxes plays a role in preventing new breweries from entering the market in Southern states.
“A lot of this goes back to path dependency — that because other states changed their regulatory structures earlier, they got more breweries," he said.
Watson said the availability of craft beer fuels demand for more investment as people try new beer.
“People were introduced to local beer, that created new demand, and the South hasn’t seen quite as much of that virtuous cycle yet,” said Watson. “I do think it is coming but it’s just going to take more time.”
Scott Maitland, owner of Top of the Hill, said his brewery has felt some of the effects of North Carolina regulations.
“State regulations had to be changed in 1989 to allow brewpubs, and state regulations made it extremely difficult to operate a distillery,” said Matiland in an email. “Our brewery, and especially our distillery, operate in spite of, not because of, state regulations.”
Maitland said some of these regulations include the inability to sell bottles of their own product — instead they sell it through the N.C. ABC store system.
Gohmann said the history of religious conservatism, as well as the political power of religious groups, are important factors in Southern brewery development.
Maitland said they generally maintain a good relationship with religious groups — but one incident stood out.
“The Baptist church across the street (University Baptist Church) once gave a sermon likening the presence of our brewery and their church across the street from each other as an example of the presence of Christ and the Devil, which I found amusing, especially in light of Christ’s first recognized miracle being the turning of water into wine,” Maitland said.
Will Isley, a "Brew Czar" at Steel Strings Brewery in Carrboro and a UNC graduate, said they have a good relationship with the local religious community.
“We actually had a group come and sing hymns on a Sunday, and they did some kind of Bible and beer event — It was led by a local pastor,” Isley said.
But he said he could see the effects of religion on previous legislation.
“In North Carolina until 1978, I think you couldn’t purchase liquor in bars, so I do think our alcohol culture is a little bit different in the South,” he said.
He added that they cannot sell beer before noon on Sundays.
“I’m not sure what the reasoning for that is outside of the fact that churches are open from 10-12 on Sunday, so they don’t want people selling alcohol during that time," Isley said.
Isley said N.C. laws in general are ideal for craft beer, and have incentivized smaller breweries — which is likely why North Carolina has the most breweries in the South.
Gohmann said he also found the state to be at the forefront of brewery growth, and he predicts as the population ages, the demand will grow, which will translate into policy changes.
“Also, politicians will see the potential for job growth, economic growth and tax revenue growth if they make it easier for breweries to open,” he concluded. “So yes, there is hope in the South.”
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