Wednesday, October 9, 2013

The impact of the government shutdown on the craft beer industry.

It’s day nine of the government shutdown, and while Congress is still being paid for essentially doing nothing, many people in the craft beer game are starting to worry about their livelihoods and the effects that the government shutdown will have on the future of the craft beer industry. The Alcohol, Tobacco and Trade Bureau (TTB) is one of those bureaucratic agencies that we all tend to complain about, but since it is no longer allowed to operate due to the shutdown, no new applications for breweries, recipes and labels are being processed. They are continuing to tax existing craft breweries, but are not able to approve labels for new beers.

This doesn’t necessarily effect the multinational macro-breweries the same way as it does those operating at the craft beer level, since they don’t release a large number of seasonal beers or rely on a large portfolio of beers to thrive. They tend to crank out the same product en masse without any concerns about releasing new products every quarter. It was taking the TTB up to 75 days to approve new applications before the shutdown, so it certainly wasn’t a model of efficiency, but an extended shutdown could cripple the thriving craft beer industry in a way that a struggling economy and high excise taxes have failed to do thus far, and it could kill off new breweries before they get a chance to produce any products.

Any new brewery that didn’t have certain government paperwork in place before mid-August is facing an indefinite hiatus during the shutdown and are at risk of losing thousands of dollars each month that their opening is delayed. That may be pennies to the In Bev’s of the world or Representatives like Lee Terry who needs his congressional salary to pay for his nice house, but these are small businesses that help build and maintain local economies and they generate the sort of tax revenues needed to run agencies like the TTB.

Most people working in the craft beer industry have come to accept certain forms of government regulation, but with that regulation comes certain expectations like the ability to release new products in a timely manner and a responsive, operational government. Neither of these expectations are currently being fulfilled and it is no wonder that the approval of Congress currently sits at a disgraceful 5%.

Tony Magee of the Lagunitas Brewing Company may have said it best when he took to twitter to voice his frustrations over the government shutdown last week in an expletive laced tirade that concluded with the statement “wanna regulate? Perform or get out of the way.”

Here's a link to the article that inspired this post:


Anonymous said...

Or perhaps the better response is to elect people to remove the feds from controlling the craft beer industry to begin with. (Of course that does no good to the businesses who already are "licensed" since increased competition wouldn't be good for them.)

Patrick McCabe said...

I would genuinely support somebody that I honestly believed had the best interest in both the American public and the craft beer industry in mind when it came to decreasing government regulation and cutting certain taxes, but I don't really believe there are too many people from either party that currently fit the mold. There has been no rush to pass either the bipartisan Small BREW act introduced by Sentor Ben Cardin of Maryland and Senator Susan Collins of Maine or the bipartisan BEER Act introduced by Senator Tom Latham of Iowa and Senator Ron Kind of Wisconsin, and there are members of the Unicameral here in Nebraska who have displayed reticence over lowering an exceedingly high excise tax on craft beer in this state. As of now, I'd simply like to see our state elect some people who are interested in governing and rational enough to be reasonable when it comes to negotiating a budget impasse. As for the Tea Party, they haven't been all that friendly to the craft beer industry in neighboring Kansas.