Tuesday, February 11, 2014

"Gluten-Free" Means Gluten-Free

Today the TTB announced that it will consider the term "gluten-free" on beer labels misleading if the beer is made with grains that contain gluten. Many beers that say "gluten-free" use barley, then break down the gluten though the use of certain enzymes. Based on new FDA regulations, the TTB is saying this no longer qualifies the brewer to market the beer as gluten-free on their label. Now the TTB will require brewers to describe their beers as "processed," "treated," or "crafted" to remove glutens. For more info check out the TTB release: http://www.ttb.gov/announcements/gluten-announcement.pdf.

Tuesday, April 23, 2013

$100MM BREW HUB, LLC - CRAFT OR CRAFTY?

For those of you who haven't heard, former Anheuser-Busch executive Tim Schoen has partnered with billionaire Ron Burkle's Yucaipa Companies to form Brew Hub, LLC. The new company plans to set up five breweries across the country at a cost of $100 million, which will then contract brew craft beers for breweries looking to expand their capacity without incurring the overhead of new brewing facilities or equipment. Unlike some other contract brewers, they'll they'll also help with branding, marketing, distribution, etc.
 
Tim Schoen



Brew Hub is a really interesting development in the craft brewing world. At $100 million, it has to rank as one of the biggest investments in craft beer by someone outside the craft brewing industry. If venture capitalists like Burkle are willing to put that kind of money in, it means people well outside the inner circle of craft brewing are taking note of the explosive growth in the business of beer, and the capacity for further growth.


Ron Burkle
Unlike "crafty" beers such as Blue Moon and Shock Top, the beers brewed by Brew Hub will no doubt still meet all definitions of craft beer. So give full credit to Schoen for figuring out a way to plug some serious cash into the craft beer space in a way that doesn't run afoul of the unwritten rule that you're not really "craft" if you didn't start with a loan from your parents and a souped-up home brew kit. I think Brew Hub serves as a good preview of the changes to come as "outside" money pours into the craft brewing business over the next five to ten years. Expect to see a blurring of the lines between the old, pull-yourself-up-by-your-bootstraps model and a much more sophisticated, well-financed, what-is-my-ROI business plan.

For more details on Brew Hub, check out the Wall Street Journal article or Brewbound's blog post.

Brew Hub head brewer Paul Farnsworth

Saturday, February 9, 2013

TTB Looking To Reduce Bond Requirement For Craft Breweries

As part of its efforts to reduce the government bureaucracy burdening the beer industry, the Federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently sought public comments on a proposed rule change that would reduce the amount of bonds required for brewers expected to have less than $50,000 in yearly excise tax liability. What does that mean? It means that, if approved, the rule change would make life easier for almost all craft brewers by permanently reducing the amount of their excise tax bond to the relatively small amount of $1,000.

According to the proposed rule change, the current excise tax on beer is $18 per barrel. However, brewers producing less than 2,000,000 barrels per year, the first 60,000 barrels are taxed at a lower rate of $7 per barrel. The excise tax is payable on a semi-monthly basis as the beer is sold, but brewers who pay less than$50,000 per year are allowed to pay on a quarterly basis.  Brewers are required to post a bond to ensure the TTB can collect the excise taxes if the payments aren’t made by the brewer.

After meetings with the Brewers Guild in 2011 and the Oregon Brewer’s Guild in 2012, the TTB determined that the “under $50,000” standard was as good a way as any to define “small” breweries – a standard which would include the vast majority of American breweries. 1,846 of the 2,026 breweries paying excise taxes paid less than $50,000 per year. Of those small breweries, almost 90% paid $7,000 or less in excise taxes annually. Despite the large number of small breweries, the total amount of taxes paid amount to only 5 to 6% of the total collected by the TTB, as the big mass-production breweries sell most of the beer in this country and therefore pay most of the taxes.

The proposal would also eliminate regulations that require different bond amounts and reporting requirements for small breweries. Instead of a convoluted system of varying options depending on how the brewers choose to report, the new regulations would have one simple bond amount ($1,000) and one simple reporting requirement (quarterly). “By lowering the required bond amount and lessening the number of required excise tax returns and operations reports for small brewers, TTB believes these proposals will lessen costs and increase efficiencies for those businesses.”

Clearly anything that the TTB does to reduce the regulatory burden on craft brewers will be met with great appreciation by the craft brewing community. Simplifying the maze of regulations that brewers have to navigate should eliminate some of the red tape craft brewers have been trying to cut through for years.

You can read the TTB’s full proposal here: http://www.gpo.gov/fdsys/pkg/FR-2012-12-07/pdf/2012-29487.pdf.