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STATEWIDE

Pour performance

Under the influence of strict state laws, spirits cannot flow as free as beer and wine.
 
by Spencer Campbell

Tim Ferris makes whiskey in the part of Rutherford County known as Golden Valley. To get to his distillery, visitors turn onto an obscure road outside Bostic and pass antique automobiles rusting in ramshackle wooden garages. Down this path and a slight hill stands the 6,000-square-foot edifice Ferris built to store equipment for his Defiant Marine Inc., an underwater-salvage company. It ended up not needing the space, so he bought a still from a local and taught himself how to make whiskey. While traveling the world — refloating vessels that ran aground in places such as Greenland and Italy — he came to appreciate single-malt whiskey, and he put his own twist on how to make it. “Barrels don’t age whiskey well,” Ferris tells two couples who made the trek today. He holds up three sticks that look like 2-foot-long wooden screws. “Vintners found a better way to get oak into the wine.” The infusion spirals are more efficient than wooden barrels at giving whiskey a toasted-oak flavor, reducing the time it needs to age. They’re why Defiant single malt went to market just two years after Ferris, 37, founded Blue Ridge Distilling Co. in 2010.

“This is nothing new in Golden Valley,” one of the women says. “It’s just legal now.” Despite North Carolina’s reputation for making illicit moonshine, anyone with the right permits can make liquor. The first legal distillery since Prohibition opened nearly a decade ago, and more than a dozen are now in the state. Defiant hit shelves in December 2012, and it’s now available in North Carolina and nine other states. Ferris, a Connecticut native who moved to Rutherford County as a teenager, says it generates about $160,000 a month in sales. “We’re profitable. By March 1, there’s no way we’re going to be able to keep up with demand.” That’s not stopping him from trying. He recently ordered two 2,000-liter stills to replace the 1,000-liter original and asked for a quote on a 5,000-liter one. He admits to playing “financial chicken” but sees a boom on the horizon. “Microdistilling is where microbrewing was 30 years ago.” He means it’s in a nascent stage of impending popularity, but he could be describing the regulatory journey distillers are just beginning.

“You want to try a little whiskey?” Ferris asks the visitors, who shout back, “Oh, yeah!” He pours Defiant into small, clear glasses that narrow near the rim. “It’s an acquired taste,” a woman says. “It’s getting better the more I try it.” Her husband disagrees — “I acquired it right away” — and asks where he can buy some. Ferris can serve each visitor 1½ ounces, but he can’t sell them a drop. Not at the distillery. “Because of law created by the organized-crime syndicate called the North Carolina Alcoholic Beverage Control Commission,” Ferris says. That’s not entirely true. First of all, the commission doesn’t make laws. It manages the three-tier system of alcohol distribution and sales the state created after Prohibition in which manufacturers must sell to wholesalers who sell to retailers. (The ABC Commission controls spirits, which move through state warehouses. That’s how county and municipal ABC boards stock their liquor stores. It’s more of an overseer for wine and beer, sold under license by private retailers.) Second, there’s no law that prohibits Blue Ridge Distilling from selling booze to consumers; the problem is, there’s no rule saying it can. The General Statutes state “the sale, purchase, transportation, manufacture, consumption, and possession of alcoholic beverages shall be prohibited except as authorized.” This has become burdensome over the last few decades as alcohol — wine and beer especially — has blossomed into a thriving industry in North Carolina. Craft distillers are starting to follow the well-marked path left by brewers and vintners.

The Tar Heel wine industry dates to 1835, when Sidney Weller founded the state’s first commercial winery in Halifax County. By focusing on muscadine wine from native scuppernong grapes, Medoc Vineyards became the most productive winery in the nation. The industry grew to 25 wineries by the 1850s, was decimated by the Civil War, rebounded to more than two dozen and led U.S. production in the early 20th century, only to be wiped out when North Carolina instituted prohibition in 1909. It wouldn’t begin another recovery until the 1970s. So wine had paid its dues when, in the early 1980s, lawmakers allowed vintners to sell their wares at their wineries, encouraging tourism. Twenty years later, the General Assembly let small wineries bypass wholesalers and self-distribute. In a 2011 paper comparing Virginia’s and North Carolina’s wine industries, a Virginia Tech agriculture economist credited the self-distribution system with sparking a rush of Tar Heel wineries. Their number grew from 20 the year before the law to nearly 150 by the spring of 2013. The industry’s total economic impact increased 58% from 2005 to 2009 — to $1.3 billion — according to a report commissioned by the N.C. Wine and Grape Council and the N.C. Division of Tourism, Film and Sports Development.   

Uli Bennewitz — reared in Bavaria, Germany, where monks reputedly started the first brewery in A.D. 800 — moved to North Carolina in 1980 to manage farms. Five years later, he bought a German brewery and moved it to Manteo with plans to open a gastropub (a restaurant that serves its own beer). He was shocked when the ABC Commission told him it was illegal for brewers to sell their beer on-site. “This is the only so-called civilized country with an ABC Commission,” Bennewitz, now 62, says. But the commission helped him get a law passed, and The Weeping Radish Farm Brewery became the state’s first microbrewery in 1986. (It has since moved to Currituck County.) Legislation raised the legal limit on beer’s alcohol content from 6% to 15% in 2005, meaning more varieties could be brewed. That helped uncap the craft-beer industry, which contributed almost $800 million to the state economy in 2012, according to the Brewers Association. But brewers are far from satisfied.

Margo Metzger has taken some flack over her Twitter handle — 
@margowino — since January, when she became the first full-time executive director of the Greensboro-based North Carolina Brewers Guild Inc. But it makes sense given her previous posts: executive director of the state Wine and Grape Council and public-relations director for the N.C. Department of Commerce’s Division of Tourism, Film and Sports Development. “I like to call myself an equal-opportunity imbiber,” she quips. Sean Lilly Wilson, guild president and owner of Fullsteam Brewery LLC in Durham, says the nonprofit’s board “agreed that we couldn’t get there without a full-time executive director committed to defending our legislative interests and promoting our state’s great beers.” Among Metzger’s tangible 2014 goals: Lower one of the highest excise taxes on beer in the nation. It’s 62 cents per gallon, and the national median is 20 cents. A few guild members also want to eliminate the cap on self distribution. Though small breweries can deliver their product to retailers, once production reaches 25,000 barrels a year they must use a distributor for every drop.

Distributors, on the other hand, are happy with the rules as written. “North Carolina has always struck a balance between being a responsible seller of alcoholic products while at the same time providing some opportunity for entrepreneurship,” says Tim Kent, executive director of Raleigh-based North Carolina Beer and Wine Wholesalers Association. The state ranks 48th in per capita spirits consumption but sixth in tax revenue from them, according to a 2008 ABC Commission report. Plus, state control prohibits big-box retailers from monopolizing the market. So if the three-tier system isn’t broken, why fix it?

A few years ago, then-Gov. Beverly Perdue examined privatizing liquor sales. The N.C. Office of State Budget and Management reported that selling ABC system assets, such as liquor warehouses, could generate up to $700 million. Pat McCrory, then between his unsuccessful bid for governor and his 2012 victory, wrote an opinion piece for the Raleigh News & Observer in 2010 that said privatization would weed out corruption in ABC boards and the $700 million could pay for roads. The movement fizzled here, with the former Charlotte mayor saying it’s not a priority, but is ramping up in other states. Issaquah, Wash.-based Costco Wholesale Corp. led a successful campaign in its home state, which in 2012 became the first of the 19 that have had a monopoly on liquor sales since the 1930s to privatize sales and distribution. “I don’t know anybody who would tell you it’s been a success,” contends Kent. Prices have gone up, but so have tax collections on spirits, climbing nearly 10% in the year that ended July 10, 2013. The Washington Post reports retailers led by Portland, Ore.-based Fred Meyer Inc. and Pleasanton, Calif.-based Safeway Inc. are trying to convert Oregon.

Tim Ferris, meanwhile, is focused on Rutherford County, where he recently offered to buy a large tract of land. He wants to turn it into a destination, like Scottish whisky estates. The distillery would have 12 stills, each at a major point of the compass, and overlook a lake. “My buddy and I walked here three years ago and thought, ‘If dreams were free …’” It will have to stay a dream as long as a rule permitting spirit sales at distilleries remains one, too.

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