Last Call: A Look at California Beer Production; Schumer Backs Permanent Excise Tax Cuts

BA Economist Breaks Down California Production Figures

Brewers Association chief economist Bart Watson recently conducted a deep dive on California-based brewery production figures from 2017.

Watson pointed out that the number of California breweries making between one and 15,000 barrels increased from 631 in 2016 to 733 last year. Of those breweries, 711 made fewer than 5,000 barrels of beer. The vast majority (575) produced fewer than 1,000 barrels annually — and just 22 breweries made between 5,001 and 15,000 barrels of beer.

Across all brewery sizes last year, draft production increased by about 70,000 barrels, Watson wrote.

“That means that many of the macro changes we are seeing — for example, growth in taproom sales — are coming from the increased number of breweries more than a shift in the actual models of those breweries,” he wrote.

According to Watson, domestic sales from regional beer companies in California declined 3.4 percent in 2017. But a closer look at the numbers revealed that in-state sales actually grew 4.6 percent, while out-of-state sales were down 12.7 percent.

“So California regional craft brewers are dealing fairly well with increasing competition in their home state, but are struggling further from home,” he wrote. “Given the importance of local to many craft drinkers, this shouldn’t be that surprising, but the gap in trends might be larger than expected.”

Read more of Watson’s insights here.

Constellation Brands Names Chief Diversity Officer

Constellation Brands has appointed Kris Carey to the newly created role of chief diversity officer, the company announced in a press release.

Carey, who will report to president and COO Bill Newlands, will lead a team on diversity and inclusion, and she will be responsible for shaping and implementing the company’s diversity strategy.

“Constellation Brands places a premium on diversity and inclusion, and I can say first-hand that my colleagues value me for who I am and the different perspectives and experiences that I can bring to the table,” Carey said, via a release. “Enhancing our diversity and inclusion strategy that continues to foster a positive, inclusive culture is critical to our growth as an organization.”

Carey will remain in her current role as senior vice president and general counsel of Constellation’s beer division. She is also a member of the company’s Women’s Leadership Development Program.

Senate Minority Leader Advocates for Permanent Excise Tax Cuts

Beer industry trade groups’ efforts to make permanent excise tax cuts for brewers and importers received a boost last week when U.S. Sen. Charles Schumer proclaimed his support.

During a speech at Duvel Moortgat-owned Brewery Ommegang last week, Schumer said bipartisan support exists to make the Craft Beverage Modernization and Tax Reform Act (CBMTRA), permanent, according to The Daily Star.

“It’s a great industry for us here in the Southern Tier,” said Schumer, the Senate Minority Leader. “Craft brewing is growing by leaps and bounds.”

Last December, two years of excise tax relief for alcohol producers and importers were included in the $1.5 trillion rewrite of the federal tax code. Under CBMTRA, the federal excise tax was reduced from $7 to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually. The legislation also cut the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and beer importers while maintaining the $18 per barrel excise tax for brewers producing more than 6 million barrels.

Also of note: Schumer said he plans to advocate for increased funding for the understaffed Alcohol and Tax and Trade Bureau (TTB) in order to speed up the brewery permit application process.

TTB Accepts $20,000 Offer in Compromise From Cigar City

The TTB has accepted a $20,000 offer in compromise from Tampa, Florida-based Cigar City Brewing for alleged violations that occurred between May 1, 2014, and May 31, 2016.

A Cigar City spokesman declined to comment, and a spokesman from Canarchy Craft Brewery Collective, which acquired the brewery in May 2016, did not return messages seeking comment.

NBWA Beer Purchasers’ Index Continues to Expand

The National Beer Wholesalers Association’s (NBWA) Beer Purchasers’ Index — which helps explain U.S. beer distributors’ monthly purchasing behavior — expanded for the third consecutive month with a reading of 62 in June. The reading was one point higher than June 2017 levels.

“This reading indicates a level of beer orders placed by beer distributors stable to the prior year period,” NBWA chief economist Lester Jones said, via a press release.

According to the NBWA, “a reading greater than 50 indicates the segment is expanding,” while “a reading below 50 indicates the segment is contracting.”

Craft’s index of 60 was a point lower than the previous year’s reading. Both imports (index of 72) and flavored malt beverages (index of 60) expanded. Cider continued to show signs of recovery with a reading of 46, posting higher ratings than in prior months despite still contracting. Meanwhile, the premium light segment contracted with a reading of 44.

Wastewater Led to Beach Closures in Vermont

Wastewater from breweries and other food producers led to last month’s closure of beaches in Burlington, Vermont, according to the Burlington Free Press.

“The cumulative effect of these multiple industrial beverage and food producers has presented a challenge for us,” Department of Public Works Director Chapin Spencer told the outlet.

Spencer added that the state and its beer companies need to improve their wastewater management practices. The issue has been magnified in recent years by the increasing number of breweries in the city. Zero Gravity, Switchback and Citizen Cider are reportedly working with the Public Works Department to rectify the issue.

Beer- and Cider-Flavored Ice Cream Legalized in New York

New York Gov. Andrew Cuomo has signed a bill to make beer- and cider-infused ice cream legal, according to the Democrat and Chronicle. The new law dictates that the alcohol in ice cream and other frozen desserts should not exceed 5 percent ABV and must be labeled as containing alcohol.

Goose Island Files Labels for New Bourbon County Flavors

Anheuser-Busch InBev-owned Goose Island has filed for label approval for several new flavors of its popular Bourbon County stout line, according to the Chicago Tribune, citing

Even though the Chicago-based brewery has received label approvals for the following Bourbon County variants, there is still a chance some never make it to store shelves.

  • Bourbon County Brand Stout
  • Bourbon County Brand Coffee Stout
  • Reserve Bourbon County Brand Stout
  • Bourbon County Brand Neapolitan Stout
  • Proprietor’s Bourbon County Brand Stout
  • Bourbon County Brand Bramble Rye Stout
  • Bourbon County Brand Vanilla Stout
  • Bourbon County Brand Horchata Stout
  • Bourbon County Brand Wheatwine

Bourbon County and its variants are released annually on the day after Thanksgiving.

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