ASHEVILLE, N.C. – In the beginning, Walt Dickinson was just a rock-climbing-guide turned rainwater-collection-system salesman who couldn’t find a decent beer in his home state and decided to start making his own at home.
“It was a wasteland,” he says of North Carolina and surrounding states. “There was no good IPA in the Southeast.”
The reason the region wasn’t producing hoppy, piney, West Coast-style India pale ales, the type that dominate craft sales around the country? Stifling government regulation. Century-old laws made it nearly impossible to start a craft brewery across the South and Mid-Atlantic. And when lawmakers began to repeal those laws, starting with North Carolina in 2005, Dickinson and other enterprising brewers took advantage.
Dickinson and his brother, Luke, rounded up capital – $3 million within six months – from family friends and in late 2012 started Wicked Weed, a purveyor of IPAs, sour ales and other malted varieties that is now the fastest-growing homegrown brewery in Asheville. The Asheville area has at least 23 craft breweries and 90,000 residents, the densest concentration in the United States. North Carolina’s microbrew production has increased 600 percent, to 675,000 barrels in 2015, just in four years.
Similar stories are playing out in Virginia and South Carolina – opening a market for local entrepreneurs and, at a much larger scale, big craft players from the Western states where government hurdles were never a problem.
The arrival of California brewery Sierra Nevada, which opened outside Asheville in 2014, and Colorado’s New Belgium, which will start offering tours on Monday, opens a final geographic frontier for one of the rare American industries where small business is booming. Their mammoth production facilities cement Asheville’s status as a power-player in the craft world – but also give their homegrown brewers some big new neighbors to worry about.
The proliferation of craft brewing on the East Coast is a case study in how government regulation can block entrepreneurship for decades – and leave entire regions playing catch-up when it is finally relaxed.
New business creation is slowing across the country and in most industries, but not in the world of beer. The industry is dominated by a few big players, led by the soon-to-be-merged SAB Miller and Anheuser-Busch InBev. But smaller competitors, peddling wide varieties of stronger and more flavorful beer, are popping up everywhere to steal market share.
There were 2,347 craft breweries in the United States in 2012, according to the Brewers Association, a trade group, and they combined for 12 percent of the country’s beer sales in dollar terms. The sales share grew to 21 percent in 2015. By year’s end, if trends hold, there will be 5,000 craft breweries nationwide.
Four Western states house more than a quarter of those breweries: California, Washington, Oregon and Colorado, which have long been havens for the hoppy India pale ales that form the liquid foundation of the craft industry. The Midwest and Northeast also boast strong craft scenes.
The Mid-Atlantic is finally on its way. From 2005 to 2012, North Carolina lawmakers steadily repealed laws – Bible Belt leftovers from the end of Prohibition nearly a century earlier – that had stifled brewers from making and selling craft beer.
They lifted restrictions on how much alcohol a beer could include by volume, which had effectively banned many of the most popular craft styles. They began allowing larger craft breweries to sell their products on site, opening the way for small-volume brew houses. And they made it easier for some smaller breweries to distribute beer to stores and bars.
Until the restrictions were lifted, it took enormous quantities of money and patience to start a brewery in the state. Oscar Wong had both, which was why he had no competition when he began selling beer from an Asheville basement two decades ago. He had plenty of critics, though. They wrote the local newspaper regularly, complaining that he was doing the devil’s work with his pale ale.
Wong had sold an engineering business in his 40s and was bored in retirement. He hired a brewmaster and was content to build Highland Brewing slowly, from a few converted dairy tanks in 1994 to a leafy campus with its own bottling plant today. He brewed Scottish ale that was low enough in alcohol content to avoid violating state law, and he waited eight years to finally turn a profit.
Sierra Nevada and New Belgium had no such problems in California and Colorado. They grew into two of the largest craft brewers in the nation, expanded their reach to the East Coast and looked for ways to ease their path to customers there.
This summer, New Belgium is ramping up production in its new 500,000-barrel facility that looms like a massive motorcycle (which the building is meant to evoke) parked along the French Broad River at the south end of downtown Asheville.
Its brew tanks are cooking up batches of Fat Tire, New Belgium’s signature amber ale, and Ranger, its IPA. Last month, its tasting room was packing in visitors to watch the Tour de France on a projector screen and sip varietals at reclaimed-wood tables fashioned from the remnants of the livestock yard that once occupied part of the 18-acre site. On a recent weekday, landscapers were tilling the grounds and blue masking tape held temporary paper signs on conference rooms.
Sierra Nevada’s facility is turning out hundreds of thousands of barrels of ale in a resort-style setting outside of town. It is a working theme park of beer, complete with a full restaurant, outdoor concert amphitheater and a gift shop, in what appears from the outside to be part overstuffed hunting lodge, part steel mill.
Brewing on the East Coast saves money for the Californians and the Coloradans, and it adds freshness to brews they would otherwise be shipping across the country.
“Beer is heavy,” said Brendan Beers, New Belgium’s business support manager in Asheville. “The closer you can get your production facility to the end customer, the better.”
Before construction began, New Belgium officials met with wary local brewers. They assured them that they weren’t trying to invade the Asheville craft scene – they were selling to the whole East Coast. Sierra Nevada officials say they told the locals that they would choose a different North Carolina location if there were objections to them moving to the outskirts of Asheville. Then they invited every brewer in town to an all-expenses-paid week of “beer camp” at their Northern California headquarters.
Many local brewers say the arrival of the Western craft giants has attracted more customers to their taprooms. They also say they can’t imagine trying to grow large enough, fast enough, to challenge them for East Coast craft supremacy.
“Why would I fight a battle with companies that are so well established with such a good product?” said Walt Dickinson, the Wicked Weed founder. “That’s not what we’re trying to be.”
A week after the Dickinsons announced plans for Wicked Weed, Sierra Nevada said it was coming to town. “I knew it was going to be great for us,” Walt Dickinson said, “bringing in more beer tourists.”
He was right. Wicked Weed has doubled its production every year and now is up to 22,000 barrels annually. Its main brewery and restaurant is packed in the afternoons and evenings.
None of that would have been possible under North Carolina’s old blue laws, Dickinson said. As similar laws fall around the South, in states such as Georgia and Tennessee, breweries like Wicked Weed could see growth opportunities – although the West Coast brewers will probably see more.
Policy changes in Virginia have unleashed a wave of homegrown breweries, but they have also attracted big new facilities from San Diego’s Stone Brewing (in Richmond) and Oregon’s Deschutes Brewery (in Roanoke).
“It’s a first-mover advantage” for the Western brewers, said Bart Watson, the chief economist for the Brewers Association. (Yes, that’s a real job.) “The window on being a truly national craft brewery has essentially closed already.”
For North Carolina pioneer Wong, who distributes to several states but has no national ambitions, the arrival of the Western giants in his back yard means more traffic to his brewery but also more competition for tap handles and more pressure to drop his six-pack prices.
“I would have preferred that they weren’t here,” Wong said on a recent morning, lounging in an upstairs bar at his brewery. “But what it has forced us to do is up our game.”
His is perhaps the only local brewery now large enough, at 40,000 barrels a year, to worry about going toe-to-toe with the larger Western players.
“We don’t have the efficiencies they do,” said Leah Wong Ashburn, the founder’s daughter, who is now Highland’s president. “We’ve seen 12-pack prices that I’ve never seen for craft beer.”
(Highland Brewing charges $16 for a 12-pack of its Early’s Hoppy Wheat beer. A 12-pack of Sierra Nevada sells for as little as $14.99 in grocery stores. And the mass market giant Budweiser might go for $11.50 for a 12-pack.)
Highland, though, is adapting. It recently put in a rooftop bar and is selling, with wide distribution, its first West Coast-style IPA. You can buy it at a gas station/brew emporium near the Asheville Airport.
It is displayed prominently, right next to stacked cases of Sierra Nevada.