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Friday, January 13, 2012

Giving N.C.'s small breweries a boost

Posted by on Fri, Jan 13, 2012 at 3:46 PM

click to enlarge Inside the Big Boss brewery - IMAGE COURTESY OF BIG BOSS BREWING ON FACEBOOK

“Twenty years ago if you didn’t like Miller or Bud, you probably didn’t like beer,” says Brad Wynn as he sizes up the history of the American brewing industry. Wynn is the co-owner of Big Boss Brewing, one of many microbreweries across North Carolina that have changed the way North Carolinians look at beer.

A piece of legislation called the Small BREW (Brewer Reinvestment and Expanding Workforce) Act seeks to give microbrewers such as Wynn a competitive edge against big domestic brewers.

The bill would cut the excise tax in half (from $7 to $3.50 per barrel) for any brewery producing less than 60,000 barrels per year. That covers all of North Carolina’s 52 microbreweries. The tax also would decrease, from $18 to $16, for others across the country producing less than 2 million barrels per year. (Beer nerd fact: 1 barrel equals 31 gallons equals 2 kegs.)

North Carolina Congressman Brad Miller, a Democrat, is a co-sponsor of the House version of the bill. On Thursday, he toured Raleigh’s Big Boss Brewery and Natty Greene’s Brewpub, where he had a discussion with small brewers from across the state.

“It would be a great help to the smaller brewers,” Miller said. “There obviously are huge advantages to being Miller or Budweiser and competing against a Big Boss or a Natty Greene’s, and this will even that up a little bit and make it easier for them to compete.”

The legislation has garnered bipartisan support and sponsorship from 11 of North Carolina’s 15 representatives, though Republicans Renee Ellmers, Virginia Foxx and Sue Myrick and Democrat Heath Shuler have not added their names to the bill.

Congressman Miller represents not only microbrews around the Triangle, but also a vast MillerCoors brewery in the town of Eden near the Virginia border. Because the bill cuts taxes only on breweries producing less than 2 million barrels, it won’t create breaks for the Eden plant, which employs 670 people and brews 9 million barrels of beer annually.

“It’s encouraging to know that you support it [the Small BREW Act] even though you support the Eden plant,” said Fullsteam Brewery owner Sean Wilson to Congressman Miller. “It’s a benefit to small brewers but not at the expense of an established business.”

Union workers at MillerCoors in Eden see the legislation differently. “Miller brewery provides some of the best jobs, best pay and best health benefits in North Carolina,” says Chip Roth, spokesperson for Teamsters Local 391, which represents the Eden plant workers. “Any legislation that gives one section of industry and advantage over another is fundamentally unfair.”

Growing Pains

Microbreweries such as Big Boss would love to see the day they can expand their operation beyond state lines. But so far, “we can’t sell anything East of 95,” says Wynn. And it’s not because the demand isn’t there, he says. It’s because microbreweries are having a hard time raising enough capital to increase production.

“$3.50 [per barrel] would mean a lot,” says Wynn’s partner, Geoff Lamb. “The joke is, I count everything in kegs. Growth is based on our ability to buy new tanks and new kegs. New tanks mean new workers.”

Big Boss employs 28 people, but that number is set to increase. Wynn and Lamb are waiting on two new 100-gallon tanks. Each tank, they say, will bring in two new hires as well as expand their market.

Profit margins in the craft industry are slim, so the tax decrease likely won’t be reflected in the price of a six-pack or keg. But there’s another potential advantage for workers.

“A lot of small breweries in North Carolina and nationwide don’t provide health insurance for their employees simply because they can’t afford it right now,” says Win Bassett, interim secretary of the North American Guild of Beer Writers. “The bill would save a lot of money that could be reinvested in the community and in the brewery itself … which means more jobs and more benefits for those employees.”

However, microbreweries are focused on expanding their regional markets farther into the state, and it may be some time before workers see benefits. Moreover, most brewers in North Carolina simply see the federal tax break as a drop in bucket. The state excise tax is 61.71 cents per gallon, which is more than $19 per barrel. And that tax is the same whether you’re MillerCoors or a microbrew.

Aviator Brewing Company in Fuquay-Varina brewed about 4,000 barrels last year. In regard to the Small BREW Act, Aviator owner Mark Doble says, “I’m all for a tax decrease, but the state needs to back off.” North Carolina has one of the nation’s 10 highest excise tax rates on beer, while ranking among the 10 lowest for excise taxes on cigarettes.

It also hasn’t made steps towards creating a progressive excise tax based on production quantity. “It doesn’t matter if you make a dime [on the beer],” says Lamb of Big Boss. “You made it. You pay it.”

Though the federal bill has widespread bipartisan support, it may not see the light of day for a long time to come. Small bills such as this typically reach the floor attached to a piece of larger legislation such as a jobs act. With Congress barely able to agree on how to keep the wheels of government turning, such a prospect seems unlikely in the near future.

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