Archive for the ‘Business’ Category

Sales Tax on Alcohol

Monday, November 1st, 2010

Tomorrow people in Massachusetts will vote on three ballot questions. Two have to do with taxes. Question 3 would reduce the rate of the state sales and use tax from 6.25% to 3%.

Question 1 would remove the sales tax from alcoholic beverages. Before last year, there was no sales tax on alcohol. There is no sales tax on food, clothing, or prescriptions in the state.

I think sales taxes are very regressive and an unfortunate way to raise revenue. The basic rate for the Massachusetts income tax is 5.3%, which is less than the sales tax. Income taxes can be progressive and can even redistribute income but they are politically unpopular. Apparently, sales taxes are less unpopular.

I have not decided how I am going to vote on Question 1 because the liquor industry already pays excise taxes so the sales tax is, in some way, double taxation. Governments have usually seen alcoholic beverages as appropriate for taxation because they supposedly have inelastic demand.

Prior to Prohibition, the states did not generally tax distilled spirits, beer, or wine. Since Repeal, many states generate significant revenue through taxiing alcohol.  Only five states do not have a sales tax on liquor.

Both before and after prohibition, some legislators have felt that taxing alcohol provides benefits to society since it could potentially reduce drinking. This attitude would imply an elastic demand. Since the 1980s, public health advocates have called for increased taxation of alcohol to help pay for the societal costs associated with alcoholism, drunk driving, and other manifestations of alcohol abuse.

Usually the government’s need for revenue is what wins out. It is interesting that Massachusetts is looking at losing revenue from alcohol while California is seeking to gain revenue from legalizing marijuana. Legalizing the recreational use of pot would enable California municipalities to generate tax revenue, which would help shore up sagging budgets.

I urge everyone to vote tomorrow because voting is a privilege. If you don’t vote you shouldn’t complain.

Beer Labels

Sunday, October 17th, 2010

witchs-wit-87x300

I wrote this post in December of 2008 before I had this word press blog. It was part of a series of posts I did about the seventy-fifth anniversary of Repeal. I am reposting it because I just read a blog about the label on Lost Abbey’s  Witch’s Wit. Tenured Radical is circulating another blogger’s concern about the graphic of a woman being burnt at the stake while a crowd of men watches with rapt attention. Of course, the picture on the label is very small  but I am sure it looks worse when you actually see it. TR and others find it offensive.

December 2 2008

The Road From Repeal: Labels and Advertising

I wanted to write about aspects of beer advertising in the seventy-five years since Repeal but I wasn’t exactly sure what I wanted to say. I also wanted to touch on labels since they became a regulatory issue in the late twentieth century. While thinking about the topic I came across an excellent article about beer labels in All About Beer (no link available). Dave Gausepohl, a breweriana collector, examines the history of labels and describes the information labels contain.

Currently all beer bottles and cans contain a government warning about the dangers of alcohol use and abuse. Post-Prohibition, as beer consumption shifted from on-premises to off-premises, primarily the home, the packaging of beer became more important. Ultimately what the container looked like was an integral part of the product’s advertising and marketing.

Beer labels have a UPC code, dating information, the government warning and in some cases, alcohol content, but they do not list ingredients. Brewers, unlike most other producers of edible, consumable products, do not have to disclose what they have used to make the beer. They also do not have to say anything about how many calories the beer has.

What the beer bottle or can looks like is part of advertising but since Prohibition the major emphasis for beer marketing has been radio and television. Brewers gained an immediate and lasting advantage over distillers who, until recently have lived under a voluntary ban against advertising on television. Despite this free gift, post-Prohibition brewers were circumspect in their marketing because they feared a return of Prohibition. This self-restraint lasted to a good degree until the 1970′s and the onset of the “beer wars”.  The intense competition among the top tier brewers fueled by the influx of advertising dollars from Miller Brewing and its parent company Philip Morris led to a decrease in the propriety of beer television ads.

Prohibitionists never went away and one of their ongoing battles has been to limit brewers access to advertising. The Center for Science in the Public Interest, a self-styled consumer and public health advocacy organization, has a Alcohol Priorities Project  which seeks to “promote a comprehensive, prevention-oriented approach to the role of alcohol in society by addressing alcohol advertising, excise taxes, changes in product labeling, and other population-based policy reforms.” In August, the Center sent a petition “signed by 60 Division I presidents, 240 athletic directors and 101 football and basketball coaches” urging the NCAA to prohibit beer advertising during college games. The NCAA declined to change its policies.  George Hacker, director of the Alcohol Policies Project, was extremely disappointed and commented, “In contrast, the NCAA rejects advertising for distilled spirits, most wine, sports wagering, gambling, nightclubs, firearms and weapons, and NC-17-rated motion pictures, among others.” Mr. Hacker also co-chairs the Coalition for the Prevention of Alcohol Problems, a coalition of temperance groups.

Sports Biz, a blog, noted “The Mountain West Conference does not carry beer commercials on its network, the mtn. (Mountain West Sports Network) It also doesn’t carry commercials for Viagra and similar products, which is a blessing for those few people who actually can receive the mtn. Declining Viagra and Cialis commercials would be a public service that I recommend that the Big Ten Network and the WWLS adopt immediately. Football and basketball fans would be forever grateful.”

It is doubtful that the labels at the top of this posting would have played a role in the ongoing controversy over beer advertising. The image at the bottom however is a different story.

Brewery Insurance

Wednesday, September 1st, 2010

I had to do something with my home insurance today and I went to my agent’s website. Right there, Whalen Insurance was proudly proclaiming their brewing insurance program. Whalen is located in Northampton, one town over from where I live. The company has had insurance for brewers since 1987 when the Northampton brewery opened the second brewpub in the Northeast.

Given that I wrote a book on beer, it struck me as funny that my insurance company has this program.  I hadn’t ever thought about it but I guess many businesses need specialized insurance to provide coverage for their specific activities. The Institute of Brewing Studies/ Association of Brewers endorses the Whalen program.

The insurance is for breweries and brewpubs and covers property, general liability, workers’ compensation, liquor liability, equipment breakdown, and automobile. Liquor liability must have to do with serving alcohol and the risks involved.  On the website, they provide information about brewery safety and OSHA regulations.

Looking at all the different aspects of insurance for a brewery, I realize how complicated an endeavor opening a brewpub or brewery would be. Despite the romanticizing of craft brewing, it really is a business.

Tourism

Tuesday, June 8th, 2010

I just finished writing a review of Garrett Peck’s The Prohibition Hangover: Alcohol in America from Demon Rum to Cult Cabernet. You will have to wait to read the review in its entirety until The Historian is published. The book is an interesting survey of the current liquor industry. One thing that stood out in the book was how much the liquor industry is using tourism as a way to promote itself.

Wine tourism, particularly in California, is very big business. One could make the case – Peck does not – that the best aspect about the liquor industry for the American economy is that they produce their products in America. They make something and offer traditional, well paying unionized jobs, particularly at the macro brewing level. If the industry shifts its’ focus toward tourism and away from production, these jobs will be replaced by lower paying service jobs, a familiar story for much of American industry.

Of course many places want to become tourist attractions. As part of the Little Berks, on Saturday I went on a  walking tour of Florence, Massachusetts. Florence use to have some industry; Pro Brush was a big employer. It closed in 2007. The David Ruggles Center is trying to restore and promote the history of the village. Florence was involved in many of the reform movements of the nineteenth century including the water cure, abolitionism, and the underground railroad.

sojourner-truth

Sojourner Truth Statue Florence Massachusetts

Sojourner Truth lived in Florence for a while and there is now a beautiful statue of her there. The house she lived in still exists but looks completely different. Local historians would love to be able to restore the house. If they do, it will certainly be a tourist attraction. Many of the places we have gone this year while traveling also hope to have something that will produce a steady stream of visitors.

7-Eleven Beer

Friday, April 16th, 2010

Alan McLeod has an interesting link in his A Good Beer Blog today. Apparently, 7-Eleven plans to sell premium private label beer at budget prices. The full story is here.

City Brewing Company will produce the beer for the convenience store chain. City is located in La Crosse, Wisconsin in the old Heileman brewery. In the past, they brewed beer for Boston Beer in the Rolling Rock, Latrobe, Pennsylvania brewery.

The key demographic group that 7-Eleven is trying to reach is young men, 21 to 27. The name of the beer is Game Day. I predict sports themed marketing.

Beer Here

Wednesday, April 14th, 2010

Today we finally got to a bar. It is in Hyde Park and had cheap but good burgers and a decent selection of beer. I had a Fat Tire, which I had never tried before. It was good. Besides going to the Woodlawn Tap tonight, we have bought two different six-packs while in Chicago. The first was Leninenkugel’s Classic Amber, which I liked a lot. They don’t sell it at home, so I was interested to try it even though I know Miller owns the company. The other six-pack we bought was Goose Island IPA. Goose Island is the biggest craft brewer in Chicago. I liked that as well.

Craft Brewers Conference – Chicago

Thursday, April 8th, 2010

The 2010 Craft Brewers Conference (CBC) and BrewExpo America started Tuesday and runs until April 10. I didn’t know that it was  in downtown Chicago until we got here. Rep. Pete DeFazio and Rep. Richie Neal (from Western Massachusetts) were the keynote speakers. They are both part of the Small Brewers Caucus which I discussed here.

The conference is primarily a trade meeting, but there are some events connected to it for the public. Tonight I could have gone and seen Fritz Maytag in another part of town but I didn’t. On Friday and Saturday Stone Brewing will be taking over eleven taps at a taqueria. I am going to try to go to that.

Lower Taxes for Small Brewers Proposed

Monday, March 15th, 2010

Brookston Bulletin has a story about HR 4278 which is a bill in the House to reduce the small brewers excise tax differential as well as changing the definition and  levels for small brewers. Jay’s information is essentially the same as what is on the Brewers Association web site. Both Jay and the Brewers Association provide information about how to appeal to Congressmen to support the bill.  The Brewers Association represents 1,516 brewers which includes sixty-three brewing companies that produce  anywhere from 15,000 to 6 million barrels of beer per year. In Bev-AB brews over 100 million barrels a year domestically.

The bill is sponsored by Rep. Neal (MA). The co-sponsors include representatives from several strongholds of craft brewing including California, Washington, Oregon, Pennsylvania, and Vermont. The House also has a Small Brewers Caucus. This group has a varied membership including people in the news recently. Joe Sestak – running against Arlen Specter for a Pennsylvania Senate seat, Bart Stupak, Family member and potential health care reform destroyer and Joe Wilson of  “you lie” fame.

There are several other bills before Congress that deal with excise taxes on beer. S.1058. Brewers Excise and Economic Relief Act of 2009, seeks to roll back the $18 per barrel excise tax to its 1991 rate of $9 and provide further tax rate reductions for small brewers.

Since 1991, the brewing industry, particularly large brewers, has tried to roll back the tax. The Brewers Association supports this, but HR 4278 appears to be an attempt to place small brewers front and center. Since the efforts of A-B in 1991 were the main reason the rate was not higher, it may be short sighted for small brewers to set out on their own.

The small brewers’ differential tax rate dates from 1976 when there were fifty-three brewers and thirty-nine brewed less than 2 million barrels.  It was the culmination of many years of effort on the part of small and regional brewers and was the last time the whole brewing industry cooperated for many years.

The Brewers Association is arguing for tax reduction by focusing on job creation, but I still think that any effort to reduce excise taxes for beer is likely to fail. Although the government is seeking to create jobs, it is also facing huge deficits. Liquor and tobacco taxes have been a mainstay of the federal governments’ internal revenue for almost 150 years. It seems unlikely that they would not want to continues to rely on a proven source of revenue during troubled economic times.

Beer in Other Places

Saturday, March 6th, 2010

In the past week there have been some interesting items about beer in different places as well as some different beer customs.The New York Times had a very interesting story about beer in Vietnam. The local draft beer is bia hoi, “a crisp, cold beer with a clean taste suggesting rice and an almost subliminal whisper of something like hops.” I think most of the Americans who go to Vietnam are Vietnam War vets but I loved China and it would be very exciting to visit other parts of Asia.

The Alcohol and Drugs History Society website has a story today about Green Beer Day at Miami University in Oxford, Ohio. David Fahey teaches there. It is apparently a pre- St. Patrick’s Day beer crawl. This year there were twenty arrests.

A Good Beer Blog writes about proposed beer regulation in Botswana. One of the local beers is chibuku is made from sorghum. They also have a higher alcohol content beer made from honey and sugar, khadi. The Chinese make  Baiiju from sorghum. It is very strong and viscous. I didn’t really like the taste.

The final item comes from the Mount Hope Monitor, a Bronx newspaper. Apparently Burger Kings plans to sell domestic beers – Budweiser – in some New York locations.  I do not know if that will make Burger King more or less appealing.

This and That

Monday, November 16th, 2009

Here are some interesting links from around the web. They are mostly alcohol related but I couldn’t resist this story about giant jellyfish.

Giant Jellyfish Washed Ashore

Giant Jellyfish Washed Ashore

My favorite part of the article is that the Japanese are trying to make consumable products out of these creatures, including ice cream.

This past weekend there was a brewers festival in Manchester, New Hampshire. It was the first year and it sounds like a lot of fun.

Carla Champion, The Beer Babe, talked at a seminar entitled, ” I Wished My Girlfriend Liked Beer.” The subject of women and beer seems to have become a required element of any beer festival. As someone who has been drinking beer since I was eleven, on some level I don’t get it. I think more women probably like beer than is commonly known. It is more an advertising and marketing issue.

Roger Protz, beer-pages.com, has an interesting post about the Scottish brewer, Brewdog. Apparently they are in an issue of a newspaper, appearing  lewd and drunk. He thinks this is bad for the image of brewing.

The final item is also from Scotland. The Scottish drinks company, Whyte and Mackay is drilling in Antarctica to recover 100 year old Scotch. The liquor was left there by explorer Sir Ernest Shackleton. It is not clear whether they plan to drink it or not, but they do plan to see if it would be viable to start distilling it again.  Didn’t McKinlay and Co., the original distillers keep records?