I knew Bill Sherrill was expanding his Red Oak Brewery along I-85/I-40 in Whitsett, but since Sherrill always seems to building something I didn’t pay too much attention to it, until I went out there this week and walked around the property.
Sherrill says when it’s done he’ll have about $40 million invested in it. He’s building a beer hall, which is a distinctive building that looks like an old red barn with half the roof raised up (see cover), a cannery, an art museum and a pretty elaborate bridge to get from the beer hall to the museum. It will also have fountains, pools, waterfalls, streams and, he claims, water that’s on fire – something I really want to see.
To pay for all of this, Sherrill has to sell a lot of beer, which is one reason state Rep. Jon Hardister was out there taking it all in. Hardister said he planned to file a bill this week in the state House to raise the cap on how much beer a brewery can sell before it has to hand its distribution off to a wholesaler.
The current cap for self-distributing is 25,000 barrels of beer a year. Which means if a brewery sells more than 25,000 barrels of beer, by state law they cannot sell directly to retailers but have to hire a beer wholesaler to handle distribution. It’s really hard to figure out what the purpose of the law is, unless it is to give business to beer wholesalers, which is kind of funny because the last folks in the state that need more help from the state are beer wholesalers.
The beer distribution system like many of the laws concerning alcoholic beverages, doesn’t seem to make sense. A wholesaler has a district, and by law no other wholesaler can sell the same brands in that district. So there is one Budweiser wholesaler in this area, R.H. Barringer, and no one else can wholesale Budweiser. If you’re a retailer in Greensboro, you have to buy your Budweiser from Barringer. It’s the system.
So the idea that the beer wholesalers would be threatened by a brewery making and selling 26,000 barrels of beer a year is laughable.
Hardister said, “I don’t see why we have a cap at all.”
Hardister said he was filing the bill to raise the cap, “Because it’s the right thing to do.”
Hardister said that whole idea of a cap and forcing people to do business a certain way went against the free enterprise system.
Sherrill can and will talk about why he doesn’t want to use a wholesaler for a good while, but you can boil most of it down to two main reasons.
Sherrill noted that his beers are unfiltered and unpasteurized. He said, “It’s alive and needs to be well cared for.” And Sherrill doesn’t trust anyone else to take care of his beer the way he does. As he said, “They don’t give a damn about my beer. They’ve got a lot of other brands to sell.”
The other reason is he doesn’t think he should be forced by the state to do it. Sherrill said, “It’s my beer. Why should I have to sign it over to someone else by law.”
Sherrill said that Red Oak sold 20,000 barrels of beer last year, so he’s getting ready to bump up against the cap.
When asked what happens if the legislature doesn’t raise the cap, Sherrill said, “Hell, I don’t know.”
Hardister said, “A brewery ought to be able to make the choice.” But under the current law, once a brewery goes over that 25,000 barrel cap, there is no choice. Legally they can no longer sell their own beer to retailers.
Sherrill has been fighting the battle to get the cap raised for a long time.
He said, “We started brewing in 1990, but we didn’t sell any beer until 1991. That first year we drank it all.” It’s a funny line, but it’s also true. They spent the first year getting the kinks out of the system and getting the formula down for Red Oak, which involved tasting a lot of different brews. As they say, it was a tough job, but somebody had to do it.
The big difference this year is the plethora of craft brewers that have sprung up in North Carolina. Not many of the new breweries are up against the cap, but a lot of them see that in their future, and they, too, would like to have the choice on how to distribute the beer they produce.
Sherrill said they started out making two beers Red Oak and the lighter Hummingbird, and they are still making two beers, along with some seasonal brews.
Red Oak is the second oldest brewery in the state and Sherrill says they distribute from Hickory to Shallotte. He said they currently sell more beer in North Carolina than any other brewery in the state. He said Olde Mecklenburg Brewery sold more beer, but it sells outside the state, while Red Oak only sells beer in North Carolina.
Hardister said that Olde Mecklenburg in Charlotte, which self-distributes, is right up against the cap and is also pushing for the cap to be raised.
Last year Olde Mecklenburg pulled out of this area, because to continue to serve both Greensboro and Charlotte it would have had to go over the cap and start using a wholesaler. Olde Mecklenburg is reportedly brewing 24,999 barrels of beer a year because it doesn’t want to lose control of its product.
The Olde Mecklenburg brewery could brew 100,000 barrels of beer a year but is on hold because of the cap on self-distribution.
When you think about all the time and effort that state and local governments put into recruiting jobs to the state, to put a halt on expansion like the state has done for Olde Mecklenburg and Red Oak seems counterproductive.
Hardister said he thought raising the cap had a lot of support in the legislature this year but that the big beer companies had a powerful lobby and it was tough to go up against them.
Walking around the Red Oak Brewery with Sherrill, looking at the current facility and the expansion, I couldn’t help but think about the first time Sherrill gave me a tour of the Red Oak Brewery in 1991, when it was in what was then Spring Garden Bar and Grill off Friendly Avenue near Guilford College. Sherrill had a couple of tanks but showed me this big room with room for 10 times more than he had. He told me he planned to fill up that room with storage tanks and then push out the wall and add some more.
He did all that, completely outgrew the site and moved the operation to its current location in Whitsett.
I toured the Red Oak Brewery in Whitsett not long after it opened, and again Sherrill showed me where they would expand, where the bottler would go and pointed out where he planned to build as the business grew.
So far the brewery has grown pretty much just like Sherrill said it would, but now unless the cap is lifted he’s going to have to go into a holding pattern and that seem right for someone who is working hard to grow a small business.
I wish I could find my notes from that first tour in 1991, because I know Sherrill made some great predictions. But if I remember correctly, I spilled beer all over them and had to call Sherrill up to write a story that wasn’t nearly as good as the story in my notes, but probably made a lot more sense.