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Another round for Olde Mecklenburg Brewery

Too much success can hurt expanding business



On a sunny fall afternoon in September, a small group gathered off Southside Drive to celebrate the ground-breaking for the new Olde Mecklenburg Brewery site. Loyal supporters of the brewery, scattered media fellows and, of course, beer drinkers joined owner John Marrino for a small ceremony to commemorate what will be, for a time, the largest brewery in North Carolina.

OMB purchased the old American Crankshaft Company building as the site for its new location, slated to open in May 2014. The property sits on 8.5 acres of land, and the brewery will occupy 24,537 square feet of historical space to spread out, increase and diversify beer production, create more local jobs and continue its vision of replicating a true beer experience. Wide open green spaces beneath mature pecan trees mimic the biergartens in Germany that boast a similar backdrop.

At just a hair over four years old, OMB is the oldest and largest brewery in Charlotte. Before it, the Queen City didn't have a brewery to call its own. Yet, as Marrino noted during his speech that fall day, prior to opening a local brewery, Charlotteans were consuming 1.2 million barrels of beer each year, none of it local. In just a few short years, OMB has helped ignite the craft brew scene, setting in motion a movement that includes the addition of five more craft breweries in town plus more on the way.

With OMB's expansion, Marrino says he's "doubling down on Charlotte." The new facility will allow him to increase brewing capacity from 15 barrels to 60 barrels of beer at a time. But beer regulations enacted by a state-run, three-tier system threaten the OMB brand and subsequent growth.

"Beer is the only product where the state disincentivizes you for being successful," says Ryan Self, director of sales and first salesman ever for OMB. The three-tier system refers to the brewer, distributors and the bars/restaurants that sell to consumers. The law allows for breweries to act as the first two tiers and even allows for a retail space to act as tier three. That is, until they exceed 25,000 barrels in a year. At that point, brewers must hire a third-party distributor to sell and distribute its beer.

OMB ranks 18th among the 50 fastest-growing breweries in the nation. From 2011 to 2012, it increased production by 75 percent, and last year, OMB produced more than 7,000 barrels of beer. Though the brewery must increase its production percentage significantly to reach the cap of 25,000 barrels, its growth rate suggests it might not be too long before that happens.

Once a brewery hires an outside distributor, the agreement between the two entities forces the brewery to relinquish its brand rights to the distributing company.

"If we hired a local distributor to sell OMB for us and things didn't work out, we would have to go to arbitration to buy our brand back," Self says. That doesn't jibe well with Self's philosophy for his sales team, which focuses on the "labor of love" that was Marrino's vision. "We don't sell a product — we tell a story," Self says.

On the other hand, distributing companies work with a portfolio of beer brands, each vying for a space on the shelf. Selection and sale of a brand is, for the most part, at the mercy of the sales rep for the distributing company. Tryon Distributing Company manages an impressive portfolio of craft beers, covering the entire state of North Carolina from "Murphy to Manteo."

So just how does a representative go about making the decision of which beer to sell? "That is the $64,000 question," says Chris Angel, beer brand manager for Tryon Distributing Company. There are some considerations, like popularity and incentives, that drive the rep to push a certain brand over another. They also have their favorites. Ultimately, says Angel, it's tricky.

Tom Stanfel, beer manager at the Common Market in Plaza Midwood, says that the hurdle for breweries lies in the growth transition from self-distributing to hiring a third-party distributor.

"Once you give up power [to a distributing company], the challenge is how to maintain relevancy in a big book with many, many beers to choose from," Stanfel says. His relationships with local breweries, all of whom currently distribute themselves, are just that — relationships. For the craft beer community, that's everything. Anything else is just watered down.

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