Burial Beer Pulls Out of South Carolina Over Wholesale Law

Austin Ray

THE GIST
Burial Beer Company has announced it will cease distribution to South Carolina, citing as reasoning a state law that prohibits wholesalers from denying sales to a retailer, “regardless of other concerns for the product’s well-being.”

In a brief statement recently posted to Facebook, the company, headquartered in Asheville, North Carolina, said it had a “stellar relationship” with its wholesale partner, Advintage Distributing, as well as the “independent retailers” in the state. However, it added, “[T]he enforcement of this law is contradictory to our business plan and our core values.”

WHY IT MATTERS
Ultimately, this is an isolated occurrence. But, as most of these legislative snafus do, it pertains to a much broader issue. Specifically, we’re dealing with one very important question here: Should a brewery—or its wholesale partner—have the legal right to deny sales to a retailer with cause?

In South Carolina, the answer is no. Or, as written in the state’s code of laws: “It is unlawful for a beer wholesaler…to refuse to sell to a licensed retailer whose place of business is within the geographical limits specified in a distributorship agreement between the beer wholesaler and the registered producer of the brands involved.”

Compounding that, South Carolina—like many states—is short on laws that ensure retailers meet a minimum threshold of care when handling a brewery’s products. Which means, for instance: a brewery or wholesaler has little recourse against, say, a bar that doesn’t clean its tap lines.

Brook Bristow is the founder and owner of Bristow Beverage Law, a South Carolina law firm serving the state’s craft beer industry. He says the whole ordeal is a “tough situation.”

“Here, it is important for producers to rely on their wholesaler partners to provide those services,” Bristow tells GBH. “Or work with the retailers as much as the retailers will allow to ensure the product is as the producers intends it be.”

Reached by GBH, Burial said it’s not at liberty to further discuss the matter beyond what it posted to social media, nor would it confirm that any one retailer was specifically mishandling its product.

“We so much want to give a full and detailed explanation to everyone who has supported us and to those who do not understand, but feel it is in the best interest of our brand and business to let it lie and move forward,” a spokesperson tells GBH. “[We] hope that those who know the story will be our best advocates.”

The company’s initial statement, though, specifically mentions, “concerns for the product’s well-being.”

It’s not just a matter of care at the retail level, either. There’s another important question being raised here: At a time when craft beer is often defined by scarcity, how can a brewery or wholesaler possibly be fair in meeting the demands of every retailer? It’s inevitable that some will be left wanting, creating a system with inherent favoritism.

Just a few months before activating South Carolina, Burial tapped Georgia, its first-ever market away from home. There, Taylor Harper specializes in alcohol beverage law as an attorney with the Atlanta-based law firm Feil Harper Lumsden Hess.

“If a manufacturer approves one retailer over another, then the approved retailer is receiving a thing-of-value from the manufacturer,” he tells GBH. “As a result, that retailer may be induced to sell that manufacturer’s products to the exclusion of other manufacturer’s products. The whole point of tied-house prohibitions and thing-of-value prohibitions is to avoid such a situation.”

This is why the ostensibly easy-to-answer question regarding the right not to sell is actually a bit more complicated than it first sounds.

Regardless, it doesn’t seem as though the South Carolina law has driven many other breweries away from the state as of yet. Bristow says this is the first time he has seen the law cited as a reason for fleeing. Though that could potentially change, especially given this precedent.

“As the industry continues to grow and evolve here, with more smaller in-state producers opening, and with more out-of-state producers moving allotments in the state, it could be problematic,” he says. “Since production can be limited, allotments [are] only so big, with many retailers to service, and there [are] always…concerns about how product is treated outside of the facility.”

As for Burial itself, it declined to tell GBH whether it knew about the law prior to entering the state. Advintage Distributing, its wholesale partner, could not be reached for comment.

Either way, the company’s time in South Carolina proved to be of the blink-and-miss-it variety. It only announced plans to tap the state in September before hosting a slew of launch parties in various cities right before Thanksgiving. So the departure represents an unceremonious end to one of Burial’s earliest expansion efforts.

Concluding its original statement, Burial said: “We will continue to monitor the state laws and hope to be distributing down south someday in the future. We’re pouring one out for you SC. We will miss you.”

—Dave Eisenberg