How the Small BREW Act stacks up in terms of dollar savings and where the bill sits now

beerpulse logo iconThis is Part Two in a two-part story on the newly-introduced Small Brew Act. Here is the fireworks-filled Part One if you missed it.

So just how do the tax savings for this bill break out across over 2,300 breweries? From the press release announcing the Small Brew Act:

Under current federal law, brewers making less than 2 million barrels annually pay $7 per barrel on the first 60,000 barrels they brew, and $18 per barrel on every barrel thereafter. The Small BREW Act would create a new rate structure that reflects the evolution of the craft brewing industry. The rate for the smallest brewers and brewpubs would be $3.50 on the first 60,000 barrels. For production between 60,001 and 2 million barrels the rate would be $16.00 per barrel. Any brewer that exceeds 2 million barrels (about 1 percent of the U.S. beer market) would begin paying the full $18 rate. Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.

BeerPulse ran some calculations based on brewery production data in 2012. BeerPulse assumes that Yuengling, Samuel Adams and North American Breweries do not currently qualify for reduced excise taxes under current tax law but would under the proposed Small BREW Act. Also assume that beer companies that have beer produced for them on a contract basis end up paying the tax even if the TTB technically applies that tax to the contract brewer. Because of that, we leave contract production out of the number for the contractors and apply them to the contractees.

BeerPulse will release production stats for the top 50 craft breweries to (free) newsletter subscribers tonight so readers will be able to back into some of these calculations. They show, unsurprisingly, that total dollar savings skew largely toward the largest small brewers. What they don’t show (but is present) is that, as a % of costs, the smallest brewers benefiting from the bill will save more as a percentage of total federal tax burden costs. A brewery making 60,000 barrels or less will save 50% of its federal tax burden under the Small BREW Act whereas those above that mark will save less than 50% of their federal tax burden.

So one could argue that it helps the largest of small brewers more. And one could also argue that it helps the smallest of small brewers more.

Here is the data based on BeerPulse production figures:

[table caption="Federal Tax Savings" width="575"]
Brewery,Annual Federal Tax Savings,% of Total
Yuengling,”4,750,000″,8%
Samuel Adams,”4,750,000″,8%
North American Breweries*,”4,750,000″,8%
Sierra Nevada,”2,022,000″,3%
New Belgium,”1,618,848″,3%
Craft Brew Alliance,”1,440,600″,2%
Gambrinus Co.,”1,290,000″,2%
Deschutes Brewery,”690,000″,1%
Lagunitas Brewing,”560,000″,1%
Bell’s Brewery,”522,548″,1%
Breweries #11-30,”7,500,000″,13%
,,
Totals,,
Top 3 Breweries,”14,250,000″,24%
Top 10 Breweries,”22,393,996″,37%
Top 30 Breweries,”29,893,996″,50%
“Other 2,300+ Small Breweries”,”30,106,004″,50%
BA-Projected Total Savings,”60,000,000″,
[/table]

*Estimated to be greater than 2 million barrels.

small brew act chart

So what is the latest on the bill front now? Let’s fast-forward to the 2013 Craft Brewers Conference held two weeks ago.

On a media conference call held by the Brewers Association (again, disclosing they a BeerPulse advertiser), Bob Pease discussed the much-ballyhooed ‘Hill Climb’ that he organized, inviting every member brewery owner, brewery CEO and state brewers guild leaders to visit Congressional offices the day prior to the Keynote. Key reasons for the climb included educating policymakers on the American craft beer story and rallying support for the Small BREW Act.

According to Pease, 233 people participated, touching over 330 offices (90 on the Senate side and 240 on the House side). They visited just about every leadership office, ways and means office, senate finance committee office. The downside is that Congressional leaders were off that week though Pease pointed out that they got more time to speak with aides than they otherwise would have. And Congress worked late hours on the budget just the week before so they wouldn’t have got much face time anyway.

Pease also acknowledged opposition. The Beer Institute had just come out against the bill earlier that week saying it will only support legislation that reduces excise taxes for all brewers, large and small. The Center for American Progress actually noted in a December report that it would raise additional revenue by proposing a uniform tax for alcohol producers, “reversing decades of erosion in revenue from that source.” Pease says that BA members met with CAP to tell them flat out that it would “devastate” an American manufacturing industry. CAP was receptive to the BA’s concerns.

As of Thursday, HR 494 currently has 61 co-sponsors. The website, GovTrack.US, says it has a 5% chance of getting past committee and a 2% chance of being enacted. For perspective, “only 11% of House bills made it past committee and only 3% were enacted in 2011–2013.”

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17 thoughts on “How the Small BREW Act stacks up in terms of dollar savings and where the bill sits now

  1. Pingback: Lagunitas reprises opposition re: Small BREW Act, Lindenbusch says Sam Adams behind it | BeerPulse

  2. Thanks, I had originally lumped them in with Deschutes for the table presentation but ended up separating them out. I’ve removed ‘Bell’s & Lagunitas’ from the Deschutes line. The totals/percentages remain unchanged.

  3. Here is how the bill actually stands now….

    http://www.govtrack.us/congress/bills/113/hr494

    A 2% chance of getting past committee and a whopping 2% chance of passing…You think for a minute that AB and MC lobbyists are going to let a bill pass that ONLY helps brewers under 6 million bbls. Remember what country we live in, remember who pays for officials to be elected, $ small brewers (even Boston!) doesn’t have. This bill might benefit some small brewers, but one this is for sure…. it won’t pass.

  4. Can someone help clarify the concern with the passage of BREW Act? It would benefit Sam Adams the most (it seems), and this seems to be a bad thing? I’m not defending it, just trying to understand the positions and interests behind them.
    Thanks

  5. Pingback: The Small Brew Act’s Big Shadow | TomAcitelli.com

  6. Pingback: Bell’s Brewery founder on the Small BREW Act | BeerPulse

  7. Dick Yuengling has also come out against it, apparently. I’ve seen him quoted saying it’s his “responsibility to invest in my business.”

    Don’t forget that ultimately the federal excise tax is paid by the consumer. So really what we’re saying is that some beer drinkers should pay more in federal taxes than others? Don’t forget, the current tax policy gives small brewers a tax break for those who produce up to 2 million barrels (62 million gallons, or roughly 15 million cases) — $7/barrel as opposed to the $18 paid by producers of more than 2 million barrels. So tax relief for small brewers exists today, with the support of the major brewers.

    If we’re going to reduce taxes, or at a minimum prevent taxes from going up on brewers, then legislation should be fair, equitable and comprehensive — meaning it protects all beer drinkers from a tax hike, instead of just some.

    And for the record, I am here as a representative of the Beer Institute, the advocacy organization that advocates on behalf of all brewers, beer importers and supply industries.

  8. Pingback: Bell’s Brewery founder on the Small BREW Act | BeerPulse

  9. Thanks for the information, guys! I think I’m getting it. It seems fairness of taxation is always in question. Currently some beers are taxed more, this will seemingly not change–the fairness issue that is–the payors will change.

    I think it’s interesting that some would refuse to pay less tax because of patriotism or fairness. Large corporations are seen as greedy as they look for every tax break and loopholes around. Lagunitas stance seems to scream anti-corporation, which is a main attraction to, and characteristic of, craft beer.

  10. I’d love to get a Pub Dialogue going on this issue (and the underlying issues)! IF this proposal does pass…or something like it…would that create friction within the craft brewing community, and if so, how strong would it be? Probably hard to gauge hypotheticals, though :)

  11. Pingback: 3 Reasons I Still Care About the ‘Craft Beer Bubble’ | This Is Why I'm Drunk

  12. Pingback: Craft Breweries could get Tax Break - Hacking Beer

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