Beer Bust 

How state laws leave Georgia microbrewers with a hangover

Page 4 of 5

Today, although Bensch insists he can taste the difference from batch to batch, Sweetwater's consistency -- especially in its flagship brew, 420 -- wins plaudits from the competition.

"I don't think they've ever put out a bad bottle of beer," says Greg Kelly, founder of Atlanta Brewing, which produces Red Brick Ale and Laughing Skull, among others, from its brewery in Midtown.

Consistent quality and taste is an imperative in the beer business, where consumers are confronted with dozens of choices at the grocery store. Sell a six-pack that foams over when your customer cracks it open, and you may have lost that customer for good. Dogwood had just such a problem several years ago, and even went so far as to pull product from retailers' shelves.

But a product's quality won't mean much if it's not wrapped in a sunny package. Sweetwater's label has its fish and its motto, "Don't Float the Mainstream." Dogwood's label, on the other hand, wasn't eye-catching, says Pete Marte, who co-founded Thunderhead Distributing and is now Southeast marketing manager for Flying Dog, a Colorado microbrewery. "Crawford's packaging was not as good as it could have been," Marte says.

What's more, the unwritten rules of beer sales in Georgia are stacked against small brewers, Marte says. He learned the hard way with Thunderhead.

"Let's say I want to go into a bar, as a distributor, and get a draft line for one of my brands. That draft came at a cost to the bar owner. And the bar owner has a loyalty to the people who gave the system to him. So I've got to buy his loyalty away from him by giving him free product."

That free product could be a keg at no charge. Or a discount on the first few. It doesn't matter; what matters is that the distributor's brand is now on tap, and his competitor's brand isn't. Like payola, it's illegal. But since both parties benefit -- the bar owner pays less for product, while the distributor scores another account -- neither is likely to rat on the other.

As a small distributor, Marte says, he couldn't play by those rules. "I didn't have a big enough brand to give away product," he says. And neither, he speculates, did Empire when it came to selling Dogwood. "Even as big as Empire is and as powerful they are, they were not competing on this level," Marte says. "They didn't go on the field to play to win in the beer business, and Crawford was a victim of that."

But as Marte also says, "Any business failure can be attributed to a number of things." How much any one factor -- the packaging, the payola, the competition -- figured in the demise of Dogwood is hard to say. Even Moran says Empire wasn't responsible for all his problems. But he is convinced that if he had a different distributor, he'd still be open today.

Gary Wolfe has another opinion. As regional sales manager at Empire, Wolfe chooses his words carefully when discussing Dogwood Brewing. "We're very proud to represent the brand," he says. "It was an important part of our beer portfolio." Indeed, the only other beer Empire distributes in Georgia is Sam Adams.

Wolfe says the realities of the marketplace crept in. Big brewers, looking to elbow their way into the craft beer market, were introducing their own specialty brands. And he says that better-positioned craft brewers, armed with huge marketing budgets, have the money to advertise "aggressively" through print and radio. "Other brands have suffered if they haven't been able to participate at those types of levels."

Wolfe says Empire never rejected Moran's request to release his brand and gave him the sales figues he'd need to shop for another distributor. "We told him we would work with him in that transition."

Moran calls Wolfe's assertation false, but does say that sales were up 20 percent at Dogwood compared to a year earlier. What's more, the new beer law in Georgia left Dogwood well positioned to take advantage of the higher-alcohol beers that could now be produced. Instead of being limited to beers with 6 percent alcohol, brewers could make beers with alcohol content up to 14 percent. "It played into what our brand was about," Moran says.

Moran says the jump in sales wasn't enough to offset his debts. Only a new distributor, he believed, could be his salvation.

Moran had one more option. He could have petitioned the state to allow him to hitch up to a new distributor. While it's done rarely, the state can release a supplier from a contract if it rules that the distributor is failing financially, breaking the law or not promoting the brand effectively. From what Moran says, this last clause seems custom-made for his type of complaint. But he didn't file the petition.

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