Oct 9 2013
Going on week two of the Federal Government shutdown, and this is getting real.
From support for needy mothers and their newborns to clinical trials for cancer patients to benefits for servicemen and their families, there are endless, heartbreaking stories of affected people, programs and agencies, each more horrifying than the last.
No industry is immune, including the one that puts your favorite libation in your glass. It may seem trivial in comparison to literal life or death situations, but the effects are hard to swallow (pun intended) to many businesses. Despite stories of Congressmen remaining well-boozed during the shutdown, here are three real life examples of how the government has brought the beverage alcohol industry to a screeching halt.
1. The Godfather of beverage alcohol is on vacation. With the Alcohol and Tobacco Tax and Trade Bureau (TTB) shuttered with the rest of the government, all label approvals are on hold. Wine labels, which provide the consumer key information about the product, must be approved before wineries can label their bottles. Bottling lines are built to label empty bottles, meaning the finished product must remain in tank or cask. No big deal, right? Just sell what you have for now, and let the wine in tank age a little longer. Well, not exactly.
Delay in label approval, and thus bottling, is a serious problem for wineries that need to free up tanks for new wine coming in from the harvest. Delay in this cyclical process would have devastating impacts on the wine itself, and serious financial implication for wineries. Breweries and cideries are in the same sinking boat.
2. Big beer won’t feel much pain, as Anheuser-Busch InBev and MillerCoors can just continue to produce their household name brews in bulk. Craft breweries, however, are definitely paying attention. The TTB shutdown means no new recipes can be approved, while craft beer is all about new, fresh and interesting labels coming to market. The AP reported Paul Gatza, director of the Brewers Association, which represents more than 1,900 U.S. breweries, as saying “one could think of this shutdown as basically stopping business indefinitely for anyone who didn’t have certain paperwork in place back in mid-August.”
From autumn seasonals awaiting labels to spring recipes needing approval, this shutdown has hit home for hundreds of small breweries and, indirectly, craft beer lovers. According to Bryan Simpson, spokesman for Colorado’s New Belgium Brewing in the AP article, the brewery has five new labels and three recipes on hold, and “everybody is frustrated in general. The whole way this has played out has been disappointing for the entire country.” We’re with you, Bryan.
3. No new permits from the TTB mean no craft brewer’s dream of opening a new brewery or production facility will be fulfilled anytime soon. This is serious news for the record breaking 1,300+ breweries in planning, according to Gatza. With an already overloaded TTB, due in part to the exciting boom of the craft beer industry, a total shutdown is a nightmare-come-true for brewers.
Aspiring Milwaukee-based craft brewer Mike Brenner, for example, hoped to open by December, according to the AP article. With his application and labels now on hold, “he expects to lose about $8,000 for every month his opening is delayed.”
Despite the shuttering of all services, the government will continue to get paid, in part. How ironic! Shanken News Daily reported that the TTB’s website will continue to accept “electronic payments and returns for federal excise taxes and operational reports.” Now that is going to chafe quite a few booze makers.
Here’s to hoping our currently ineffective and frustrating government finds a way to play nicely together in the sandbox soon. Cheers.