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Your Beermonger: House of Pints

by Nick Anderson — March 21, 2014 at 2:30 pm 740 0

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Editor’s Note: This sponsored column is written by Nick Anderson, beermonger at Arrowine (4508 Lee Highway).

For all of the annoyances of Virginia ABC laws — and there are many — there is one way the Commonwealth has managed to not mess with beer lovers. Virginia doesn’t “cap” the amount of alcohol a beer can have either by volume (ABV) or weight (ABW), unlike many other states.

Over the past 20-30 years, most states with caps have raised them to the point where there functionally is no cap; it’s not uncommon to see caps anywhere from 14-17.5 percent ABV. There are still low-cap states, though; among them is Tennessee, where an effort to raise the limits of beer strength gives us one example of how breweries small and large are attempting to shape policy to take advantage of the rapidly growing market.

This week saw the release of the Brewers Association’s (BA) 2013 craft beer growth figures, and what they showed was that craft beer’s momentum is far from slowing. Compare to 2012, 2013 saw an 18 percent increase in sales by volume and a 20 percent increase in retail dollar value. Craft beer accounted for 7.8 percent of the total volume of the U.S. beer market in 2013, up from 6.5 percent in 2012.

Even taking into account BA’s definition of what makes a “craft” brewery and the associated controversy and consternation that goes along with it, the 2013 figures are impressive. By the BA’s count, some 98 percent of the United States’ 2,822 operating breweries are craft breweries, and even with the rate of new breweries opening increasing almost exponentially there are still far more openings than closings — with 413 openings to 44 closings occurring in 2013.

With over $14 billion in retail value and over 110,000 jobs coming from craft beer, states with lower ABV/ABW caps are being lobbied to raise those caps in order to generate more tax revenue and encourage new start-ups. Tennessee in particular has stifling regulations for small brewers in-state: they can make and sell beers over the current limit of 5 percent ABW (~6.2 percent ABV), but to do so they must acquire a “high alcohol content” beer license for $1,000 and then pay an additional $4,000 for a “liquor-by-the-drink” (LBD) license to sell said beers in their taprooms.

Not only do those licenses and their fees need to be re-upped every year, but the brewery must have at least 15 percent of its gross sales come from food to keep its LBD license. The proposed changes to Tennessee law would raise the limit to 12 percent, eliminating the license burden for in-state brewers and opening the state to the sales of more popular, stronger beers.

It’s not only small brewers who are trying to change regulations to their benefit. A recent article on The Motley Fool took a peek into the money “big beer” is spending in its lobbying efforts and the numbers were eye-opening even for me: Anheuser Busch-InBev (ABI) spent $4.3 million in 2013 and MillerCoors doled out over $2 million (by contrast, the only “craft” brewer mentioned was Boston Beer Company — $130,000).

According to the article, most of ABI’s millions were targeted toward getting two pieces of legislation passed; the “BEER Act” and the “Small BREW Act.” The BEER Act would lower the per-barrel tax on beer to $9 (from $18) and reduce those excise taxes on “smaller” breweries to levels that would be at nearly zero for the first 15,000 barrels produced. The Small BREW Act would increase the maximum barrel production amount of what is considered a “small brewery” from 2 million barrels annually to 6 million, cut excise taxes in half on the first 60,000 barrels produced, and lower taxes $2 per barrel on the next 1.94 million barrels.

Neither legislation appears to have much of a chance of becoming law — The Motley Fool estimates a zero percent chance for the BEER Act and 2 percent for the Small BREW Act — so why sink so much money into an apparently lost cause? And why the focus on small breweries, when ABI and MillerCoors are so big?

The answer can be found in beer business trends outside of “craft,” which aren’t pretty in terms of sales. Over the first half of 2013, overall beer sales were down 2 percent, with ABI (Stella Artois, Budweiser, Bud Light, etc) down 5 percent in the first quarter of 2013 and another 1.2 percent in the second. Despite the downtick in sales, ABI posted a revenue increase of 3.9 percent for that same second quarter of 2013. ABI’s faux-craft Shock Top label, along with more expensive, specialty products like the ‘Ritas (Lime-A-Rita, Strawber-Rita, etc.), Chelada, Budweiser Black Crown, and it’s ownership of Goose Island mean more money coming in with less product needed.

With their market share decreasing and stock numbers to keep up, the giants of the beer industry are looking for every way possible to make up the difference. If the BEER and Small BREW Acts were to pass, ABI’s $4.3 million investment would pay off to the tune of hundreds of millions of dollars saved through tax reductions.

Another way ABI is trying to leverage its influence can be seen back at the state level — this time, in Florida. Currently in the Sunshine State, craft brewers can legally fill gallon- and quart-sized growlers, but not half-gallon sized growlers, which are by far the most common format used. There is a bill in the Florida legislature that would make half-gallon growler fills legal, but ABI’s Florida distributor Lewis Bear has used its political influence to attach provisions that would have dire consequences for Florida’s craft breweries. The Tampa Tribune reports:

“Sales of full-gallon containers would have been banned. Brewers would have been prevented from selling their products in bottles, cans and kegs at the brewery. The legislation would have also stopped brewers from selling beers they make in collaboration with other brewers and would have prohibited them having guest taps from which they sell other brewers’ beer.

The proposal also would have set standards for labeling, sanitizing and sealing growlers that the Florida Brewers Guild believes are excessive.”

Why are half-gallon growler sales illegal in Florida in the first place? The AP asked Florida Senate President Don Gaetz, who offered a simple “I don’t know” in response. Despite claiming to be a pro-business, free-market legislator, Gaetz says he’ll support the bill “because one of my very best friends is an Anheuser-Busch distributor and he never talks to me about his business. It’s always about what are we going to do for disabled children, what are we going to do for the arts, what are we going to do for economic development. But this time he’s talking about growlers.”

Craft beer is finally “growing up” as an industry, and that means more than breweries taking action against each other over label names or art — it means swimming in the deep end with long-entrenched powers like ABI and MillerCoors (who, for the record, are against the Florida bill and for making half-gallon growler sales legal there). Where ABI and MillerCoors can’t “beat” craft brewers, they’ll buy them and take advantage of their built-in fanbases and small brewery tax breaks to keep the money rolling in.

Every gain for craft beer is going to be even harder-fought from here on out, and at every opportunity Big Beer gets to put the screws to craft beer’s rise, it will do so — and that’s ok. That’s their job. My point is this: if you don’t like how your state regulates its beer business, it’s never going to change simply because you want it to. Contact your local, State, and Congressional representatives and let them know what you’d like to see happen—right now, Cigar City is doing just that, leading an effort to push back against the Florida bill. Expect to see more of these battles in the future while the rest of us wonder why we can’t just get the beers we want.

What I’ve Been Drinking This Week:

Bottle Share Weekend Edition! I got together with a couple friends to watch the UFC pay-per-view last Saturday and it turned into one of the best bottle-share sessions I’ve ever been to. Here are a couple of the highlights:

Almanac Beer Company Valley Of The Heart’s Delight: This was my first beer from Almanac, based in San Francisco but contract brewing for now while a production facility is in the works. Valley Of The Heart’s Delight is from Almanac’s “Farm to Barrel” series, which uses ingredients harvested in Northern California and are all aged at least partially in oak barrels. In the case of Valley, that means apricots, loquats, and cherries with Almanac’s unique “Dogpatch” sour culture. Dogpatch is a combination of “wild Belgian and American yeasts, including San Francisco sourdough starter.” Whatever it is, it works – this was the best new Sour Ale I’ve had in ages, with the fruit flavors blooming after only a few minutes in the glass and a unique balance of tartness and acidity that I couldn’t get enough of.

The Bruery Chocolate Rain 2014: It’s OK, I had to do it too so go ahead – I’ll be here when you’re done.  Chocolate Rain is 18.5 percent ABV of barrel-aged, cacao, and vanilla bean-influenced Imperial Stout decadence. The Bruery wasn’t looking for balance with Chocolate Rain, but it finds something like it: the sheer density of the Stout is cut by the boozy heat from its barrel-aging, which in turn is kept in check by the vanilla’s sweet spicy note. It’s always difficult to try beers from The Bruery that usually only go to members of its Reserve Society — they always make me want to plunk down the hundreds of dollars to join up and figure out a way to bring them home. Someday…

Ok, that’s all for now. Until next time!

Nick Anderson maintains a blog at www.beermonger.net, and can be found on Twitter at @The_Beermonger. Sign up for Arrowine’s money saving email offers and free wine and beer tastings at www.arrowine.com/mailing-list-signup.aspx. The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

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