Greensboro restaurateur can’t sell own microbrew at restaurants

GREENSBORO, N.C. — A Greensboro business owner who was planning to open a microbrewery in June says he can’t get permits to sell the beer in his restaurants.

Marty Kotis tells FOX8 the Pig Pounder Brewery has been in the works for two years. When they recently went to finalize permits, the NC Alcoholic Beverage Control Commission could not issue the paperwork.

“We’re scheduled to open the Pig Pounder the first week of June, and right now we can’t get a permit,” Kotis said simply.

ABC Commission Director of Public Affairs Agnes Stevens said the law dates back to post-prohibition. The goal was to prevent big alcohol manufacturers from becoming corrupt or forcing retailers to only sell certain alcoholic brands and products.

She said the state formed what’s called a three tier system of permitting. “The manufacturers are separate from the wholesalers, and the wholesalers are separate from the retailers,” Stevens explained.

And generally speaking, a business person can’t have permits across tiers in order to prevent financial conflicts of interest.

There are exceptions.

Stevens explained, “If the brewery had been established first, as long as its production remains small enough, it can hold up to three retail permits and self-distribute its own product.”

But because Kotis already owns restaurants, Stevens said it is a different situation according to the law 18B-1116 entitled “Exclusive outlets prohibited.”

Kotis said he was given two options. “One option is to agree not to sell any of our beer in any of our restaurants ever. However, we could sell it other places. And to do that we would have to have a special exemption from the ABC Commission,” he said.

“The other option would be to transfer our assets over from the other companies, the other restaurant companies, into one entity and we would have to limit ourselves to only three restaurants plus the brewery.”

That would mean closing YoDaddy Desert bar in Greensboro, he said.

“It makes no sense at all,” Kotis added. “The three tier system was designed to protect and encourage free trade. This is the opposite of that… it’s trying to protect against an abuse and in turn creating an abuse.”

Right now they can’t sell the Pig Pounder beer in his restaurants or in the brewery itself.

Kotis pointed out he plans to sell other beer brands in the restaurants, too, not just Pig Pounder.

He said they would be forced to take future plans for restaurant and brewery endeavors outside the state if they can’t resolve this issue.

Two different attorneys FOX8 talked to Tuesday believed Kotis could get an exemption if he continues working with the ABC Commission.

Erik Myers, President of the NC Craft Brewers Guild who runs Mystery Brewing Company, agreed there had to be some wiggle room.

Stevens said the ABC Commission staff is working to figure out what would be the best options for Kotis.

Representative Jon Hardister told FOX8 he would try to address this issue legislatively.

Jamie Bartholomaus, President of Foothills Brewing in Winston-Salem said he wished Pig Pounder luck and hopes they open soon. Foothills sells its own beer in its one restaurant.

7 comments

  • NRA4ever

    “pig pounder”? probably wouldn’t sell by that name anyway. should have taken a class in marketing.

  • Billy

    Sounds like an government entity trying to justify their existence. If the beer is good people will buy it, if not they won’t. Let the man open his business and let the market decide.

  • Scott

    Same thing different day from Kotis. This has been the intention of PP and the long-awaited Marshall Freehouse establishment of selling his own beer as his house brand in the restaurants that he owns, not to mention the restaurants/bars in commercial properties onwed by Kotis Properties. Good try on back-dooring a sales network for your product (regardless of quality.)
    I have been in the bar and beer business for over a decade now and believe that if NC ABC allows this to happen it will set a precedent across the state, and further upset the (albeit ainchient) Three-Tier System that was established by the Federal Govt. I feel that the options are limited for Kotis to work around this. One option would be to sell the Brewery to a third party (and please allow them to change the name.) The real viable option would be to take a section of Marshall Freehouse (nix the liquid nitrogen/foam bar area) and convert it to an in-house brewery for the restaurant, allow the brewery that is complete to make beer for other markets/establishments and not carry PP in Darryl’s (also owned by Marty Kotis).
    A little bit of research would have gone a long way for Kotis on this endeavor, as the ABC system and it’s regulatory rules are very clear to follow.
    Side note: Foothills was established as a brewpub (brewery on it’s restaurant property) and now has a separate production facility to accommodate their amazing demand (i.e.-thier product is really good!.)

    Cheers Greensboro!

  • greensboroobserver

    From PP Brewery FB page –

    The NC Statute reads: “A brewery not exceeding the sales quantity limitations in this subdivision may also sell the malt beverages manufactured by the brewery at not more than three other locations in the State, where the sale is legal, upon obtaining the appropriate permits under G.S. 18B-1001. A brewery operating any additional retail location pursuant to this subdivision shall also offer for sale at that location a reasonable selection of competitive malt beverage products.”

    We meet this criteria, but the current interpretation of the Statute by ABC has changed. We have Darryl’s, Yo Daddy, The Marshall Free House open currently. We’re very close to launching Burger Warfare.

    The previous interpretation was that you could have a brewery and sell your beer in up to 3 additional locations. The new interpretation is that all those entities have to be in one LLC and only a maximum of 4 alcohol permits will be issued (the brewery and 3 others) even if you aren’t selling your beer in the additional restaurants in excess of 3. That would prevent us from opening any new restaurants that serve ANY alcohol. Our understanding was that we just couldn’t sell our beer in those other new outlets, but that’s not the way it’s currently being enforced.

    ABC is refusing to issue the permit to the brewery without this going before the commissioners for an exception. The new interpretation of the Statute is the problem for us and several existing breweries in the State.

    We are in discussions with ABC officials and NC Legislators to come up with a short term and long term fix. This isn’t a case of us not doing our homework, we have. And now we’re carrying the ball for everyone else, including existing NC breweries that are not in compliance with ABC’s interpretation of the statute.

  • HJ

    Darryl’s is not a good restaurant. It will be interesting to see how Kotis’ new concepts fare. He sure is creating some high expecations. Will the restuarants have good food and service. When you get down to it, that’s what matters, not the decor and exterior of the building.

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