Connecticut Gov. Ned Lamont Reduces State Beer Tax
Connecticut Gov. Ned Lamont this week announced the reduction of taxes on beer by 16.7%, effective July 1, 2023.
Under the law, the tax rate on a barrel (31 gallons) will be reduced from $7.20 to $6; a half barrel will be reduced from $3.60 to $3; a quarter barrel will be cut from $1.80 to $1.50; and a wine gallon from $0.24 to $0.20.
The decrease was included in the 2022-2023 state budget, which Lamont signed into law last month, according to a release from the state.
“Connecticut’s craft brewery industry has been booming in recent years, and it is evidenced by the growth of hundreds of new jobs for our state’s residents,” Lamont said in the release. “We should be doing everything we can to support locally owned small businesses, including craft breweries. This reduction in taxes is another way we can support them.”
Beer yielded $2.9 billion in economic output for Connecticut in 2020, and supported 17,892 jobs, according to the latest Beer Serves America report from the Beer Institute (BI) and National Beer Wholesalers Association (NBWA). 120 breweries currently operate in the state.
This is not the first move Lamont has made with the intent to support craft breweries. He signed a package of reforms into law in 2019, including several permitting changes. Beer manufacturer permits — beer, brew pub, beer and brewpub, and farm brewery — were consolidated into one permit, and a Connecticut Craft Café permit was created to allow permit holders to sell all types of alcohol. Craft breweries are also now allowed to hold multiple manufacturing permits in order to make wine, cider, spirits, and more on-site.
Additionally, the amount of beer breweries could sell for off-premise consumption was increased from nine liters to nine gallons.
The state estimates a $2 million loss in revenue from the latest tax change.
Jack’s Abby Signs with Sheehan-Owned Craft Rhode Island
Framingham, Massachusetts-based Jack’s Abby Craft Lagers expanded its relationship with multistate beer wholesaler Sheehan Family Companies in its home state earlier this month, and this week joined the portfolio of the company’s Craft Rhode Island distributor, a spokesperson told Brewbound.
The move follows last month’s announcement that Sheehan’s Craft Massachusetts, L. Knife & Son and Seaboard Products had acquired the rights to sell the Jack’s Abby and Springdale Beer Company brands in Massachusetts, after a contentious split from its previous Bay State distributor, Atlantic Beverage Distributors.
Atlantic had previously distributed Jack’s Abby and Springdale products in the Ocean State. The companies’ relationship in Rhode Island was not included in Jack’s Abby’s initial termination notice, which the brewery sent to Atlantic two days after Massachusetts’ new franchise law took effect.
Pepin CEO Claims Reports of Company’s Sale Are False
Pepin Distributing Co. CEO Tom Pepin disputed reports this week that the company had been sold to Redwood Capital Investments, despite an internal message to employees that said “this transaction will result in a change in the ownership structure of Pepin Distributing Company but not in culture (sic) that we have built,” according to the Business Observer.
Beer Marketer’s Insights first reported the news last week that Redwood was in the process of acquiring the Tampa-based distribution company, valuing the deal at more than $350 million. Local publications the Tampa Bay Business Journal, the Tampa Bay Times, and the Baltimore Business Journal — where Redwood is based — reported the sale as well. Brewbound confirmed the story with multiple sources.
However, Pepin described Redwood’s deal with the independent Anheuser-Busch wholesaler as an investment, rather than an acquisition. In an email to the Business Observer Wednesday, Pepin said the investment was “more of a capital restructuring that will infuse capital to fund growth,” and that the deal would help the company improve service and product availability.
“It is important to differentiate between a sale and an investment,” Pepin wrote in his email. “Pepin will remain Pepin and operate as it has for 50 years as an integral part of the community.”
A July 6 email to employees may be the source of confusion as Pepin described the transaction as “a change in the ownership structure.”
In a follow-up email with the Business Observer on the topic of these structural changes, Pepin said that “Redwood will most likely invest more in the future.”
As of now, Pepin will remain CEO of the company, and Greg McLeod will remain president.
The Business Observer reported that Pepin shared that its revenue increased 3.6% in 2020, to $201 million. The company sells more than 10 million cases of product annually.
Beerboard: On-Premise Volume Up 14.2%
Volume grew +14% in the on-premise channel over the weekend of July 8-11, according to BeerBoard’s “On-Premise Status Report.”
Each state observed by BeerBoard tracked positive volume compared to the previous period (June 17-20), led by Tennessee (+21.3%), Illinois (+14.0%) and Michigan (+13.4%).
Rate of sale posted similar growth, rising from 2.67 kegs per 30 days to 3.01 in the past two weeks (+12.7%). Again, Tennessee (+15.4%) led the category, followed by Illinois and New York (+9.2%), Florida (+8.4%), and Georgia (+8.1%). Michigan (-12.4%) and Minnesota (-8.6%) were the only states to note a decrease in rate of sale.
Every observed state with the exception of Minnesota (-12.2%) and Nevada (-12.7%) reported a rate of sale higher than the same weekend in 2019, averaging +25.9% nationally year-over-year.
Open rate held at 92% for the second consecutive period. The rate has fluctuated between 90% and 93% since the last weekend of January, 2021.
Average number of taps per on-premise location increased to 20 nationally (+5.3%). Illinois, Minnesota, Nevada, Texas and South Carolina each added one handle to their averages. While tap numbers have steadily increased over the past few months, each state still averages significantly fewer taps than in 2019, down -50% nationally.
The percentage of taps pouring grew to 73% nationally (+2.8%), rising for the second consecutive period. Texas (+9%) and South Carolina (+8.6%) reported the most growth, pouring 73% and 76%, respectively. Florida and Georgia were the only states not to increase pouring percentages, remaining at 75% and 72%, respectively, for the second straight period.
Volume share and tap share remained flat for the third period in a row, with domestic leading volume share (49%) and craft leading tap share (57.8%). In the top five styles, wheat/hefeweizen was ousted from the fifth place spot by European ales.
US District Court Dismisses Out of State Retailer’s Lawsuit Against North Carolina
United State District Judge Frank Whitney sided with the state of North Carolina last week, dismissing a retail shipping case that would allow out-of-state retailers to ship directly to consumers in the state, according to the Alcohol Law Review.
Mike Rash of B-21 Wines — a Florida-based wine retailer — along with three named consumers, initially filed a lawsuit against the state in February 2021, claiming that North Carolina’s retail residency law violates the U.S. Constitution’s dormant commerce clause, thus prohibiting B-21 Wines from securing a state permit to ship wine into the state.
In making his decision, Whitney cited the 4th Circuit’s 2003 case Beskind v. Easley, which found that out-of-state retailers and in-state retailers were treated differently by the state, but remedied the issue by removing in-state retailer shipping rather than extending rights to others.
“Wineries are producers; they are the first tier in a three-tier system and are meaningfully distinct from retailers, the third tier.” Whitney noted in his summary. “Allowing producers to circumvent the three-tier system does not undermine the system in the same way allowing retailers to circumvent the system would.
“Given a choice between virtually eliminating North Carolina’s three-tier system, which the Supreme Court and multiple Courts of Appeals have determined is unquestionably legitimate, and maintaining the status quo, the Court chooses the latter,” he continued.