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Tobacco, tar heels and tulip glasses—NC's craft beer boom

Traditionally known for its tobacco, barbecue, college basketball and the squealing tires of stock car racing, one Southeastern state is blazing a new trail for its name.

"North Carolina is the hottest emerging state for craft beer right now," said Marc Levit, associate at the Demeter Group, which advises alcoholic beverage companies.

The gold medal-winning Hop Drop ‘n Roll being readied for distribution at NoDa Brewing Company in Charlotte, N.C.
Source: Mike Carroll | NoDa Brewing Co.
The gold medal-winning Hop Drop ‘n Roll being readied for distribution at NoDa Brewing Company in Charlotte, N.C.

The proof is in the numbers. In 2006, the state was home to 26 breweries, and now boasts 110. Last year, the production of craft beer increased 65.7 percent to 263,488 barrels, from 159,003 in 2012.

Yet, beyond the numbers is the recognition the state is gaining as three major craft beer companiesSierra Nevada, Oskar Blues and New Belgiumexpand their business into the mountains of western North Carolina.

Homegrown craft brewers are reaping attention through accolades, too. NoDa Brewing Company, of Charlotte, won gold for its Hop, Drop 'n Roll I.P.A. in the most popular category at the World Beer Cup, and seven other North Carolina brewers took home awards.

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"When you look at how North Carolina is developing, growing at that percentage with that number of barrels is something we don't see often.The future is certainly bright for the North Carolina industry," said Bart Watson, economist for the Brewers Association.

Factors driving the growth include an outdoorsy and music-loving culture easily married to that of craft beer, a strong locavore movement and a change in state law that combined to set the spark.

Pop the Cap

North Carolina's first step toward its craft beer boom happened in 2005 with the passage of the state's "Pop the Cap" law, which allowed brewers to produce beer with as much as 15 percent alcohol by volume. Prior to its passage, brewers were limited to 6 percent ABV or less.

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"Before, when it was only up to 6 percent, that prevented brewers from brewing entire styles of beer," said Daniel Hartis, editor of CharlotteBeer.com and author of "Beer Lover's the Carolinas."

"You really saw things starting to change at that point, especially in Asheville," he said.

In 2006, the first full year after Pop the Cap was instituted, North Carolina had 26 breweries. The number has quadrupled to 110, with 40 more registered as being in the planning stages, said Margo Metzger, director of the North Carolina Craft Brewers Guild.

Beer City, USA

One place driving the boom has been Asheville, which was named "Beer City USA" from 2009-2012 in a poll conducted by Brewers Association President Charlie Papazian on Examiner.com. (Asheville tied with Grand Rapids, Michigan, in 2012.) But it wasn't always that way.

When it opened its doors on a street in downtown Asheville in 1994, Highland Brewing Company was the first legal brewery to open in western North Carolina since Prohibition.

At that time, the city was quiet and not many people went out and about, said Highland Brewing President Leah Wong Ashburn. But as time passed, that changed.

A server pours a Highland Brewing ale at the company’s brewpub in Asheville, N.C.
Source: Warner Photography | Highland Brewing Co.
A server pours a Highland Brewing ale at the company’s brewpub in Asheville, N.C.

"Since then we have seen Asheville proper have 18 breweries, so things have popped up from there," she said. Highland Brewing now produces 38,000 barrels a year and ships to nine states, mostly in the Southeast.

"A major, major portion of the Asheville economy is from tourism—they also have beautiful mountains and hundreds of great restaurants," Metzger said. The expansion of breweries in the area has added to its tourism and accelerated craft beer's growth by making the area a hot spot for "beer pilgrims."

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"You can have a neighborhood bar that draws locals, but if you have a cluster of them, and a cluster of breweries, you have a destination," Metzger said.

In addition to homegrown breweries, the Asheville area is becoming home to Sierra Nevada, New Belgium and Oskar Blues, major craft players from the West that came to the region to extend their reach.

"Just looking in the mirror, it kind of made sense to start looking for another small community we enjoyed spending time in," said Chad Melis, marketing director of Oskar Blues. "Dale [the founder] had been visiting the small town of Brevard, North Carolina, for quite a while, and we really liked the craft beer scene that was out there. There was a good quality of life with good music and an outdoors environment and it's centrally located for shipping."

The Oskar Blues’ Burning Can festival
Source: Eddie Clark Media | Oskar Blues Brewery
The Oskar Blues’ Burning Can festival

Sierra Nevada and New Belgium representatives also cited the quality of life around Asheville, specifically the city's music and outdoor-centric living, as well as its passion for great beer, as reasons for the companies' moves into the area. The water, too, was a big factor for each.

"The water here is a blank slate, so we can manipulate it in any way we'd like to brew to specific beer styles," said Bill Manley, beer ambassador for Sierra Nevada. "It's really important for us to match and pinpoint the exact same water and flavors that we have in California."

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"Everybody's making good beer because you have to in Asheville," said Suzanne Hackett, a brewery community liaison for New Belgium. "Our neighbors across the river, Wedge, are making great beer, and Wicked Weed is doing great, too. We can take visiting coworkers pretty much anywhere and get great beer, and that's pretty awesome."

Charlotte, the Triangle and the Future

While Asheville is the most famous of the North Carolina beer scenes, Charlotte is gaining ground.

"There has been a profound local movement around the urban areas of North Carolina, and there was a sea change in people's minds in which they wanted to know where their foods were coming from, and that has extended to craft breweries," said Metzger. "Charlotte is behind on craft beer, but it's making up for lost time."

A group tours and tastes at the facilities of NoDa Brewing in Charlotte, N.C.
Mike Carroll | Courtesy NoDa Brewing Company
A group tours and tastes at the facilities of NoDa Brewing in Charlotte, N.C.

NoDa Brewing, which won gold at the World Beer Cup in the hardest division, American-style India Pale Ale, is one example of Charlotte breweries that have either seen themselves moving or on the move toward bigger facilities to cope with local demand alone in the last year.

"We are getting four more tanks at the end of this week, and once those tanks are installed, we're maxed at capacity," said Suzie Ford, who co-founded NoDa Brewing with her husband Todd in 2011. "There's plenty of market share in Charlotte that we still haven't touched, so we have to get more tanks, more capacity and more space."

In 2012 NoDa Brewing produced 2,400 barrels of beer. In 2013 that number was almost 5,000. This year, in the wake of the attention its gold medal offered it, the brewery is set to do 8,000 to 9,000 barrels, Ford said. If Citra hops weren't so in demand and under contract, they could brew more of their Hop, Drop 'n Roll and that number would be even higher, she continued.

Both Ford and Metzger said that NoDa Brewing and other Charlotte brewers are now establishing Charlotte as a beer destination similar to Asheville.

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Charlotte may be the current booming scene, but the Triangle area boasts the majority of North Carolina's breweries, Metzger said. Manley, too, cited the Triangle's beer scene as impressive, specifically naming Trophy Brewing out of Raleigh, North Carolina, as having "knocked my socks off" even though he has tried hundreds of beers.

But the state's breweries, like NoDa Brewing, are mostly sticking to a local level. NoDa Brewing self-distributes within the Charlotte area and is still struggling to keep up with local demand, though bars and distributors actually drive across the state to get its beer, and international companies have made offers, too, Ford said.

"Right now we're focused on keeping our backyard in line. I would think slowly we'll roll out of the Charlotte area and into other parts of North Carolina, but we don't have any plans right now to go further than South Carolina even," Ford said.

And although the outlook for North Carolina beer looks bright, some suggest there is one factor holding it back a bit: the North Carolina excise tax for beer is 62 cents per gallon, making it the eighth-highest in the country.

"It's impeding growth," Metzger said. "These breweries are maxing out their capacities, but they could grow more if they had more capital to expand rather than paying the tax. We're actively recruiting these businesses that can afford it, like these incoming big brewers, but we have the potential to incubate our homegrown breweries, maybe even have our own Sierra Nevada, but right now that can't happen."

By Bo McMillan, Special to CNBC.com