Politics

Government Shutdown May Have Great Impact On Beer Industry

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With the government shutdown and no deal in sight, the beer industry will see the impact of spending cuts, which took effect on Tuesday.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) double-check that breweries act in accordance with all mandated steps by the federal government in the alcohol production and distribution course of action. The TTB will also furlough 35 out of 518 employees for each day of the shutdown. Those 35 people will stay to collect excise taxes on beer.

The government shutdown could delay permits and labels, and stop the TTB process of approval. Every beer must include mandatory label information, such as the alcoholic content, and the name and address of the bottler or packer.

Jacob McKean, CEO and Founder of Point Loma’s Modern Times Beer, explains that a government shutdown can bring the improvement of the beer industry to a screeching halt.

“For better or worse, the TTB regulates a lot of what smaller breweries do, including approving labels for new beers,” says McKean. “Without labels moving through the approval process, many breweries won’t be able to release a new beer, which is terrible news for brewers and beer drinkers alike.”

In addition, the TTB must approve every beer formula that do not abide by the “traditional processes” that is defined by the federal government.

“The TTB also approves new Brewers Notices, which a brewery can’t operate without,” says McKean. “A TTB shutdown means new breweries can’t operate if they’re waiting on their notice. That could mean financial ruin for some start-ups.”

It is difficult to understand when the government shutdown will end exactly, but the shutdown lasted 28 days. Despite the shutdown, though, craft growth continues. Craft beer experienced a large percent gain with 14.4 percent, and total beer volume of 6.3 percent. The outlook in 2013 continues to be positive.

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