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TagsBY JOHN HOLL
NEWJERSEYNEWSROOM.COM
As part of the healthcare reform deliberations, the U.S. Senate Finance committee is currently considering a proposal to increase and equalize the excise tax for alcohol beverages, an action that could cause some significant problems for small breweries, including several in New Jersey.
The proposal would triple the excise tax for beer with 4.5% alcohol content and impose even higher excise tax rates for higher alcohol beers, according to the Brewers Association a nonprofit group based in Colorado devoted to professional brewers.
"If such a proposal becomes reality, there is no question that many small brewery businesses will suffer, some will close and consumers will face higher prices and diminished choice in the marketplace," said Charlie Papazian, president of the Brewers Association.One reason it would especially hurt craft brewers is because they traditionally brew innovative beers that go beyond 4.5% alcohol. Mainstream beers like Coors Light, for example have 4.2 % alcohol that would make it exempt from the proposed tax.
Craft brewers are already fighting an uphill battle against the large breweries as they represent only 4% of the entire U.S. beer market by volume, with 95% of them being very small businesses producing 15,000 barrels or less per year.
Many brewers are still trying to recover from an increase in brewing ingredients, which spiked in 2008, and the Brewers Association said that even a $1 per case excise tax increase would likely cost consumers at least $1.69 due to successive mark-ups as the case moves from brewer to wholesaler to retailer.
Among the craft breweries in the state: Cricket Hill of Fairfield, Flying Fish of Cherry Hill and River Horse of Lambertville, all say the tax would hurt their bottom line and threaten business.
Sen. Robert Menendez (D-NJ) serves on the Finance Committee and a spokesman for the senator said nothing is set in stone.
"Health care reform proposals remain in the discussion phase," said Spokesman Afshin Mohamadi. "Ultimately, the committee will work toward a plan that that balances the incredibly important goal of making quality and affordable health care readily accessible with finding a fiscally responsible way to pay for it."
John Holl covers craft beer, spirits and the culture of drinking for newnerseynewsroom.com. He may be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
