[00:00:00] Justin Fonte: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound team. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound team at booth 956 during CBC. What are the biggest state and federal issues facing Craft Brewers right now? The Brewer'Brewers Association's Katie Marisic and Marc Sorini drop by the Brewbound Podcast to discuss. Hello and welcome to the Brewbound Podcast. My name is Justin Kendall and I am the editor of Brewbound and I am joined by Justin Fonte, the managing editor of Brewbound. Hi, Justin. What's up? Hi. I'm ready for our four day weekend that is coming right up after people listen to this podcast. Maybe they're even listening to it on their way to their memorial days that are full of beer drinking and bringing the category back.
[00:01:16] Brewers Association: Let's hope that happens, but I'm now also concerned that you told the world about our plan. There's going to be a ton of news on Friday, but that's okay. I know that we can do better now.
[00:01:26] Justin Fonte: That's all right. Also joining us, as always, Zoe Licata, Generation Z representative, Brewbound reporter extraordinaire. How are you doing?
[00:01:38] Craft Brewers: Great. I feel like I always get these like long, very positive titles every time you intro me. Because you deserve them. It's lovely.
[00:01:48] Justin Fonte: You're not getting one next week.
[00:01:51] Craft Brewers: Yes, it's fine. I actually technically will get one next week because we've already recorded next week, but the week after.
[00:01:58] Justin Fonte: No, I don't think I'd give you one next.
[00:02:00] Brewers Association: I don't even think you said her title. You just said, like, and here's Zoe.
[00:02:03] Justin Fonte: I did not. I just said Zoe Licata. So that's why I said that.
[00:02:07] Brewers Association: All right. That's fine.
[00:02:09] Justin Fonte: I apologize. But as I said at the top of the show, we've got the Brewers Association's Katie Marisic and Marc Sorini dropping by on this episode to tell us all about the state and federal affairs issues going on. And we also have a special guest joining us now is Sean McNulty, the man behind the Brewbound Insider Weekend newsletter. How's it going, Sean? I'm good, Justin. How are you all? Doing well. Good to see you on this podcast where we can't see anything.
[00:02:44] Brewers Association: Sean, this is such a fun surprise.
[00:02:47] Marc Sorini: Well, you know, that's how the Irish like to do it.
[00:02:50] Craft Brewers: It's true. Where are you coming from? You're on a mission over there.
[00:02:54] Marc Sorini: Yeah, exactly. The mission to find a room to talk in. There we go. Welcome to modern office politics. People still go to offices? What's that? You see this video thing? You can actually do it in person. It's pretty crazy.
[00:03:10] Justin Fonte: That is wild. What is human contact like?
[00:03:15] Marc Sorini: Come on, geez, you guys are out of the world. You know what's up?
[00:03:19] Justin Fonte: I mean, every now and again, every now and again, yeah. So yeah, you're, you're jumping on to the podcast. We are recording now and we haven't really gotten that far, but I want to throw out a thank you before we get started here. To, uh, the folks over at the Vaughn trap brewing company for sending us some Willie Becker glasses and some beers that I still need to distribute to Jess and Zoe, but they listened and I guess I willed this into existence.
[00:03:52] Brewers Association: You manifested this, but next we're going to manifest you seeing the sound of music because you haven't.
[00:03:58] Justin Fonte: What?
[00:03:59] Brewers Association: Right?
[00:04:00] Justin Fonte: I know. I'm going to drink these beers in my Willie Becker glass, and I'm going to watch the sound of music, and I'm going to watch both.
[00:04:08] Brewers Association: I mean, you're not going to watch them. Exactly.
[00:04:10] Justin Fonte: I pointed just to a podcast about someone who had only seen the first videotape, VHS tape, because I'm old, of The Sound of Music that cuts off before the Nazis get there.
[00:04:23] Brewers Association: Yeah, it's a whole thing. I was in my high school's production of The Sound of Music. It was my last, you know, production on my acting resume. Who's your play? Oh, well, As we know, I attended an all-girls high school. Were you Baron von Trapp? I was not Baron von Trapp. So we got boys to play Baron von Trapp and Rolf, but the rest of the men in the cast were played by the taller girls in the student population. So I was Baron Elberfeld. I had one line. I said, I am not a German. I'm an Austrian. And I also double dipped as the bishop who married Maria and Captain Fun Trap. Oh my God, I can't believe I'm telling you guys this.
[00:05:11] Marc Sorini: There are photos of this, right? Oh, there's photos.
[00:05:14] Craft Brewers: And yeah, we need to see some evidence of this.
[00:05:17] Justin Fonte: Is there a dusty VHS tape that I could just watch your performance of The Sound of Music instead of watching the actual Sound of Music?
[00:05:24] Brewers Association: I don't think so. I can ask. I can ask the ladies of Villa Walsh Academy.
[00:05:30] Justin Fonte: If you can do it before next weekend, I might be able to scrounge up a VCR somewhere.
[00:05:34] Brewers Association: No, but you're either Sound of Music person or a Mary Poppins person. And if you're a Mary Poppins person, you're wrong. I have to tell you.
[00:05:45] Craft Brewers: Oh, no, I have never. I have to join Justin. I haven't. I haven't actually watched all of Sound of Music either. You're not 30. That's allowed. I have watched Mary Poppins probably a good couple dozen times.
[00:05:59] SPEAKER_??: Wow.
[00:06:00] Justin Fonte: I am not 30 either, to be fair.
[00:06:05] Brewers Association: Neither am I. You know, like the vibes in Mary Poppins that I got were just that she was, you know, a perfectionist and kind of smug. And Forlay Maria was on a journey.
[00:06:15] Marc Sorini: Plus the beer was better. So it's all right.
[00:06:17] Brewers Association: Yeah, I don't think there's any, any beer in, in Mary Poppins. There's really nowhere to go after this. My Memorial Day weekend plans have fallen apart. I was supposed to go somewhere else, and now we're talking about an alternative trip. So maybe I will go see our friends at the Von Trapp Brewery.
[00:06:33] Justin Fonte: Well, one last thank you to them. So thank you to Michael Witte, director of sales and marketing for Von Trapp for very kind, providing us with beer and glasses for the weekend. And apparently a movie agenda that now I must have. So yeah, yeah, go a deer. A female dinger had to do it. I didn't even know that song was part of it. It is sung daily in this house.
[00:06:57] Brewers Association: I know I need to stop. OK, we'll talk about my favorite things later. I know it's not a Christmas song.
[00:07:03] Justin Fonte: Let's get to the news. Why don't we? And I'm sure Sean has had better things to do than keep up with our news of today. But Boston Beer's cannabis plans are coming to fruition or at least coming to the fore. And that's in Canada. And it's with something called Teapot. I like the name. OK. I don't know how you feel about it.
[00:07:27] Craft Brewers: It seems a little too on the nose for me. Like it's it's all right. It's cute. It's a cute little logo they got.
[00:07:34] Justin Fonte: All right. I can be in the minority with your cousin from Boston.
[00:07:41] Brewers Association: I do not dabble. Do people really call it pot anymore? I feel like you don't really hear that so much. No. Right? No.
[00:07:49] Justin Fonte: Thanks, Zoe.
[00:07:50] Craft Brewers: The marijuana. Yeah, no one my age is calling it pot or marijuana, to my knowledge. What about grass?
[00:08:00] Marc Sorini: No, no. Is there a cousin from Canada though? That's what I want to know.
[00:08:06] Craft Brewers: Yeah, they need like a new, an addition. Right? Another family member.
[00:08:12] Justin Fonte: He's going to be saying a and a, a buddy, a tea party. Here's some good day. Ice tea, buddy. All right, five milligrams of THC. And I don't think there's a price point on this, but of course, it's probably sold in one can per per trip, right? Something like that.
[00:08:33] Craft Brewers: That's what I would assume. That's what most of the other beverages of the like are.
[00:08:39] Brewers Association: I realized I just told you guys I don't dabble, but I did acquire over the weekend. THC seltzers, 20 bucks for a four pack, but they only had two and a half grams, milligrams. You can tell, and I have not opened them, contrary to how this sounds right now.
[00:08:56] Justin Fonte: My favorite part of the press release for teapot was crafted to minimize any cannabis taste or aroma.
[00:09:06] Brewers Association: This is why I don't understand this product. I mean, that's why I bought this four pack of seltzers. you don't want it to taste like the product that it is. You want it to taste like the product that it's pretending to be when the product that it's pretending to be is widely available. Like, yes, I don't get it. I don't get it.
[00:09:23] Justin Fonte: So teapot is made with real lemon black tea and infused with Pedro sweet sativa, a unique cultivar which is grown in Just Strathroy, Ontario. I'm totally saying that wrong anyway. So that's what's going on with Boston Beer. It's not in the US. It's not going to be in the US anytime soon. And what did Dave Berwick say? Other than it's not going to be in the US anytime soon. As we await further progress on US regulations, we'll continue to develop an exciting product pipeline in the federally regulated market of Canada. I'm sorry, no teapot for us for now. Also in the news, we're gonna party like it's 1989 in Minnesota because they freed the growler. Yes. The growler was introduced in 1989. Not 1999. Are you sure? I googled it.
[00:10:27] Marc Sorini: Is that like 1889? Seems like a technology that's been around for longer than that, but you know.
[00:10:33] Justin Fonte: 1989, Charlie Otto and his father wanted to offer beer to go for their local customers. So in its current format? Yeah, that's according to Growler Station.
[00:10:46] Marc Sorini: Glass chug has been around for a while.
[00:10:49] Brewers Association: I did hear, and I don't know how true this is, because like everything I've learned through the beer education the network at my former employer. Sometimes I, the more I learned, the more I realized I've been told things that are perhaps inaccurate, but supposedly growlers got their name because, you know, workers in the olden days would bring a jug of beer with them to work to have for lunch. And when your stomach would start to growl, cause you were hungry for lunch, it was time to break for lunch and go open up your growler. I don't know how true that is, but that's what I was told.
[00:11:23] Marc Sorini: I buy it. When's the last time you had beer from a growler? Anybody? Years. Past five years?
[00:11:32] Craft Brewers: I don't know if I've ever had beer from a growler. Zoe, never. All right. We get a lot of cider in growlers from down east, because that's the thing.
[00:11:42] Justin Fonte: When we were at Dangerous Man, it was those big jugs, glass jugs.
[00:11:48] Craft Brewers: Yeah.
[00:11:48] Justin Fonte: That might have been the last growler that I had was from Dangerous Man. Somebody brought me chocolate peanut butter porter.
[00:11:57] Brewers Association: From a growler?
[00:11:58] Justin Fonte: Yes.
[00:12:00] Brewers Association: Are you sure? I thought I bought that round and it was just poured from their taps.
[00:12:04] Justin Fonte: No, the last time I had a growler.
[00:12:07] Brewers Association: Oh, I thought you meant like on our last trip.
[00:12:09] Justin Fonte: Six years ago or whenever it was.
[00:12:11] Brewers Association: It's like, I'm pretty sure I was there. I see what you're saying. Yeah, you know, I got a howler. like a little over a year ago, picked up some beer to go from a brewery in the town next to me. But the Howler is like the, it's like a half growler. It's like a, still a glass bottle, but minus the handle. They're cute. I have growlers with like decorative flowers all around my house. Cause I have problems.
[00:12:36] Marc Sorini: Yeah. How many glass? Yeah, this is a glass drawer. So Jess has to have a bunch of, you have to have a bunch of these, don't you?
[00:12:41] Brewers Association: Yeah. Oh, I have probably five with flowers in them. They haven't had beer in them in many years.
[00:12:51] Justin Fonte: That's what I'm saying. Yeah. Well, the six breweries that are producing more or up to 150,000 barrels in Minnesota will see you as their target audience. But I kind of think the bigger deal here is that the legislation allows breweries producing fewer than 7,500 barrels to sell up to 128 ounces to go. So that's four and six packs.
[00:13:18] Brewers Association: Yeah. No, this is like, it's easy to, for us to make jokes at the expense of the poor growler, but this is a big deal.
[00:13:24] Marc Sorini: Yeah. For that reason. Yeah.
[00:13:26] Brewers Association: And even the growlers, you know, like breweries like Surly and the others in that coalition weren't able to sell any beer to go at all. So some is better than none.
[00:13:37] Justin Fonte: We're just jaded jerks.
[00:13:39] Brewers Association: Yeah, no. And like, the thing is like to go sales from your brewery can come, like, there's a lot you could do here. Like, you know, Bruce and experimental R and D type stuff, growler it up, attach like a little card with the QR code to a survey, maybe get some feedback. You're welcome. Everybody in Minnesota.
[00:13:57] Marc Sorini: Three ideas left and right. Justin Fonte. Love it.
[00:13:58] Brewers Association: That's what I'm here for. That's why you hired me.
[00:14:02] Justin Fonte: That exact reason right there. Also going on this week, someone making some noise is Anderson Valley. Zoe, you were on this. You talked to Kevin McGee, who owns Anderson Valley now, and they have vowed for at least six months to not take price.
[00:14:23] Craft Brewers: Yeah, so they put out a little announcement saying, this is word for word, we actually like our customers and said that, yeah, they will take any other adjustments they have to first before taking price right now. That announcement didn't give a time period, but when I talked to Kevin, he said they will reevaluate after the summer months and see how those go, but he has no plans at this moment to take price. And apparently it's something that has been a mission for them ever since Kevin and his family took over the company. He said he from the beginning, he's talked to all of their distributors and everything and said, hey, like we're not going to take price no matter what. That's just going to be something we're going to be strong held to. And they want to continue it, even with all the stuff that breweries are facing right now. It got a little bit of backlash. We heard a couple people who've said, you know, that's kind of that hurts us a little bit because I think you're insinuating that as Craft Brewers have been having to take prices, not just the big beer guys who have. And so I think some people are a bit hurt by that. But it definitely was meant as a message against the big guys. That is specifically what they said in their notes. They called out specifically, I think, Heineken and Constellation for their price hikes and saying, they're just using inflation as an excuse. They're just doing this to make more money. So we'll see how long they can hold that out for, because it's definitely not It's not just an easy decision to be like, oh, yeah, no, we're not. We're not going to raise the prices. We can we can figure it out some other way. And Kevin also acknowledged that they have a very unique situation where they can do that. I mean, it's he works with his whole family like this is a family run thing. Now they have the means to support this if they need to. They also are working on a bunch of different things to support themselves as a breed, a lot of sustainability efforts so they don't have to outsource other sorts of things like power and water, those types of bills, so they can save price there.
[00:16:36] Brewers Association: Yeah, and to put a little more background to this story, Zoe's really been all over. In 2019, December of 2019, Kevin and his family acquired Anderson Valley in a cash deal. they're pretty well set up and I assume they have more of a safety net financially than a lot of other Craft Brewers do who are struggling with the increasing costs of pretty much everything required to make beer. So I think that's where some of the conversation around this kind of stemmed from.
[00:17:14] Craft Brewers: Yeah, and Kevin did not try it like he admitted it wasn't a good year last year either, or necessarily like they had a still we're dealing with a lot of stuff last year, the various waves of COVID-19 did not help them at all. The beginning of this year was rough. So like they're, this isn't just being supported by they have great business. They personally can can take this risk.
[00:17:37] Justin Fonte: Well, good for Anderson Valley drinkers. I would say if you're looking to buy that beer. Also another cider deal another week another well, but this one wasn't a cidery getting acquired. This was a cidery acquiring a Craft Brewers. Dallas is Bishop Cider has struck a deal to acquire Wildacre Brewing in Fort Worth as well as the assets of legal draft in Arlington. The Wildacre. beer brand will continue on, but legal draft doesn't sound like it. The message that I took away from that was, uh, it's a lot faster to get equipment. If you acquire someone that it is to, uh, get equipment on the market. So that's what they got going on there. That deal is expected to close by the end of may and they're opening up, I believe four more. entertainment spaces. They run something called Cidercade, which is a restaurant slash arcade concept. More of those on the way in Texas.
[00:18:45] Brewers Association: That's kind of like the man bites dog story, though. You know, cidery acquiring a Craft Brewers.
[00:18:52] Justin Fonte: It is at this point, right?
[00:18:53] Brewers Association: It is. Yeah. That's what I'm here for. Useless beer information and also journalism platitudes.
[00:19:00] Justin Fonte: Wow. We are on the luckiest timeline, Zoe.
[00:19:04] Brewers Association: Really, your mother says she loves you. Check it out.
[00:19:10] Justin Fonte: I often do. Zoe, you also did a feature on Fiddlehead, which was one of the fastest growing or one of the big gainers in the Brewers Association's production volume, which they've been stingy with of late. But by the time you listen to this, it'll be out, I'm told.
[00:19:35] Craft Brewers: Yes, we should have specific numbers for that list this week, but fiddlehead broke the top 50 list this year. They ranked number 49 and I got to chat with them and they've have had great growth every single year, like double digit growth every year since they have started, which has been like 11 years, 11 or 12 years now. And I chatted with Matt Cohen, who is, the owner of Fiddlehead and talked about how they weren't really focused on doing or had any plans to do distribution for the majority of their beer, as was the case with a lot of breweries and COVID changed that. And they ended up canning their flagship Fiddlehead IPA, and it just took off and was super successful in the off premise. And that has also just that alone has grown double digits in each of its markets in the past few years. That's just been leading all of their growth and they only do cold distribution. They won't distribute any of their beer warm or room temp or anything, which Matt was very strong on. They are going to continue that with any growth that they have. They are in Vermont, Massachusetts, New Hampshire, New York, Connecticut, Rhode Island, New Jersey and Pennsylvania right now. And that seems like it's going to be the case for a little bit. They're not going to really expand out to many places right now. Just keep the growth going where they're at.
[00:21:05] Brewers Association: But it seems to be going quite well for them. I mean, especially with the cold thing, you can't get much farther than those places. I really enjoyed reading that story you wrote. Thank you. I appreciate that.
[00:21:17] Justin Fonte: Sean, favorite Fiddlehead IPA?
[00:21:20] Marc Sorini: Yeah. I mean, second fiddle still, it's a world-class beer. Both beers are world-class beers. I love seeing them in Jersey. Whenever I go back and they're in New York, I suppose, I don't see him too much, but, uh, but it's priced right. And the quality, every time I have picked up that beer, if you tasted that blind, you, you know, I mean, it, it gets all the press in Vermont out of that area, but You know, it's funny, I went there, I guess 2012, this is pretty early, but you know, like that was it was Lawson's, Sip of Sunshine, it was Heady Topper and Second Fiddle was the other like beer to kind of, you know, on the hype train back then. And Second Fiddle, all those beers are still as good as they were, but it's really good to see them. I mean, that's 70,000, you know, 70,000 barrels. That's a lot of beer. That's legit. Like they doubled during COVID. Sorry, they tripled during COVID really almost the past two years. And their split is 50-50 on and off premise. And it's like, you're doing that kind of business, you know, when the bars were shut or whatever it was like, it's just, I'm really happy to see the growth and they make two beers that I know really, really well. I know that the story Zoe did a couple of beers I hadn't heard of that they were, I guess, hoping to send more out on, but, um, which I'd love to try, but yeah, they're, uh, they're coming out with a, like Belgian white ale this year for the summer.
[00:22:32] Craft Brewers: They tested it out just in Vermont over this past winter, but yeah, trying out some new stuff away from the IPAs. But that freshness thing, like they try to keep a two week cycle with everything. So like they're like, if you're drinking one of our beers, it is most likely been brewed within the past 14 days, which is quite impressive.
[00:22:51] Marc Sorini: Holds true in Jersey. Whenever I see it, check the date. I'm like, yep, that's definitely worth it. Pick it up. So it pays off.
[00:22:57] Brewers Association: I did a blind tasting with all three of the beers you mentioned. Brian and I had been in Vermont in 2015 and I brought back, had a sip of sunshine and second fiddle and we piled into a conference room and did a blind tasting on a Friday afternoon at my old job. And everybody was pretty split, which was interesting.
[00:23:16] Marc Sorini: I think everybody's a winner there, really. That's really, you know, there's no, there's no loser in that bunch.
[00:23:20] Brewers Association: Right. I'm just a kind of coworker to have.
[00:23:24] Craft Brewers: That was the theme of this week's podcast.
[00:23:28] Marc Sorini: I'm just going to brag about myself.
[00:23:30] Craft Brewers: Jess is the perfect coworker.
[00:23:31] Marc Sorini: Jess is there for you. A lot. Marketing needs, ideas for growlers, you know, whatever you need.
[00:23:38] Craft Brewers: I'm here. This is not an advertisement, though, for anyone to try to recruit Jess away from us.
[00:23:44] Marc Sorini: Yes, absolutely. She's also very loyal. Yeah.
[00:23:50] Brewers Association: I don't think I can go work anywhere else. This is like the only thing I'm suited for. And I'm terrified to go back to marketing. Terrified. So please just keep me.
[00:23:59] Justin Fonte: Yes. I told you, ride or die. You also reported on trogues this week, Jess.
[00:24:06] Brewers Association: I did.
[00:24:06] Justin Fonte: Tell us about trogues and, you know, this not trend, but everybody's putting up solar panels.
[00:24:14] Brewers Association: Well, yeah, the sun so hot right now, literally. Sorry. Oh, man. OK, yeah, I had a great conversation with Chris Chagner a while back now. That's just kind of how this seems to go. So I apologize if you have spoken with me and are wondering when I'm going to write about it. Eventually I will. But yeah, Troggs is turning 25, which is a feat in Craft Brewers these days. Good for them. Happy anniversary. The company bought their building, they were renting the building they were able to buy it was a deal that was delayed by the pandemic and since acquiring the building they've done a lot so filled the whole roof with solar panels that's going to be able to power 15 to 20% of all the electricity needs. They also are in the process of installing, building an expansion to hold a new canning line that will be able to double their can capacity. That should come online in October. Their packaging split right now is about 60% cans. They don't want to get away from bottles because their bottle is so iconic to them. They have a custom mold. But yeah, they've really, even before the pandemic, leaned into 12-packs, 12-ounce cans, 12-packs, Perpetual IPA, Sunshine Pilsner. Summer is a busy time in Hershey Pennsylvania as Hershey Park draws 4 million visitors a year well Hershey Pennsylvania itself draws 4 million visitors a year. I cannot say for sure whether or not they're all going there to visit the chocolate themed amusement park, but they probably are. plus the concert venue, conference center, and trokes. They're going to be dabbling in a gluten-reduced FMB called Raza Squeeze, 4.5% alcohol, limited push in Pennsylvania off-premise markets. But since Pennsylvania allowed grocery stores and convenience stores to sell beer. They've really developed a good, nice little change strategy to handle that burgeoning market in their state. Pennsylvania is still obviously the bulk of their sales. It's where they're from, but they're also in about nine other states as well.
[00:26:16] Justin Fonte: Nice. Yeah. So shifting gears a little bit this week, we saw the new high noon SunSips ad and they're coming after a malt based and I'm guessing sugar based as well. Hard seltzers.
[00:26:31] Brewers Association: I think I'm the only person in the world that's annoyed by this, but I am. Okay, so to fill everybody else in, High Noon has a commercial out that says any lake can be a great lake if you're drinking High Noon something, something, basically a lake. I don't like swimming lakes, they creep me out. You know what, the ocean, the fish just have more room. I get it. I get it. I mean, yeah, we're not like, yes, I understand. We're not like people. Thank you, Sean. So, but anyway, the point that we want to make here is that like they specifically say in this commercial, like it's not a malt based hard seltzer. which like most of them aren't. They're brewed with sugarcane. It's fermented sugarcane. And you'll hear in next week's podcast, we do have a whole conversation about the difference between fermentation and distillation. And I think that's probably the verbiage that everybody should start shifting toward so that you stop freaking out word nerds like me.
[00:27:29] Justin Fonte: Sean, this strikes me though is so inside baseball.
[00:27:34] Marc Sorini: Yeah, this is a hashtag. Nobody cares. This is worse than corn syrup gates. You know, it's like, do we learn nothing in three years about like, yeah, everybody cares. Nobody cares. Why are you doing this?
[00:27:46] Brewers Association: I don't know who the heck they think they're talking to.
[00:27:48] Marc Sorini: Yeah, this is absolutely like somebody we should talk about. Oh, yeah. Well, what's the differentiator? Nobody cares.
[00:27:55] Justin Fonte: Zoe, a year ago, before we knew you, before any of this, you see this ad, you hear malt-based seltzers. What goes through your mind? Like, huh?
[00:28:07] Craft Brewers: Yeah yeah I mean yeah before I was in this world I didn't know what a malt based or sugar based or any of that was. I knew a seltzer was an alcoholic fizzy drink. I also didn't know high noon was different for a second there. I thought it was the same as all the other seltzers. If I saw this then, and what I'm sure most of my friends who say this are going to think is like, they're just, I don't know, rooting for vodka. They're not going to really know what... The only thing I could see happening is like maybe interpreting from that, like maybe having vodka is better for you. So that's why we should choose this and not a malt based one. There's probably going to be some confusion of like, oh, maybe because it's like gluten and malt, that's not good for you. Let's not have that. that's where I could see those connections happening. But no one that I know of is going to the liquor store and being like, oh, I really need to make sure I get a malt-based seltzer right now or a non-whatever. Spirits-based. Spirits-based, yeah. I don't think that's the focal point. They're focusing on what the flavor is, and then maybe next is either calorie count or ABV. It's not really what the base is, I think, at this point in time.
[00:29:22] Brewers Association: Yeah. I mean, the other thing is that they know that because it has vodka, they're able to charge more money.
[00:29:28] SPEAKER_??: Right.
[00:29:29] Marc Sorini: That's important. Like lean into that part. Like Zoe said, vodka, like, oh, it's less, you know, vodka soda. It's a little, maybe less calories or whatever, a little better for me. But like malt, no one knows what malt is. No. It's like, it's the dumbest, it's such an industry term. It's like, maybe like not sugar-based would be something like, okay, again, it means nothing in the end, but just put malt in there. Like you picked the wrong one and nobody cares. Nobody cares.
[00:29:51] Justin Fonte: Well, they advertise themselves as a hard seltzer on the cans. It says vodka and soda. And then, Zoe, over the weekend, you shared a video of someone who went to the truly hard seltzer Ria in Los Angeles. And what was it that she specifically said about vodka sodas?
[00:30:13] Craft Brewers: She tried one of the seltzers and she and she said, like, I might as well have a vodka soda or something. It tasted like the same and seemed bored by it.
[00:30:22] Brewers Association: Yeah. Well, I guess like those giant tanks behind the bar have like a super concentrated. Truly Base, that's 18% alcohol, and that's what they use to mix cocktails.
[00:30:31] Craft Brewers: So, like, you should find your review. Her name is Lauren Powell, Lauren, spell L-O-R-Y-N on TikTok, shout her out, Lauren Powell. She does the reviews of all of the hard seltzer you have ever, anyone ever comes out with. So that is why she got invited to go to this Truly House. But yeah, she tried one of the drinks and said, I didn't love it, it reminded me of a vodka soda.
[00:30:55] Brewers Association: Which like in 2018, when all of this started, the way that you got people to understand what a hard seltzer was, well, it's like vodka soda in a can. And crunched like 15 years worth of hard seltzer innovation into two. And now people are like, ugh, it's just vodka soda. Full circle. Can we get Lauren on the pod?
[00:31:16] Craft Brewers: We should do that. We should. She is very energetic, very excited about all things hard seltzer. She also has tried the absence hard seltzers that we reported on as well. She tries everything under the sun.
[00:31:28] Marc Sorini: Can I give a hard seltzer shout out here for a second? Please. Oh, it's a evil twin, which is a brewery here, uh, New York city. And yep. Of course. Exactly. You're famous of that lineage. They do hard, hard seltzers, which are, they have a line of them, but in Hawaiian punch one, it was spot on, man. I'm like, you could have told me that was a carbonated Hawaiian punch. And that would have not have done the difference. Like for all the crazy things they do with that brewery, their seltzer lines whenever they do like this tastes like you know whatever like spot on so shout out to eel twin for for dialing that in
[00:32:02] Craft Brewers: I think that's the whole like what people who are looking for something along those lines, that's what they're all about. It's all about the flavor now. It's not going to be about, I don't know, whatever it was before. That's why she's not excited about a vodka soda. That's why everyone is trying out all the new stuff from Truly and Bud Light and everything. It's like, what kind of crazy new flavors? And does it taste good? Does it not taste like fizzy alcoholic water? That's what people want.
[00:32:29] Justin Fonte: Let's wrap up this section of news with the Restaurant Revitalization Fund, which died in the U.S. Senate. May it, you know, zombie back from the dead and hopefully fund some of these restaurants, breweries, bars that need it, actually.
[00:32:48] Craft Brewers: Yeah, unfortunately, we talked to, in this podcast, we talked to Katie Marisic about possible more funding. She had said that they're still looking for the votes for this, and it ended up not being enough in the Senate, and so they did not pass it on to the next step. They denied the Senate, but it's technically a bill that passed the House, but that legislation is unlikely to go any further now that this one hasn't either. I mean, it's not the first time that it seemed like additional funding was dead. It seemed like there wasn't really anything coming for a minute. And then a few months ago, both these two bits of legislation came about and it was exciting and possibly a new life.
[00:33:33] Brewers Association: It needs 60 senators and it got 52. So unlikely that the House version will come over, but it could.
[00:33:42] Justin Fonte: And five didn't vote.
[00:33:44] Brewers Association: Five did not vote.
[00:33:45] Justin Fonte: All the side eye there.
[00:33:47] Brewers Association: Yeah, and they were a mix, too, of not voters. It would be three Republicans and two Democrats.
[00:33:54] Justin Fonte: Well, let's get to our featured interview with Marc Sorini and Katie Marisic. They'll talk all about it and we'll go from there.
[00:34:04] Brewers Association: On the heels of the Brewers Association's annual Craft Brewers Conference earlier this month, we've got two VIP guests to help us break down the trade group's regulatory and legislative priorities for 2022. Please welcome to the Brewbound Podcast, BA Federal Affairs Director, Katie Marisic. Hi, Katie. How are you? Hello. Thank you so much for having me. Oh, thank you so much for being here. And we also have with us today, BA General Counsel Marc Sorini. Hi, Mark. How are you?
[00:34:36] Katie Marisic: I'm doing fine. Glad to be here.
[00:34:39] Brewers Association: So glad you guys are here. There's a lot to discuss. So let's jump right in. Katie, I'm going to start with you. Your colleague Bart Watson, BA Chief Economist, has said that 2022 is going to be a make it or break it year for many Craft Brewers, many of whom were able to eke out an existence in 2020 and 2021 with help from federal relief programs. And those have largely slowed down, but Katie, there is one more that is, well, there's a few things floating out in the ether, but let's start with the state of the bill to refill the restaurant revitalization fund. What's going on there?
[00:35:14] Brewbound Podcast: Yes, so the Restaurant Revitalization Fund, just a quick refresher for those of you who don't know, was a $28.6 billion fund that was passed by Congress in 2021 that provided grants to hospitality businesses. And breweries were included in that, specifically breweries that were able to show that 33% of their revenue was on site, as well as restaurants and bars. So I mean, it's good for the on-premise. both our members and the broader hospitality industry. Unfortunately, the amount of funding that went in was less than was originally requested in a bill called the Restaurants Act, and that money ran out, and it ran out very quickly. From the brewing industry, we had about 1,600 members that qualified for about half a billion dollars in grants. I think $480 million is what I am remembering. And there are still a lot of breweries and other businesses out there, like in the hundreds of thousands that didn't get funds that qualified for and needed them. So Congress has been trying to, I don't want to say, I don't know if replenish is even the right word. They want to fully fund. They want to finish that promise that they made to these industries and say, OK, we're going to give you these grants that you needed. There have been multiple pieces of legislation. In early April, the House passed their most recent legislation that would have provided $42 billion for the restaurant revitalization fund. The Senate has said that they're going to bring their legislation up for a vote this week. It's called the Small Business COVID Relief Act of 2022. And in that legislation, amongst many other things, is $40 billion for the Restaurant Revitalization Fund. Now, the Senate does often say they are going to vote on legislation at a certain time period, and it gets pushed back. So I want to say that I hope by the time this airs, there will have been a vote on this legislation, but there is a chance that it will not have happened yet. but it's on the calendar and there is commitment from Senate leadership to bring it up. For it to pass, it first needs to pass a filibuster. The Senate is its own special political animal, which means it needs the support of 60 senators. So the Senate is broken down exactly 50-50 across bipartisan lines, 50 Republicans, 50 Democrats. So they need the support if Assuming that you have 50 Democratic votes for the legislation, you're going to need the support of 10 Republican senators. This legislation has had the long support of Senator Wicker from Mississippi. He was a lead sponsor of the original bill. And there are a lot of other Republican members who support it as well. But we really want to get that 60-senator threshold so this gets a vote. So we're doing a strong grassroots push. We're doing strong outreach on the Hill. And of course, our friends in the restaurant hospitality industries are also doing the same. I'm not even going to put odds on it. I think it does have broad support. I think it has bipartisan support. But there are a lot of things in the House and the Senate that have that right now. There are also a lot of issues that the Congress has been working on. They have not been able to pass involving COVID relief, involving the Russian-Ukraine war. So really pushing to make sure that this is a priority and something that passes, that's what we are doing right now. And our members have been great. We've had strong outreach on the Hill. And we just want to make sure that we can get it across the finish line. But unfortunately, it's not up to us.
[00:38:50] Craft Brewers: And I remember you mentioning during CBC when he talked about this, there's a little bit more like flexibility in these as well of like how much people are getting try to get more access to more people, right?
[00:39:01] Brewbound Podcast: Yeah. And I mean, there's some Monday morning quarterbacking on this, but I don't necessarily disagree with it. If for some reason this legislation passes and there is not enough money for everyone who qualified for the grants, they can do across the board percentage reductions. The SBA administrator has a little bit more flexibility. And this stems from the fact that they were saying with that initial, you know, initial money, maybe they should have given a little bit to everyone instead of fully funding fewer number of people. So I think that is a good solution if that's something that arises. And I do hope we get to that point. I hope legislation passes, you know, passes the House then and then get signed. So this is an issue that we can deal with.
[00:39:43] Craft Brewers: Do we have any idea of what the head count for support looks like right now or how many more supporters are needed?
[00:39:51] Brewbound Podcast: I've heard it fluctuating throughout time. Most recently, I've heard optimism from some Republican offices that they think they have the 10 votes, but it can switch back and forth depending on what the priority is. By my last count, I think there were still two that we would really love to have strong confirmation from that have not gotten that yet.
[00:40:12] Craft Brewers: Another thing that you touched on during your guys conversation on all this relief and everything was pushing for tax credit related to like spoiled goods, beer that had gone bad and coolers at the beginning of the pandemic. What is the status of that now? What is that looking like?
[00:40:30] Brewbound Podcast: That one is a piece of legislation that we are working on with our friends at the Bureau Institute and the NBWA and other groups, fisheries, the vending machine association, that is likely something that we would see happen at the end of the year. You guys have been doing this for a while. You know, a lot of times Congress waits till December and passes large pieces of legislation like tax extender bills. We think that if there's an opportunity for that to move forward, it would likely happen in December. But we're also continuing to advocate for that. And it has strong bipartisan support in both the House and Senate. And the legislation itself was introduced by, in the Senate, Senator Cortez Masto, who I know is pushing this issue very hard.
[00:41:18] Justin Fonte: Mark, one of the themes that I took away from the Craft Brewers Conference was direct to consumer shipping. And it feels like there's sort of a drumbeat going for DTC shipping and sales. And I'm curious, do you think that this is the year that we make meaningful headway there? And if so, why is this the right moment?
[00:41:41] Katie Marisic: We hope this is the year we can make meaningful progress. We are supporting strongly the California Craft Brewers Association in legislation that would open up direct-to-consumer shipping from the current status quo, which is in-state breweries only, to one that would open up the California market to the entire country. And we think then that's a bellwether state to signal to other states that they ought to open up their markets to this. Having said that, I'm not Pollyanna. It took the wine industry two-plus decades to get this done. In fact, arguably three decades, because they really started the effort in the early 1990s with the so-called reciprocity legislation. They got about 12 states in and then the opposition solidified and it turned into much more of a litigation strategy that culminated in 2005 and then since then they've been rolling out their permit states and and got to the point now where you have you know 46 states but it took Again, depending on how you measure it, 20 to 30 years to get that done. So, you know, this is not going to be done in a year or two, but we hope that we see meaningful progress with California as Exhibit A. And then, Katie, you want to say a few words about the USPS Act?
[00:43:01] Brewbound Podcast: Always. I mean, I love to ask people, like, why do you think the U.S. Postal Service isn't allowed to ship alcohol?
[00:43:07] Justin Fonte: Well, I've been told that it's because your letter carrier shouldn't be your bartender.
[00:43:12] Brewbound Podcast: Okay, well, I mean, should my flight attendant?
[00:43:16] Katie Marisic: Or my pizza delivery guy, because apparently delivery intrastate is perfectly fine.
[00:43:23] Brewbound Podcast: I would say on that, the United The Postal Service, the USPS Shipping Equity Act, that is something that we're pretty passionate about. We've seen a lot of support from our members and a lot of support from consumers. And Justin, I think you asked why this might be something that's starting to become more prevalent and maybe have a better chance of passing. And I think it does revolve a lot about consumers and the consumer demand or desire to have things delivered directly to them. And that's more of the state DTC level. But like I said in my talk, for those of you who weren't at CBC, when we talked to our members in more rural locations in states where DTC is legal, some of them don't have access to shipping, even though they would like to do it. The Postal Service was built to send mail to all of us. And the private carriers don't always necessarily fulfill that role, or if they do it might be cost prohibitive. We would like to see The Postal Service be allowed to compete in that market and mark you can always correct me on this if I'm wrong but they were at one point allowed to ship alcohol. But when individual states started banning alcohol prior to prohibition, The Postal Service, you know, stepped in to no longer ship alcohol from states where it was legal to states where it wasn't. And that makes sense. That was probably one of the main sources of shipping back then. Now, we think that it does make sense to allow them to compete, to give them the opportunity. We hope that they would be successful at it. The thing about this legislation that we do really like is it does not supersede any state law. It's very clear on that front. It does require, you know, the same things to ensure that underage people do not have access to alcohol. And we think that it's a good natural step in allowing consumers to have access to the products that they want.
[00:45:22] Craft Brewers: Just another example of beer laws and liquor laws still kind of needing to get updated with the times, I guess you would say. What do you see as like happening first? Do you see this as more likely to come about or is it going to be more state by state, those laws adjusting first?
[00:45:41] Katie Marisic: I think that because the federal law doesn't preempt state law, the real battle is going to ultimately be at the states. We think the federal government could send a nice message, B, help The Postal Service and C, help people in rural areas. But I think the main event, just as it was with wine, is going to be at a state by state level. So that that's where we see the current dozen or so state status quo as as being something that we'd like to change.
[00:46:09] Brewbound Podcast: Yeah, I agree on that. I think Mark and our new state government affairs managers, Sam DeWitt and Nancy Palmer and our guilds will definitely progress at the state level. Because as the USPS is built to ship to all of us, Congress is not built to pass things quickly, or at least that's the way I look at them.
[00:46:31] Brewers Association: Katie, how many times has the USPS Shipping Equity Act come up in the past?
[00:46:36] Brewbound Podcast: That is an excellent question. This is the first Congress that the Brewers Association has actually been publicly supportive of the legislation. And that is because they work to tighten up some of that language about not superseding state law. But it is an issue that I know that I have heard about since I started working for the Brewers Association back in 2015, I think it is. So it has been around for a few Congresses. The real lead sponsor of this legislation is Representative Jackie Speier from California. She has been pushing it for a long time. And of course, Representative Newhouse from Washington and Senator Merkley from Oregon are also sponsors of the legislation.
[00:47:23] Brewers Association: Well, happy seventh anniversary to your BA career. And as Justin had mentioned before, we've heard that our letter carrier should not be our bartender. That's an oft-repeated line from Craig Purser, CEO and president of the National Beer Wholesalers Association. And we've talked to them a good amount about this, because this is something that they have opposed, at least the last time we spoke going on about half a year ago. their counter to why this shouldn't work is something that you basically just refuted is that the bill has been tightened up recently to make sure it doesn't supersede state law because you know the counter was well by making this legal at the federal level you would circumvent the state's ability to regulate their own alcohol but clearly that that's been fixed so I guess we'll see what happens.
[00:48:11] Brewbound Podcast: Yeah, I'm effective at my job. I don't know that I am anywhere near good enough to overturn amendments, so we're preferring to work within the rules that exist.
[00:48:24] Brewers Association: Totally makes sense. So shifting gears a little bit at Tim Wu who is special assistant to the President for technology and competition policy spoke during CBC earlier this month to discuss the Treasury Department's report on competition in the beverage alcohol industry. He had a heaps of praise for Craft Brewers. you know, saying that they're so innovative and have such a fighting competitive spirit. So this report has been something that, you know, we've all been reading about, thinking about, and writing about for months now, ever since the executive order came out last summer. But what changes should we look for in the short term as the result of this report? What do you think is going to be some of the more immediate things that come out of it?
[00:49:05] Katie Marisic: The quick things are the things that the executive branch can do without either rulemaking or legislation. If you came to my CBC talk, and some of you did, the biggest bucket there is trade practice enforcement. We also think there's going to be new regulations on the trade practice front. But even now, TTB, for example, has a pretty clear policy on category management that they articulated in 2016 that identified the fact that a lot of the secondary practices related to category management are not in fact covered by their current exemption on schematics and yet they have yet to make a single case under that ruling. So we think it's time for that to end and we think they need to take on those bigger issues because of course that's not going to be popular with certain big retailers, might not be popular with the folks who are designated as the category captain. But we think that the control of the mouse by the largest players in the beer industry, it's almost always one or two suppliers in the wine and spirits industry. It often is now the very large wholesalers there. But in either case, we think that's a chokehold that gives the largest companies a big advantage at the chain retail. And we think that needs to end. But that's one example. other things. You've heard us talk about stadium practices. I went to the Nats game this Saturday, which was awesome breaking an 11 game winning streak of the, of the Astros, which was surprising given the state of the nationals this year. But you know, you go to that venue and it's not surprising that the sponsor, which has paid for signage only, according to the contract, just happens to be the only malt beverage products that you can get from any of the vendors walking up and down the aisles when you're in your seats and virtually all the food venues. And then there's one or two taps for local folks that are kept there for window dressing, I think, but it looks a lot to us like a modern Tide House. and in fact TTB did make a case a couple years ago in Colorado but the practices haven't stopped and we think one of the reasons the practices haven't stopped is that the the fine was not commensurate with the the scale of the activity or the scale of the violator and that's another thing that we've urged Treasury to look at, and that can be changed without additional rulemaking or additional legislation. So those are just a couple of things that we want to see changed immediately, and hopefully we'll see some action coming out of Treasury. And when I say Treasury, of course, TTB being the point of the spear.
[00:51:46] Brewers Association: Mark, I have a very important, very serious follow-up question for you on your Nationals experience. Which president won the race before the game started?
[00:51:55] Katie Marisic: I think it was Teddy Roosevelt, but I wasn't paying very close attention at that moment.
[00:52:02] Brewers Association: I'm glad that Teddy is allowed to win now.
[00:52:05] Brewbound Podcast: He is. Wow, good for Teddy. After they made it to the playoffs for the first time, they started letting Teddy win.
[00:52:14] Brewers Association: Yeah, I've never seen it live, but it's one of my favorite, you know, stadium bits to find on YouTube. I forgot they did that.
[00:52:21] Katie Marisic: Washington's good for theater, aren't they?
[00:52:24] Brewers Association: Yeah, the Red Sox have nothing like that. And the Red Sox, interestingly enough, are probably the only team in baseball to have a BA-defined member as their main sponsor. So I've not been to a game this year, but if I do recall correctly, up on what's now called the Sam Deck, you can still purchase beers from other breweries.
[00:52:45] Craft Brewers: Which you will need to watch how horrible they are right now.
[00:52:51] Justin Fonte: So you mentioned stadium sponsorship deals and you mentioned category management, and those are clearly two priorities of the Brewers Association on this. Do you get the sense that those are sort of the shared main priorities of the treasury, the TTB coming out of this report? Do you get a sense that that's going to be where their focal points are going to be going forward?
[00:53:17] Katie Marisic: From the trade practice perspective, I think so. One thing to keep in mind is that even an investigation has a pipeline. If they start a new investigation today, we are probably not going to hear about it for at least a year because they go and first subpoena the retailers, then they subpoena the distributors involved, and then they end up with the suppliers. And so it's a process. But we would expect them to have heard the Treasury report loud and clear. Now, of course, there are other parts of TTB that have other priorities. One of the things that the Treasury report also underlined that we endorse, and I think this is one where we share the views of the bigger brewers and many other in the industry, is the need to just generally update and streamline some of the TTP processes and regulations. For example, on labeling, we think that's an area where there's probably more consensus among the industry, and that's a different priority with a different set of people working on it.
[00:54:17] Craft Brewers: Going back to looking at sponsorships and things, that seems to be a major area for TTV, especially some of maybe the larger members of the BA may be looking into these types of deals. Do you have any advice for how to navigate this with this new kind of focus on these types of deals?
[00:54:35] Katie Marisic: I think that you have to look at this as a as an area where if you're going to say that it's just about signage that it's really just about signage. And I understand that if your venue is plastered with a particular logo you're probably going to sell more of your beer than you might. You know all of the things being equal. But I think we all have been to these venues and it's not just signage. It's patently obvious when you walk the aisles and you look at the placements that sponsorship has in effect dictated the choice. And, you know, the lawyers who who set these up are smart people. They always make sure that there's, you know, some de minimis presence of somebody else. But we think it's lopsided. So my advice to a client, you know, look, I was in private practice until two years ago. This is what I did. would be if TTB is going to be looking at this, you want to make sure that there is absolutely not only nothing in writing, but that there's no understanding. That's right in the statute. It says it doesn't have to be a written agreement. It can be just an understanding to exclude other products. And there shouldn't be that. And you have to train your salespeople to not do that.
[00:55:51] Brewers Association: Let's shift gears a little bit and talk about something that I know is a big issue for the BA that I think a lot of people in and around the beer industry have been talking and thinking a lot about, and that is the spirits industry's push to create some more equivalencies between beer and ready-to-drink canned cocktails that are spirits-based. And there's a few different ways that this goes down in terms of some states. lowering the tax rates for these beverages, and some are also granting them wider market access. So Mark, you recapped a lot of these efforts during your talk at CBC. Earlier last week, we reported that Vermont's legislature approved a bill that would create a new regulatory class for RTDs, would tax them at $1.10 a gallon, and would allow them to be sold at beer and wine stores rather than state-run liquor stores. And Your CBC update wasn't all that long ago, but we know how fast things move. So have there been any developments with bills in other states that we need to be looking out for?
[00:56:51] Katie Marisic: One other development is that there is now a bill that's been pending in New Jersey for quite some time. You may recall that last session, the New Jersey RTB bill looked like it had serious legs. That brings the excise tax rate for New Jersey, not for New Jersey, in New Jersey, from the liquor rate all the way down to the beer rate. And it was narrowly defeated. The primary sponsor of that bill in the last legislative session was none other than the Senate President. We got lucky because the Senate President, in a stunning upset, lost his re-election bid. And now that bill was reintroduced by another member. It will get a hearing, we learned on Friday. This coming Thursday, we feel quietly confident that it will ultimately be defeated like we did the last time around. But that's the latest development on an RTD bill. We haven't seen movement any place else, although we are waiting on one other state whose short legislative session is just getting going. So there may be other changes. I will say our batting record has been outstanding this year. We had to take a compromise in Vermont. but the tax rate that was ultimately settled on was higher than they originally asked for the wine rate. It ended up being double the wine rate, still lower than it is now because it's in the control system, but that was the one state we had to compromise on and we've had very clear wins in, I guess, eight states that can be counted as definitive wins and then several others that we think we have under control.
[00:58:32] Justin Fonte: I'm a little curious because we have a lot of conversations, obviously, with Craft Brewers who are getting into these spaces and they're making RTDs and they're super psyched that they think that they're getting in on this hot trend. And I'm curious, you know, we're just coming off the Craft Brewers conference. Obviously, you guys have had a lot of conversations as well with Craft Brewers and guild leaders. And so I'm personally curious how you convince them that this is not in their best interest in the long run, because I think a lot of them see opportunity.
[00:59:07] Katie Marisic: Well, so at the end of the day, obviously, there's a debate to be had, which was had internally and with our relevant committees as to where to go, because you point out, we have members that are making these products. And indeed, our efforts here are in lockstep with the large brewers and with the wineries. And the number one product is made by the largest member of the Wine Institute, and the number two product is made by Anheuser-Busch. But they recognize that the long-term policy and economic interests are aligned with keeping fermented products in a different category than liquor products. But we recognize that there are some members that may take some convincing, but we think that there's a long-term case to be made that Team Beer needs to win this fight Liquor has been advancing on drinking occasions, market share, for many, many years. We think it's self-evident that liquor is different from beer. The RTDs, because of their lower alcohol content, make for a facially more attractive argument. But let's face it, you could make the exact same products from a taste perspective and make them out of a malt base. When you think about, for example, the Bartles and James product, The gallo knows how to make a malt based cooler type of product. They chose to make high noon in a different way because they want to sell it as vodka. And in their case they recognize that they're fine with playing higher tax. My point though is that. The idea that this is somehow unfair, we don't see it. You could have made these products as malt beverage products and taken advantage of the lower tax rate. You're doing it because you want to sell liquor. And if you want to sell liquor, ultimately that's pushing consumers to products that are 80 proof and 100 proof. And that's an entirely different animal.
[01:00:59] Justin Fonte: So does that education effort start with guild leaders or does it start one by one with the breweries?
[01:01:08] Katie Marisic: I think it's a little bit of both. I don't think they're exclusive. We have talked to the guild leaders about this. They've given us some feedback. Sometimes they ask very, very pointed questions, and that's good. You know, that makes us and forces us to think. But we've had that education that's been ongoing with guild leaders, but we also have communications on this directly with the membership. at, you know, CBC, for example. So I think that's a great question, but we don't think members versus Guild are mutually exclusive. We think we need to get Team Beer together on this one, and we'll spread that message to different audiences.
[01:01:45] Craft Brewers: This might be more of just your personal views on things than if you can actually have data to back it up. But when all The Postal Bev-Alc is being pushed into this more, like being a beverage company, a total beverage company, and Bart talked about, you have to kind of be open to innovating, finding new niches. how do you kind of show how important it is that you still have to have team beer show how important beer is rather than everyone kind of merging into these similar total beverage companies?
[01:02:20] Katie Marisic: You ask a very good question because the fourth category, so to speak, is where a lot of the action is. But our membership for 90 well in numbers of members you know 99% of our members are making their revenues and making their living off of fermented malted barley beverages. And we recognize, look, if a company is making three times as much spirits as beer, well, maybe they should be on Team Liquor. I mean, that's the reality. But our members are on Team Beer already, whether they know it or not, because that's where their market is. And long term, I think that there's a naivete sometimes. I'll say that. thinking, well, these liquor products, they're really not, you know, my folks, they love IPAs and it really isn't a threat to us. But we've seen in 20 years that the palette has shifted. And if the palette shifts to places where beer is disadvantaged and beer isn't going to play, that's a very existential threat to not just, you know, a small number of companies, but really all of our members. And so we take it very, very seriously.
[01:03:32] Brewers Association: So we'd love to have Nancy and Sam, the BA's new-ish state government affairs managers on the podcast in the near future. We certainly will, but are there any states where they're particularly focusing their energies right now?
[01:03:47] Katie Marisic: You know, and that changes on a daily basis. As of today, because of this hearing coming up in New Jersey, for example, Nancy's jumping off the deep end and taking the point on that. I literally, 10 minutes before this call, got a email from Sam on a state, which I don't even know if it's public, because I haven't talked to him yet, but he's got an agenda to start working on, because he just spoke with the guild leader. So we are here to support the guilds. and we are trying to be responsive to their needs. So, they have been engaged. One of the areas where Sam got very engaged in the last month was in the EPR legislation in Colorado. That's extended producer responsibility. VA supports recycling, but when you look at some of the recycling bills that are out there that have exemptions that, for example, count on-premise sales as if they were package sales, so you're sort of penalized for having an on-premise business and you don't get the benefit of a carve-out. He worked with the Guild, he testified, and we managed to get some very sensible carve-outs that made the bill acceptable to two small brewers, and we shifted from opposed to neutral, which is exactly where I want to be, because we want to be good stewards of the environment. But that's Justin Fonte example of where Sam's been working over the last month. One of the reasons I'm a little hesitant is, you know, half of what we're talking with the guilds about is still confidential. And so I don't want to spring any confidentiality, but we are working and they are both very busy.
[01:05:21] Brewers Association: No worries, so back to Vermont. You mentioned how the BA and other beer interest groups were able to compromise here to get the bill to be where it is. Is the team interested in making a last-ditch effort to convince the governor to veto this bill? And how did this compromise happen?
[01:05:37] Katie Marisic: So the compromise, and obviously I'm the guy at the national level, so I'm not in the halls up there, but in the first chamber in the House, things went very smoothly for the liquor people. In the Senate, there was a lot more opposition, and so the senators themselves started asking some tough questions, which brought the alcohol limit of what counted for an RTD product down and pushed the tax rate up. That was all as a result of a lot of questions that we were raising. I mean, one of the things that we frankly thought was under-considered there was the whole revenue piece.
[01:06:15] Justin Fonte: What was the ABV before that you pushed it down to? Because I think it landed at... It's 12. 12, yeah.
[01:06:21] Katie Marisic: It started at 16. So it went from 16 to 12, yeah. Getting rowdy.
[01:06:28] Brewers Association: Yeah. The thing that has always interested me about the New Jersey situation and now this one is that I can't think of off the top of my head a producer who is solely making these RTDs in either of those places. So you'd have to think that it's an existing beverage maker who's making them. And oftentimes, as Justin mentioned, a lot of Craft Brewers are starting to dabble. So it's just odd to me that someone in New Jersey got Steve Sweeney's ear to make this happen. And obviously he's out, but now it's back. It's like, where is this coming from?
[01:07:00] Katie Marisic: So the interesting story about Sweeney is that he had a friend who's in the distilling industry, but not in New Jersey. It's a distillery in a neighboring state. I don't want to give too many specifics. That was his pal and that initially motivated this. But as I'm sure you've seen in many issues, once the ball gets rolling, then it became something that the large distillers saw as an opportunity and they got behind. But all the fairly good intel that we got was that it was started with a personal relationship with a distillery owner in a neighboring state, not even a New Jersey distillery owner.
[01:07:38] Justin Fonte: What's wild to me is on some of these bills, at least on equalization, is the ABV starting point is usually at a completely wilding out point where you're like, what are we talking about here? You mentioned 16%. I even think 12% seems to be wild in the end, but here we are.
[01:07:59] Katie Marisic: One of the things that has happened is, and as a beer geek myself, I enjoy the occasional barley wine or imperial stout, but we all know that those are, first of all, extremely hard and expensive to make, and number two, occupy an extremely small part of the beer market. But that has given, again, sort of the facially attractive argument that we see, which is, well, beers are as high as 16% alcohol now, so we should treat liquor that's 16% as something like a beer. And we think that's a false dichotomy. If you look at the average ABV across the entire beer category, it actually comes in at below 5%. It's about 4.6%. When you look at the average across the entire liquor category, it's below 80 proof, but not by much. It's something like 36% alcohol by volume. And so making a 16% liquor product is only a function of how much water you add. And it's particularly easy when you consider that a large number of these products are being made with alcohol that's made in enormous quantities by a couple of large industrial producers in the Midwest. And so the so-called distiller is really just a blender and adding water. That's a totally different animal and cost structure from somebody trying to make a 16% or and 16% is very high, but a 12% barley wine, which takes a lot of time, a lot of materials and a lot of effort.
[01:09:38] Justin Fonte: When was the last time you had a barley wine, Katie?
[01:09:42] Brewbound Podcast: That's an excellent question. I've got like five in my fridge.
[01:09:47] Justin Fonte: So does every other Craft Brewers fan I think.
[01:09:50] Katie Marisic: I've got a couple in my fridge right now as well.
[01:09:53] Brewbound Podcast: I could comfortably say that the last beers that I had were Hellas, so not in the barley wine category as time.
[01:10:04] Katie Marisic: I think I'm going to have a Bigfoot tonight just so I just so I could say I did.
[01:10:11] Brewers Association: Just for the record, it is a Monday, so when you listen to this recording, just know that Mark tapped into a pretty Boston Beer on a Monday afternoon. Evening. Evening, fair, fair. Other states we know have have similar ish bills. Should we be looking out for any action in Alabama, Kentucky, Minnesota, Ohio, Oklahoma, or really the focus right now is on Vermont, New Jersey?
[01:10:37] Katie Marisic: Yeah, so in Oklahoma there was a serious attempt to shop something. It never materialized into an actual bill, and to the best of our knowledge, it will not. It seems likely we're through that. We have not seen any progress in Alabama. We are concerned about Alabama long term as one of the states that may be subject to a larger privatization push. We think that there's going to be a larger privatization push in a number of control states over the next year or two. Minnesota, no activity there. And as you know, the legislative session is wrapping up. And I think the big action there, of course, is the growler bill and some of the other side issues, because that was a big omnibus. But no, we have not seen anything else really moving. North Carolina is still a bit of a blank slate. So we're watching that one closely.
[01:11:29] Craft Brewers: We'll definitely be keeping tabs on all these. And I will be headed to New Orleans in a couple of weeks for Discus's annual conference, too. So we will see what that side is saying about all their efforts. Definitely going to be interesting to see bringing the beer guns into a spirits event.
[01:11:49] Katie Marisic: They're good people, too. I know many of them and they're good folks, too. They're just wrong on this issue.
[01:11:56] Brewbound Podcast: So what breweries are you going to go to when you're down there?
[01:11:59] Craft Brewers: great question. I asked Justin what the brewery scene is like in New Orleans and we have a short list so we got to get some more names on there. Shifting a little bit, Katie, you did a really cool thing during you and Mark's talk at CBC, where you're going to ask everybody in the audience, when was the last time you actually got involved in something legislative? You spoke to a representative or someone, and then you're like, if you haven't here, you could do it right now. This minute, you showed a little code people could scan and put an effort in. So what are some of the ways that people can get involved in the stuff the BA is pushing for that they haven't before?
[01:12:36] Brewbound Podcast: Some things about the internet are fantastic, and I think your ability to connect with your legislators is one of them. There are what 9200 breweries across the US, 170,000 people are employed by our industry. You should be reaching out to your legislators. You should be connecting with them. And we have found that grassroots is absolutely the easiest way to do that. So on the Brewers Association website, or sometimes you'll get direct emails from us, you can use our grassroots action forms. We have one right now for the restaurant revitalization push and for the USPS Shipping Equity Act. And then, you know, your guilds are often pretty active too. We just talked about a lot of state issues. I think that they are very good at making sure their members are engaged, and we help the guilds out with some of those grassroots pushes as well if that's something that they request from us. Another thing is, for people who have already built those relationships or are trying to start building them, we really encourage you to invite some staff or a legislator out to your business. Invite them to come and see what your day-to-day operations are like. When I first started at the Brewers Association, I got a lot of, it's beer, it's fun. And I realized a lot of people didn't understand how much work and effort goes into running a brewery. And I think that's changed. I think that our state and federal legislators have a much better understanding of our industry. But that's come from them going out and meeting directly with the people who work there, meeting with the owners and taking a tour of the manufacturing side of things, interacting with the hospitality side. It's a fantastic way to get to interact. And don't get me wrong, I am very aware of our current political situation. And I still think that there is importance to to meeting with people and showing them what it is you do. Members of Congress, legislators, they're going to change. Staff don't change as much. So the intern that comes out and takes a tour of your brewery in five years could be a legislative director or even a chief of staff. You're building relationships just like you would in your business, but you're building relationships for your business. And then I always love to say, if you have the opportunity to do a hill climb, we're doing ours in June, state guilds do them as well. That is a fantastic way to learn about what it's like to be a lobbyist and do some of our day-to-day activities. And when I was younger, when I interned, going to the hill was a big part of what I did. And it's still a big part of what I do, it is my job, but it's a great way to start making some of those connections and forging some of those connections. So I hope everything will be running smoothly and much more like it was in 2019 when we do the Hill Climb. I think we'll have a mix of probably virtual and in-person. But also, just feel free to connect with me, connect with Mark. We are happy to set you up and help with some of these things that I mentioned, whether it's grassroots, legislator visits, or doing Hill Climb events. Katie, when is that hill climb that you mentioned? June 22nd, two days before my beloved Savor. I'm so excited.
[01:16:01] Brewers Association: Today on my TimeHop app, you had tweeted a few years ago in 2020 when Savor was sadly canceled, but everybody liked about it and I had responded to you and we had a whole little chat about fun Savor memories. Good to hear that it's back this year, Savor. If you are listening and have never been, I highly recommend the BA's Craft Brewers and Food Pairing event that happens in D.C. every year. Chef paired bites with beers. Can't go wrong. Good time. I don't know that I'm allowed to endorse things in such a manner.
[01:16:30] Brewbound Podcast: I was going to say I'm going to personally request now that you come to Savor this year.
[01:16:34] Brewers Association: Oh, well, talk about it.
[01:16:37] Justin Fonte: You just earned yourself more travel.
[01:16:39] Brewers Association: Yeah, but that's travel with food, so that's all right.
[01:16:44] Katie Marisic: Yeah, savers always worth it. That's such a great event.
[01:16:47] Brewbound Podcast: It really is. I love it. I love doing it. Even with the hill climb and everything, you always think that we'd all be exhausted. But our members are excited to be in D.C. I think the people of D.C. are excited to have them. And there are always a lot of really great events that go on I don't want to say in conjunction with Sabre, but alongside of Sabre. And it's an excellent time. Plus it's at the Anthem, which is a super cool venue. Anyway, I'm allowed to endorse things and I endorse Sabre. I second that.
[01:17:21] Brewers Association: All right, well, let's release you guys to go enjoy your Monday evening barley wines. Thank you so much for the time. We know busy both of you are, so we really appreciate you joining us. And I guess we're going to leave it here. That's our show. Huge thank you to our one audio man. Nope. Our one man audio team of Joe for making this listenable, because Lord knows I tried my hardest this week to make it not. Thank you to everybody for listening. Thank you, Mark. Thank you, Katie. Thank you, Zoe. Thank you, Justin. And we'll see you all back again next week.
