New beer laws could boost brewing in Auburn

The brewing kettles tucked into the backroom of the Olde Auburn Ale House are long gone, and the brewery Chris Collier dreamed of building went north.

Each in their own way were victims of financial realities that, until this year, made brewing beer in Alabama a difficult business.

“Two years ago, I would have never considered opening a brewery in Alabama,” said Collier, the brewer at the North-Carolina-based Nantahala Brewing Company. “Not because I didn’t want to, but because it wouldn’t have made any fiscal sense.”

Collier, who lives in Atlanta and commutes to North Carolina on the weekends to brew, said the beer-friendly laws and culture of North Carolina made the choice of where to locate his brewery easy.

But during its last session, the Alabama Legislature changed state laws, giving brewpubs and breweries more freedom to bring their beer to a wider Alabama audience.

The recent legislation was a compromise between advocates such as grassroots group Free the Hops and the distributors who currently sell beer across the state to retailers.

The new regulations still tether brewpubs to historic buildings or historic districts in counties where brewing occurred before Prohibition, but it frees them of the requirement to also operate as 80-seat restaurants and to only sell their beer to customers on premise. The new law also allows brewpubs to sell their beer to wholesalers for retail sale off premise.

The revised law allows breweries to operate taprooms, where beer lovers may sample brews as well as enjoy full pints.

The new regulations allow enough wiggle room for the breweries to get off the ground and have a chance and making a profit, but how much latitude is afforded by the revised law is a question for lawyers, and the ABC, said Stuart Carter of Free the Hops.

As an example, Carter noted the restriction to counties with brewing histories before Prohibition may be less prohibitive than is seems.

Carter said any beer to be had in Alabama’s wilder past would have been brewed by the settlers establishing the communities across the state.

“How do you prove something didn’t happen? It is pretty difficult,” he said.

Carter said the beer consumer advocacy group is unlikely to return to brewpub laws — it achieved its goal of making more beer available — but it would likely take up container size again in the new year during the next legislative session. Alabama is one of the few states which limit beer to 16-oz containers. The state also restricts home brewing.

Container size and the previous restrictions — preventing brewpubs from packaging for off-premise sales and binding breweries to only selling to wholesalers — are anachronisms in a Southeast where beer brewing as an industry has mostly flourished outside the state’s borders.

Collier said while the change to Alabama law is encouraging, he has no current plans to move his brewery, which opened in 2010. There’s just too much incentive to keep it where it is.

“Basically, the reason I went to North Carolina is threefold: You can self-distribute, we can have a taproom and sell off-premise, and as you grow your business, you can write your contract anyway you want,” Collier said.

Collier estimates North Carolina has more breweries and brewpubs than the rest of its Southern neighbors combined.

“That is not coincidence,” he said.

Brewers pay expensive excise taxes — about $25 per keg — on their beer, but it is a price that allows them to operate their businesses with relative freedom.

“I’m not a fan of taxes in any form, but it is a lesson in economics,” Collier said. “It doesn’t create thousands of jobs, but the bigger thing it does is it supplements that tax revenue for the state.”

While more breweries offer a potential economic incentive, the change would also help reform Alabama’s reputation, Carter said.

“You can’t put numbers on that,” Carter said.

As an example of that intangible value, Carter noted the state’s recent competition with neighboring Tennessee for a Volkswagen plant. Alabama lost to its northern neighbor. Among the reasons was better quality of life. Buried in that consideration was beer, Carter said.

“The Germans would not have been able to drink their own beer at the opening of their plant,” Carter said.

Collier, Carter and Ale House owner Daryl Cargile say the struggle of brewpubs and breweries in Alabama is partly a cultural one.

“The Southeast as a whole does not do well with brewpubs,” Cargile said.

Cargile said other parts of the country, such as the Midwest, saw their community breweries and pubs close during Prohibition, but those same communities made sure the beer makers returned when the law was repealed.

For the most part in the South, the breweries didn’t open back up, Cargile said.

Cargile brewed beer in Auburn for eight years from 2000 until 2008, when he sold his equipment.

Cargile said the Ale House beers had a following of local fans, but the brews only sold about half as well as he had hoped. Cargile said the brewpub's beer accounted for about 25 percent of sales when he had hoped it would be 50 percent or more.

“That was the biggest disappointment,” he said.

The brewpub’s beers faced stiff competition from domestics half their price.

“In this college town, people want dollar-and-a-half bottle beers and cheap brown whiskey,” Cargile said.

But the more serious threat came from skyrocketing ingredient prices.

Cargile said the price of ingredients quadrupled in the years before he finally sold the brewery.

“There’s nothing you can do about that,” he said.

Cargile said he had to increase prices to try to offset the spike, leaving his beer more expensive than the competing labels.

“I couldn’t do it as efficiently as I did when I started,” he said.

He said it was hard to compete against breweries which could buy grains and other ingredients by the box car.

“I can’t produce it as cheap as they can,” he said.

Nor could he sell it off-premise. Cargile said he found himself caught between the less expensive domestics and the large craft-beer producers like Samuel Adams.

“I was fighting the big boys and other cheap beers,” he said.

So Cargile sold his brewery. Now pool tables have replaced the stainless steel equipment.

Cargile said he probably won’t brew again at the downtown pub and eatery — since he sold his equipment, the variety of beer available in Alabama has expanded, thanks, in part, to a push by Free the Hops and others for 2009 legislation to allow beer with higher alcohol content.

But Cargile said he would possibly consider opening a micro brewery with a bigger capacity than the Ale House in the future, allowing him to sell kegs to bars.

Carter hopes other entrepreneurs like Cargile will take that chance in Alabama.

While the pubs and breweries would likely concentrate in the population centers such as Huntsville and Birmingham, Cargile said some will take chances on smaller cities and college towns such as Auburn.

“What my gut is saying to me is in areas like Auburn, you will see smaller, much cozier, much more inventive breweries,” Carter said.