Beer in North Carolina is booming again, but craft breweries are slowly recovering | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Kevin Garcia Galindo.

    Last week, Beer Serves America reported that the beer industry contributes 75,082 jobs and brings in about $1.8 billion in taxes to the state of North Carolina. Yet according to a local craft brewery owner, not every aspect of the beer business has recovered from the COVID-19 induced economic downturn.

    "Beer sales have not fully recovered in the bar and restaurant categories, and [sales] have softened in grocery. I don't expect them to fully recover for years," said Leah Wong Ashburn, family owner of Highland Brewing Company.

    The report sponsored by the Beer Institute and the National Beer Wholesalers Association (NBWA), broke down the employment that the beer industry provides into different positions:

• 3,301 jobs in breweries
• 3,994 jobs in distributing
• 29,936 jobs in retail
• 1,180 jobs in agriculture
• 3,076 jobs in manufacturing

    In total, this equates to more than $3.8 billion in wages and 12.8 in total economic output.

    Craft beer alone has an economic impact of $2.8 billion per year and creates 18,000 jobs alone, making it a large portion of the beer industry in the state. This is due to the more than 400 craft breweries in North Carolina according to Business North Carolina, which put the state among the top 10 nationally for craft beer production.

    High State Taxes on Beer

    A separate report by Beer Serves America also details the bevy of special taxes on the production and sale of beer. In NC, an estimated 40.7% of the retail price of beer goes to taxes. Roughly $0.81 of every $2 beer goes to the state government.

    The reason for such a high tax rate on beer is due to a "wide range of hidden taxes including excise taxes at both the state and federal level, as well as other special taxes at both the state and local level," according to the Beer Institute and the NBWA who both publish the report.

    Furthermore, according to a report by the Urban Institute, North Carolina is only tied with Alabama and behind Tennessee for the state that collected the most revenue from alcohol taxes. In beer taxes alone, North Carolina ranks sixth behind South Carolina, Kentucky, Hawai, Alaska, and Tennessee according to the Tax Foundation.

    COVID-19 Slowdown

    In 2020, the craft brewery was in a very different situation. At least five breweries shut down and close to 10-15% had to remain closed during the pandemic due to health concerns, according to abc11.

    The impact was so grand that in 2021, Governor Roy Cooper signed a proclamation declaring October as North Carolina Beer Month as a way to help struggling craft breweries.

    "A month-long celebration of North Carolina's beer craftsmanship, and those destinations where it thrives, will raise the state's profile to its rightful place in a highly competitive landscape," Gov. Cooper stated in his proclamation.

    Nationwide, according to the Beer Institute, 568,000 jobs in the beer industry were lost in 2020 as a consequence of the $20 billion drop in retail beer sales in 2020.

    Local Owner Perspective

    Leah Wong Ashburn is the President, CEO, and family owner of Highland Brewing Company, one of the largest craft breweries in North Carolina.

    "NC is a good state for beer. Over many years, surrounding states have created routes to success in brewing because NC was clearly leading the way in the Southeast," Ashburn told the Carolina Journal. "In Asheville specifically, we went from being the sole brewery in town in 1994 to one of almost 40 today. The favorable climate is clear, but not all breweries are thriving as market conditions have added strain."

    Since the end of the COVID-19 pandemic, Ashburn said that "the pandemic created an opportunity for us to re-imagine many aspects of our business" but that "challenges continue in the high costs for everything associated with brewing, packaging, and shipping."

    Despite saying that "we are in a great state for beer," Ashbrun also commented on the high beer taxes that North Carolina imposes saying that "a rollback would help us support more staff and would relieve some of the pressure we are feeling from high costs across the board."