Quantcast
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

New tax bill a win for craft brew biz?

"This is a huge deal for small distilleries."

The cost of selling beer goes down, but will it help?
The cost of selling beer goes down, but will it help?

A part of the federal tax overhaul that passed through Congress this week was a provision likely to impact local craft-beverage business. The Craft Beverage Modernization and Tax Reform Act lowers the federal excise tax on alcoholic beverages.

For local breweries, that means the excise on the first 60,000 barrels of production will be cut in half, dropping from $7 per barrel (31 gallons) to $3.50. For higher-volume businesses, the excise on volume over 60,000 barrels will change from $18 to $16.

Craft-beer trade organization the Brewers Association has been advocating for the bill for ten years and estimates $142 million in annual savings for the U.S. beer industry, with $80 million of that applied to craft breweries producing under 6 million barrels per year. A statement from the Brewers Association suggests the tax relief is designed to help small brewers, "reinvest in their businesses, expand their operations, and hire more workers."

For one of the nation's largest craft breweries, Samuel Adams producer Boston Beer Co., production numbers suggest savings will amount to more than $8 million. Bloomberg reported that Boston Beer founder Jim Koch became craft beer's first billionaire in 2013.

Based on the most recent published production numbers for San Diego's largest independent producer, Stone Brewing, the change could save the company more than three quarters of a million dollars each year. However, most local craft brewers operate on a much smaller scale, and immediate reactions were mixed.

Societe Brewing Co. cofounder Douglas Constantiner calls change, "A big victory to bring the excise tax to a modern-day craft-brewery climate," noting the existing excise was established long before the rise of craft beer. At current production rates, Societe would stand to net about $14,000 in annual savings. Constantiner suggests the new bill "allows more operating cash flow to afford new equipment or increase benefits to employees."

Curtis Chism, cofounder of Council Brewing, appreciates what the Brewers Association's efforts mean for the industry. However, he notes Council's small production numbers (1000 barrels per year) means the new rate won't help growth just yet. "[It] doesn't amount to a particularly large overall tax cut and will likely be used to off-set our other overhead expenses," Chism says. "As we grow larger the savings will amount to much more."

Alex Van Horne, cofounder of Intergalactic Brewing Company, operates on a very small scale, producing about 250 barrels per year. "It will save us a few hundred dollars next year. Maybe a thousand," he says. Van Horne recently announced he may need to sell or shut down his brewery due to rising competition, and he doesn't envision lower federal taxes changing that. "The beer industry is so capital-intensive, going from a nano setup to a true micro costs hundreds of thousands," he says. "It's a win, but it won't be the deciding factor in a brewery's success or failure."

Meanwhile, Modern Times Beer founder Jacob McKean acknowledges his growing business — which is about to open new breweries in Los Angeles and Portland, Oregon — would appear to benefit. However, he looks at a broader perspective. "Whatever direct savings we will have from the tax bill will unfortunately be wiped out many times over by the terrible toll this bill will take on society as a whole," he says. "The increased cost of health care alone will make this tax cut worthless for breweries."

The local businesses standing to benefit the most may be craft distilleries. The new bill drops the excise per proof gallon of spirits from $13.50 all the way down to $2.70 for small producers (under 100,000 proof gallons).

"This is a huge deal for small distilleries," says Bill Rogers, founder of Liberty Call Distilling and president of the San Diego Distillers Guild. He explains the change could average a saving of $1.71 per 750ml bottle for the manufacturer (vs. $1.75 per keg of beer). He believes it could help craft distillers in the uphill battle to compete against large manufacturers. "It might mean the difference in losing money or breaking even," he says. "It’s definitely a silver lining in the controversial tax bill."

Here's something you might be interested in.
Submit a free classified
or view all

Previous article

Floating Outdoor Cinema on the Bay, Toy Piano Festival

Events September 27-September 30, 2020
The cost of selling beer goes down, but will it help?
The cost of selling beer goes down, but will it help?

A part of the federal tax overhaul that passed through Congress this week was a provision likely to impact local craft-beverage business. The Craft Beverage Modernization and Tax Reform Act lowers the federal excise tax on alcoholic beverages.

For local breweries, that means the excise on the first 60,000 barrels of production will be cut in half, dropping from $7 per barrel (31 gallons) to $3.50. For higher-volume businesses, the excise on volume over 60,000 barrels will change from $18 to $16.

Craft-beer trade organization the Brewers Association has been advocating for the bill for ten years and estimates $142 million in annual savings for the U.S. beer industry, with $80 million of that applied to craft breweries producing under 6 million barrels per year. A statement from the Brewers Association suggests the tax relief is designed to help small brewers, "reinvest in their businesses, expand their operations, and hire more workers."

For one of the nation's largest craft breweries, Samuel Adams producer Boston Beer Co., production numbers suggest savings will amount to more than $8 million. Bloomberg reported that Boston Beer founder Jim Koch became craft beer's first billionaire in 2013.

Based on the most recent published production numbers for San Diego's largest independent producer, Stone Brewing, the change could save the company more than three quarters of a million dollars each year. However, most local craft brewers operate on a much smaller scale, and immediate reactions were mixed.

Societe Brewing Co. cofounder Douglas Constantiner calls change, "A big victory to bring the excise tax to a modern-day craft-brewery climate," noting the existing excise was established long before the rise of craft beer. At current production rates, Societe would stand to net about $14,000 in annual savings. Constantiner suggests the new bill "allows more operating cash flow to afford new equipment or increase benefits to employees."

Curtis Chism, cofounder of Council Brewing, appreciates what the Brewers Association's efforts mean for the industry. However, he notes Council's small production numbers (1000 barrels per year) means the new rate won't help growth just yet. "[It] doesn't amount to a particularly large overall tax cut and will likely be used to off-set our other overhead expenses," Chism says. "As we grow larger the savings will amount to much more."

Alex Van Horne, cofounder of Intergalactic Brewing Company, operates on a very small scale, producing about 250 barrels per year. "It will save us a few hundred dollars next year. Maybe a thousand," he says. Van Horne recently announced he may need to sell or shut down his brewery due to rising competition, and he doesn't envision lower federal taxes changing that. "The beer industry is so capital-intensive, going from a nano setup to a true micro costs hundreds of thousands," he says. "It's a win, but it won't be the deciding factor in a brewery's success or failure."

Meanwhile, Modern Times Beer founder Jacob McKean acknowledges his growing business — which is about to open new breweries in Los Angeles and Portland, Oregon — would appear to benefit. However, he looks at a broader perspective. "Whatever direct savings we will have from the tax bill will unfortunately be wiped out many times over by the terrible toll this bill will take on society as a whole," he says. "The increased cost of health care alone will make this tax cut worthless for breweries."

The local businesses standing to benefit the most may be craft distilleries. The new bill drops the excise per proof gallon of spirits from $13.50 all the way down to $2.70 for small producers (under 100,000 proof gallons).

"This is a huge deal for small distilleries," says Bill Rogers, founder of Liberty Call Distilling and president of the San Diego Distillers Guild. He explains the change could average a saving of $1.71 per 750ml bottle for the manufacturer (vs. $1.75 per keg of beer). He believes it could help craft distillers in the uphill battle to compete against large manufacturers. "It might mean the difference in losing money or breaking even," he says. "It’s definitely a silver lining in the controversial tax bill."

Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Rapper Chris “KILLcRey” Reyes transitions to Twitch for performance streaming

The Barrio Logan artist is depicted playing the Grand Theft Auto V and NBA 2K20 on his latest video
Next Article

Floating Outdoor Cinema on the Bay, Toy Piano Festival

Events September 27-September 30, 2020
Comments
0

Be the first to leave a comment.

Sign in to comment

Sign in

Art Reviews — W.S. Di Piero's eye on exhibits Ask a Hipster — Advice you didn't know you needed Best Buys — San Diego shopping Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits City Lights — News and politics Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Excerpts — Literary and spiritual excerpts Famous Former Neighbors — Next-door celebs Feast! — Food & drink reviews Feature Stories — Local news & stories From the Archives — Spotlight on the past Golden Dreams — Talk of the town Here's the Deal — Chad Deal's watering holes Just Announced — The scoop on shows Letters — Our inbox [email protected] — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Of Note — Concert picks Out & About — What's Happening Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Pour Over — Grab a cup Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Set 'em Up Joe — Bartenders' drink recipes Sheep and Goats — Places of worship Special Issues — The best of Sports — Athletics without gush Street Style — San Diego streets have style Suit Up — Fashion tips for dudes Theater Reviews — Local productions Theater antireviews — Narrow your search Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Waterfront — All things ocean Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close