Dive Brief:
- Federal legislation to lower excise taxes on beer, wine and distilled spirits has majority support in the U.S. Senate, according to trade groups representing beer, spirts and wine.
- The associations said the bill, introduced in January by U.S. Sens. Ron Wyden, D-Oregon, and Roy Blunt, R-Missouri, would create a more a fair and equitable tax structure for brewers, winemakers, distillers and importers of all beverage alcohol and allow them to continue to invest in their businesses and grow jobs across the country. Both lawmakers have a vested interest in seeing the bill passed. Anheuser-Busch, part of beer giant AB InBev, is located in St. Louis, Missouri. In addition, Portland, Oregon has the most craft breweries of any U.S. city.
- The legislation would lower the per-barrel tax on beer from $7 to $3.50 for the first 60,000 barrels for domestic producers that make fewer than 2 million barrels a year. It also would lower the tax from $18 to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers.
Dive Insight:
The decline in beer sales accelerated in 2016, dropping 1.8% compared with a five-year decline rate of 0.6%, according to IWSR, which tracks the alcohol industry. At the same time, sales of hard alcohol — such as gin, tequila and whiskey — rose 0.04%. Mixed drinks, like pre-made cocktails, surged 1.6%.
For beer makers, a tax cut would not only help their bottom line, but could give them addition cashflow to invest in new technology, create new brews and increase production.
“The beer industry helps to support more than 2.2 million American jobs in every congressional district across the country," Jim McGreevy, president and CEO of the Beer Institute President, said in a statement. "I look forward to Congress taking up the bill and moving it to President Trump for his signature so that brewers and beer importers can continue to invest in their businesses to meet consumers’ demand for beer."
According to the Beer Institute, more than 90 percent of all federally permitted brewers produce fewer than 7,143 barrels annually. Many are brewpubs, or restaurants with brewing operations designed to sell locally.
Distilleries and wineries also are impacted by the legislation, and bill supporters are underscoring the number of jobs and overall economic value of those sectors. WineAmerica estimates the wine industry is worth about $220 billion, which includes 1.7 million jobs and $75 billion in wages. The spirit side said there are 1,315 operating distilleries that employ more than 12,000 people last year. Together, they posted $2.4 billion in retail sales in 2015, for a CAGR of 27.4% in volume.
Given the number of co-sponsors, the bill could pass this session of Congress. If so, President Trump might sign it since he is generally opposed to industry regulation and supports tax cuts. But the bill has garnered enough support in each of the past two years before languishing in Congress, so passage this time around is not sure thing.