Tariffs, Taxes and Marijuana Top Discussions at Beer Institute Annual Meeting

The discussion of several headwinds facing the industry dominated the Monday afternoon session at the Beer Institute’s annual meeting in St. Louis.

Beer Institute president and CEO Jim McGreevy opened Monday’s General Session and discussed several issues currently facing beer companies, including the effort to make permanent federal excise tax relief in the Craft Beverage Modernization and Tax Reform Act, as well as the impact of tariffs on beer companies, and competition for market share with wine and spirits companies.

In the effort for permanent tax relief, the beer industry has a powerful ally in Missouri U.S. Sen. Roy Blunt, who is co-sponsoring CBMTRA. During a pre-recorded speech, Blunt said he’s working to make the legislation “a permanent part of the tax code.”

“The goal now would be to permanently reduce taxes and eliminate red tape that made it hard for you to grow your business,” he said.

McGreevy echoed that sentiment, noting that a coalition of alcoholic beverage industry trade groups have already garnered majority support in both the U.S. Senate (65 Senators) and House of Representatives (218 Reps). And “another six or seven” Senators could join as cosponsors in the coming weeks, he added.

McGreevy explained that achieving permanent excise tax relief is critical due to the $350 million annual expenses caused by President Donald Trump’s tariffs on aluminum and steel. The tariffs have cost large brewers such as MillerCoors $40 million and regional craft breweries such as Minnesota’s Summit Brewing $160,000, thus far, he said.

In good news for the beer industry, President Trump announced Friday that the U.S. had reached “a signed agreement” with Mexico, and escalating 5 percent tariffs on all goods from Mexico that were slated to be begin this week were “indefinitely suspended.”

“Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border,” Trump wrote on Twitter. “This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States.”

Another piece of legislative reform the BI is supporting is H.R. 1406, the Aluminum Pricing Examination Act (APEX), which would give the Department of Justice and the Commodity Futures Trading Commission enhanced regulatory oversight over the companies that set aluminum pricing benchmarks, including the controversial “Midwest Premium.” McGreevy called on industry members to drum up legislative support for this measure.

Meanwhile, the beer industry remains in competition with wine and spirits for market share. In an effort to differentiate beer from other alcoholic beverages and demonstrate that it is “the beverage of moderation,” the BI has launched KnowYourDrink.org, a website aimed at demonstrating the differences in alcohol content between beer, wine, and spirits via a drink calculator.

Moderation and marijuana were on the mind of August Busch III, who the BI honored with the 2019 Jeff Becker Beer Industry Service Award, which is given to industry members with “with a passion for beer”

In accepting the award, the 82-year-old Busch, who led Anheuser-Busch for three decades, said he’s not concerned about wine and spirits taking market share from the beer industry. Instead, he pointed to legal marijuana being a bigger threat to beer occasions.

Busch said the company, via its wholly owned distributorship in Colorado, conducted research in legal markets and found that legal cannabis “will reduce the consumption of alcohol.”

“Why we don’t do something about that ladies and gentlemen is beyond me because I don’t think we should lose share to marijuana,” he said. “I think it’s a bad influence in the marketplace, and I think it’s going to get many people in trouble and needless to say, take some of our share.”

Busch closed his speech promoting the merits of low-alcohol beer.

“3.2 beer … is beer you can drink all evening, and be damn proud to be able to hold your presence, be able to hold your conversation and drink all evening,” he said. “I call it drinkability, and I call it share of mind.”

Busch called on A-B North American CEO Michel Doukeris to focus on “drinkability” and to “work hard against marijuana.”

“I don’t think it does anybody any good in our industry — or for that matter the United States — that that comes into the marketplace,” he said.

Other notes:

  • The Beer Institute added five brewer members to its board of directors, including Heavy Seas Beer CEO Dan Kopman as the “Craft Brewer Member.” Kopman supplants Rogue Ales and Spirits’ Brett Joyce, who stepped down as president of Rogue in October 2018 after 13 years of leading the company.
  • Additionally, the board added four ex-officio representatives to the board: Sprecher Brewing president Jeff Hamilton, Two Roads Brewing CEO Brad Hittle, Cape May Brewing CEO and co-founder Ryan Krill and Rogue president Dharma Tamm.
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