State craft beer stats, courtesy of the Brewers Association
The brewing industry has become a much bigger part of Arkansas’ economic health over the last few years. According to the Brewers Association (the official trade association of small and independent brewers in the U.S.), the number of active breweries in the state grew from six in 2011 to 19 in 2014. The economic impact of those breweries is now estimated to be in the hundreds of millions of dollars and is expected to grow quickly. There are a number of new breweries that have opened in 2015, with several more right around the corner.
A significant number of Arkansans now owe their livelihoods to brewing beer. So now more than ever, a collective voice on issues impacting the state’s brewers is important.
Providing that voice is the role of the Arkansas Brewers Guild.
Forty-six states currently have their own guilds, or in some cases “associations.” They present a unified effort to promote craft brewing in their respective regions, and to speak out on legislative issues that are of importance to their members.
According to Russ Melton – current president of the Arkansas Brewers Guild and owner of North Little Rock’s Diamond Bear Brewing Company – our state’s version was launched in 2003.
“Back then the climate was very poor for small local breweries,” said Melton. “There were five of us – Diamond Bear, Vino’s, Bosco’s, Ozark Brewing Company, and West Mountain, which wasn’t actually brewing at the time. We formed as a guild and hired a lobbyist to help make some changes. We gained a lot of legislative support as a result.”
Lobbying in Washington D.C.
These days, the Arkansas Brewers Guild doesn’t focus solely on state matters. It also gets involved with issues affecting the national brewing industry as a whole. Apple Blossom Brewing Company co-owner Evan McDonald, who serves as the guild’s secretary, recently traveled to Washington D.C. to participate in a lobbying event sponsored by the Brewers Association. Representatives from guilds across the nation were in attendance.
“Last year’s focus was spent grain,” said McDonald. “This year our focus was on two competing legislative items getting attention – the Small BREW Act and the Fair BEER Act.”
While both items seek to recalibrate the federal excise tax on beer – which hasn’t been adjusted since 1991 – they attempt to do so in different ways.
Currently, brewers producing less than 2 million barrels per year pay $7 in federal tax on each barrel up to 60,000. Beyond 60,000 the tax is $18 per barrel.
Under the Small Brewer Reinvestment and Expanding Workforce Act – or Small BREW Act for short – the federal tax would be cut in half (or $3.50 per barrel) for the first 60,000 barrels. The tax would increase to $16 up to 2 million, and $18 for each barrel thereafter. Only breweries producing less than 6 million barrels per year would be eligible for the discounted rates.
The competing Fair Brewers Excise and Economic Relief Act – better known as the Fair BEER Act – contains similar reductions in tax rates, but does not place a cap on brewery production, and extends the benefits to foreign producers.
During the visit to Capitol Hill, McDonald was able to talk with Senators Tom Cotton and John Boozman, as well as Congressman French Hill and staffers from Congressman Steve Womack’s office.
“The Brewers Association has taken the position that the Small BREW Act is the most beneficial to the small brewer, which is the majority of the BA’s membership,” said McDonald.
Melton said both pieces of legislation are appealing, but extending tax benefits to foreign companies is problematic for small American brewers.
“I guaranteed we would pay if we went into another country,” Melton said. “America’s small breweries are trying to compete with the imports.”
Brewers’ lobbying efforts are apparently paying off because news recently broke that a new act was introduced in Congress, combining the best parts of the Small BREW Act and Fair BEER Act. The Craft Beverage Modernization and Tax Reform Act – co-sponsored by Congressman Womack – seeks to reduce the federal tax on the first 60,000 barrels to $3.50 for brewers producing less than 2 million barrels per year. For all other brewers the tax would be $16 per barrel up to 6 million, and $18 per barrel thereafter.
The Brewers Association issued a press release applauding the new legislation.
“This legislation is a big win for the brewing industry, bringing us together over the common goal of recalibrating federal excise tax,” said Bob Pease, CEO of the Brewers Association. “The Craft Beverage Modernization and Tax Reform Act will greatly benefit America’s small brewers and allow them to achieve their job creation and brewing capacity reinvestment objectives.”
Back home in Arkansas
The Arkansas Brewers Guild is just as busy back in its home state. This Saturday the guild will host the Arkansas Brewers Conference & Festival at the state fair complex in Little Rock. The day kicks off with official guild meetings, followed by a beer festival open to the public. Tickets to the festival can be purchased online through Friday, July 17.
And the guild will partner with the Dickson Street Merchants Association this fall to host Oktoberfest 2015 in downtown Fayetteville. Apple Blossom’s McDonald said the event is a no-brainer.
“This city has such a vibrant drinking community,” he said. “Especially on Dickson Street. The (Fayetteville) Advertising and Promotion Commission graciously awarded us $6,500 for the event, which will go a long way in getting the event going.”
Oktoberest 2015 is tentatively scheduled for Oct. 11. Watch for a formal announcement and more details soon.
Fueling Arkansas’ economic engine
Though Arkansas’ brewing industry is still considered small compared to other states, its organized approach is already paying dividends. State laws are brewer-friendly and new breweries are opening all the time.
“One of the most important things is for all of us to stay united,” said Melton. “We need to agree on the key items that can move our industry forward and set a very good example. The image of our state is important to all of us.”
In a state that sometimes suffers from the stereotype of being behind the times, the Arkansas Brewers Guild is working to ensure that the brewing industry is progressive in its approach to doing business. From Northwest Arkansas to Little Rock, Texarkana to the Delta region – local beer is doing its part to fuel the state’s economic engine.