How Craft Brewers Got Caught Up in Government Shutdown Mess

Just when you may have thought you’ve heard all the ways the US partial government shutdown is impacting every aspect of society, craft beer makers are saying, ‘hold my beer.’

These brewers charge the shutdown is causing delays in the snazzy recipes they create receiving government approval. Beer makers like craft brewers fall under the purview of the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB).

As the Wall Street Journal points out, the TTB approves new labels and formulations. It also signs off on startups, expansions, and acquisitions.

Throwing a Monkey Wrench in Craft Brewing Growth

The partial government shutdown entered its 23rd day Sunday. For craft brewers, the shutdown comes on the heels of another banner year of growth. If they can’t get the needed approvals for their recipes, and other activities, their growth could stall.

Brewers saw their volumes and market shares increase impressively in recent years. In fact, 2017 proved to be one of the best years for small and independent American craft brewers. They contributed about $76 billion to the US economy, according to the Brewers Association (BA).

It’s not just the big guys either. Small and independently-owned craft breweries account for 98% of all U.S. operating breweries.

Here are some more statistics compiled by the association. They are from 2017, which is the latest year for which they provide stats:

– small and independent craft brewers saw a 5% rise in their volumes
– craft beers account for 23.4% market share by dollars, and 12.7% share by volumes
– the number of operating breweries grew 16% to more than 6,300
– almost 1,000 breweries opened, while just 165 closed
– craft brewing in the US dates back to the late 1970s

Tired of Drinking the Same Old Thing

The history of craft beers dates back to the 1970s. As beer drinkers bored with traditional beers, opportunities were created for craft brewers.

According to the BA:

The traditions and styles brought over by immigrants from all over the world were disappearing. … At the same time as the American brewing landscape was shrinking in taste and size, a grassroots home brewing culture emerged.

Some have so much disdain for the traditional brands, they even started saying they tasted like pee. To dazzle these beer enthusiasts, as well as finicky, boujee folks, craft brewers sprang into action.

Their resulting concoctions include ingredients that don’t at all seem like they belong in a beer. However, the results are turning out to be hits.

For example, brewers have developed their uniquely-flavored libations using chocolate, coffee, raisins, and even prunes. Yes, prunes!

No Pot Laced, Himalyan Salt Beers For You

With pot smoking being all the rage these days, some craft brewers are firing up recipes using hemp. Considering marijuana is still not lawful in most states, brewers seeking to use hemp are relying heavily on government approvals.

Such is the case for New Belgium Brewing, a craft brewer based in Fort Collins, Colo. Its officials told the Wall Street Journal that they can’t move forward with a new version of its Hemperor HPA product without government approval.

Then there’s Boston Beer. While not pot related, its officials told the Journal that they can’t move forward with plans to update the recipe for its Sam Adams Summer Ale. In the works is a blend that includes citrus fruit purées and peels, along with Himalayan salt.

We’ll hear how beer enthusiasts digest all that if Boston Beer receives a label approval, the Journal notes. It joins dozens of other new beers needing the label. Others include so-called experimental beers that are stewing in tanks while the shutdown drags on.

WSJ reports:

Brewers say that even after the shutdown ends, the TTB could face a several-month backlog in approval requests. A Treasury spokesman said that estimates on the impact of the shutdown on issued labels, formula approvals and permits aren’t currently available, and approval times post-shutdown will depend on a range of factors.

Marc Sorini, an alcohol-industry attorney, told WSJ that the longer the shutdown drags on, the worse it gets for brewers. He adds the prolonged shutdown could tamp down product innovation.

 

Last modified: March 4, 2021 2:30 PM

Tedra DeSue: If you can buy it, trade it, invest in it, or sell it, I write about it. For more than 20 years, I've covered all things finance. Based in Atlanta, Ga., I threw myself into covering the crypto space with a keen understanding that it would be an industry disruptor. I'm in constant search for the real Satoshi Nakamoto!