Small BREW Act, Taxes and Craft Brew

The growth of craft beer as an industry has persuaded some to take notice as to what "craft" brewing really means and its role in the overall beer industry. While debates continue over craft v. crafty, production levels salience on definitions and independent v. corporate brewing, one issue has craft brewers seemingly debating each other, and that issue is tax.  More precisely, excise federal tax on the production of beer, no matter if it's craft, independent, neither or both. 

Basically the excise tax code is set up so that those breweries who produce more beer are taxed more on the federal level. Right now, that production level is 2 Million barrels per year (those producing such quantities are taxed more per barrel than those producing less).  On the ground, it currently means that all craft breweries do not pay this extra tax, but large breweries (like SABMiller and AB-InBev) fork over the money.

Yet, the growth of craft beer has pushed some breweries closer to this 2 Million barrel level, and therefore more taxation.  As such, or by coincidence, the Brewers Association has altered/updated its definition of craft brewery to include breweries producing up to 6 Million barrels per year (among other stipulations).  Following this, there have been efforts to alter/update the tax code.  Without getting into details, the new tax proposals seek to increase the production level to 6 Million barrels per year before enduring the full excise tax of $18/barrel. 

This has some people in an uproar (or at least discomfort).  Some claim that only a handful of large craft breweries will benefit from this while most of the other medium/small craft breweries will see little benefit, especially if the money saved by the large breweries is spent on marketing--giving them a leg up on the competition, which is the smaller breweries.  Are you following?  It's a bit complicated, so to summarize:  Craft breweries are getting bigger. Getting bigger means more excise tax.  Change definition of "bigger" to avoid this tax burden increase. Those "bigger" breweries benefit most, while smaller breweries see little gain. I think that's the gist of it.

This will be interesting to watch to see if a rift develops (or grows) between the handful of big craft breweries (like Sam Adams, Sierra Nevada, New Belgium , etc) and the more numerous small breweries (like Crooked Stave, Lagunitas, Foothills). It will also be interesting to see how the Brewers Association handles this disagreement.  It should be noted that the BA supports this new tax code, as well as a majority of its member breweries. Consensus is difficult to achieve in any industry, so we'll see how this situation develops, if at all.  Sources predict that this new tax code will not pass Congress.

It should also be noted that the main argument in favor of this proposed tax code is job creation.  With the money saved from the discounted excise tax (from $7/barrel to $3.50/barrel for production under 60,000 barrels), small breweries can re-invest in their companies, hire more employees and build up their neighborhoods.

NCAA Paying College Athletes...

With the Final Four starting today, it seems like a good time to spew my thoughts on paying college athletes.  Notice: this is not the hashed-out version of my rant, just a glimpse.

In short, I'm against it. The big money maker is football.  Programs such as Nebraska, Alabama, Florida and USC can bring in millions of dollars.  On top of that, television contracts with such schools adds more dough to that pile.  The common argument in favor of paying athletes is that they are part of the product that sells, so they should get a cut. Otherwise, they are just free labor. Well, for one, no they aren't (free education and room/board).  Also, free labor (when not forced) is called "volunteering".  They don't have to do it.

Let's look a bit closer.

• No one is forcing athletes to compete in college.  They are free to pursue other scholarships, grants, etc if they so choose
• Other scholarship students (let's say in engineering) do not enjoy free marketing and promotion. Athletes, especially in football and basketball, have their skills displayed on TV
• College athletes are on scholarship*, they get a free education as their payment.  IF they leave school early, that's their loss
• Athletes are in no position to demand anything. A university offers an opportunity for students...students...to compete athletically.  Just because some organizations pay people to play a sport, doesn't mean colleges are suppose to do the same

Now, if the proponent argument contains a notion that since a lot of money is being made, then it should be shared, I would agree.  But why does it have to go to the athletes?  Why not stipulate that a large % of revenue goes back to the school--for scholarships, buildings, overall improvement--or to the community, which no doubt shares the burden of student life?  Maybe allocate a good portion to education and research?  How immoral would that be....?

It's a ridiculous argument to say that football (for example) makes so much money and the athletes get none of it is wrong. If they don't like it, they can leave. A retort might state, "well, how else will they get an education?"  Please, how many leave early anyway?  And, is money THAT important?  Athletics, especially team sports, teaches a whole lot more than just how to make money. 

Bottom line for me:  athletes do get paid.  They get free education, learn lessons while competing, and receive free marketing.  And they can always refuse to do so.

* It should be noted that most student-athletes probably receive partial or no scholarship, but they make it work.  Perhaps a bigger slice of the revenue should go to them?

What's More Important: Definitions or Beer?

What is a gypsy brewer?  How do they differ from regular brewers? Should they be held with the same regard as regular brewers?  These questions have come up, either directly or indirectly, in a recent blog from a brewer in Massachusetts. A gypsy brewer (or contract brewer) is one who uses other breweries' equipment to brew his/her beer.  Mikkeller is probably the most commonly known one, but there are many others. So why are they getting some heat?

The gist is that gypsy brewers are not real brewers since they do not brew the beer themselves and/or are not present when their beer is brewed. They do not own brick and mortar localities and rely on the talents of others for brewing their recipes. Financially, they have not invested or risked as much as those regular brewers, which makes them seem as just trying to get a piece of the pie with less effort.

These are opinions, based on facts.  It is a fact that gypsy brewers use equipment that is not theirs (or the bank's). It is true that sometimes they are not present when their beer is brewed. The opinions rise from there. 

But what is also true is the common claim, by brewers, that beer isn't beer until the yeast has done it's job: brewers make wort, yeast makes beer.  So, who are the real brewers?  Ok, so this is nitpicking a bit.  Yet, I think it's important to acknowledge the whole process before rendering opinions of absolute labeling.

Of course, we could look at new technologies and ask ourselves who the brewers really are. Push button computer software can follow the progress of the brewing cycle and make minute changes when need to follow a recipe. Some software can even be overseen and controlled off premise: that is, by the brewer from his/her couch at home. In this case, is the brewer still a brewer?

My answer is, who cares?  What's the deal with the focus on definitions of such trivial scale? Sure, I can understand the difference between sweating all brewing and picking up wort. I'm not saying brewing and gypsy brewing are the same. My question is why should it matter? Maybe giving credit where credit is due is the underlying issue.  If so, then perhaps labels on the bottles/cans can provide satisfaction.  I'm sure they are options to consider.

The bottom line for me is that if you admonish some beers for being "contracted", then you are missing some great beer.  AND doing disservice to those who actually did sweat all day making the wort. It's still great beer, those who worked on it got paid, and the yeast finished it off.