Tags
Beer, economic growth, education, Prohibition, spirits, taxes, wine
Perhaps you’ve noticed all the hard ciders suddenly on the market in your area.
To be sure, there are some great local cider makers who ply their wares from time to time. We had one about 15 years ago in our area known as Goldfinch Cider, made by the partner team of Black & Fagan (which was one of my personal favorites actually, made by real guys who gave a crap…but unfortunately no longer made as you can read in the link). There are others, of course, including older, well-known companies like Strongbow, but over the past couple years, there’s been a bunch of new names on the scene, such as REDD‘s (malt beverage, not technically a cider), Cidre, Vermont Hard Cider (a.k.a.: Woodchuck) & Crispin among others. Wouldn’t you know it, but ALL these ciders referenced (and more) are owned by large brewers, including MillerCoors, Heineken, ABInbev, and others!
There must be a reason for this right? Well it’s all explained here: LINK
Rising sales, gluten free, appeal to the ladies, blah, blah…right? Well, there may be another reason: Taxes.
Not too many years ago, there was a wave of wine coolers that swept the nation. You may remember California Wine Cooler, Bartles & Jaymes, and others. A few of them are still around and they have alco-pops on board also, like Mike’s Hard Lemonade, Twisted Tea…remember Zima? Ironically, none of them contain any wine, despite the name, nor does a Bacardi Breezer or Seagram’s Twist contain any liquor. They’re malt beverages…just like beer. What difference does it make? Well…a lot.
Here’s the deal. Alcohol, tobacco and other products are charged a federal (and often a state) excise tax – it was actually one of the government’s largest sources of revenues before Prohibition and the lack of those revenues was a big reason for the 21st Amendment, which eventually repealed Prohibition. That excise tax varies by product, but we’ll go over the current Federal taxes for purposes of this discussion.
For brewers making over 60,000 Barrels (Bbl = 31 gallons) per year, which includes ALL the big guys, that tax is $18 per Bbl, or $0.58 per gallon. Small brewers pay $7 per Bbl, or almost $0.23 per gallon, with a small, sliding scale for brewers between 60,000 & 2 million Bbl annual production. Cider is taxed like a small brewer, basically at about $0.23 per gallon (there are some reductions also for small producers, based on Wine Gallons (w.g.) with the big guys paying the higher rate).
For comparison, wine makers are taxed on a sliding scale, based on Alcohol content, that ranges from $1.07 to $3.15 per gallon, with Sparkling Wine (or champaign) even higher at $3.30-3.40 per gallon. There are some discounts for smaller producers available, but all of those are at least double what beer makers pay and four times what cider makers pay.
For spirit makers, meaning liquor, spirits, and distillates, the Federal burden is even higher. They pay $13.50 per gallon at 80 proof, with adjustments for alcohol content. For the math challenged, this is over 23 times what beer makers pay and nearly 60 times what cider makers pay! (SIDE NOTE: This is another topic, but this excise tax is the reason that no true “ice beer” is sold in the United States, despite the image of Molson Ice, Icehouse and others. To remove ice or reduce the product would result in a distillate, and therefore, a huge excise tax increase or create a beer concentrate, which is forbidden by regulation.)
So for every “gallon” of malt beverage or cider a big brewer can sell to consumers, they claim not only market share and market dollars from a wine maker or a spirit maker, but they do so at a fraction of the cost in Federal excise tax, and in most cases, state taxes too!
Now, none of this is intended to be a statement on excise taxes or the propriety of their existence, nor to criticize there being a difference between various beverages. It IS, however, a statement against the further shady marketing practices of big brewers. Similar to the “faux craft” discussion that’s been raging in the beer world, the big brewers are in most cases hiding their ownership of these hard cider products and burying the fact that “malt beverages” contain no liquor and wine coolers contain no wine, yet are in most cases claiming the margin by selling “servings” at the same price as the competing beverage.
Maybe it’s no big deal, but we found it interesting and thought you might like to know.
UPDATE (5/17/13): A little review of Cidre. Comments British writer, Pete Brown, “Stella Cidre is nothing like a quality European dry cider and they’re basically lying to America by claiming that it is. For one thing it’s an Anheuser-Bush Inbev product and those guys take absolutely no pride, care or attention over anyth…ing they make. They’ve said on record they do not consider themselves to be a brewer, but rather a marketing company that happens to sell beer (and now cider).
Proper ciders are becoming more widely available of you know where to look. My new book, World’s Best Cider, co-authored with Bill Bradshaw, is published in the US by Sterling in October 2013 and has a chunky section on the US with around 40 recommendations, as well as sections on the UK, Canada, France, Spain and many more. Our favourites in the US included Tieton, EZ Orchards, Farnum Hill and Tandem. And then there’s Quebecois ice cider – an absolute sensation!”
So I’m on a little road trip and happen to stop by “Victorian Days” in a little town of Grand Ledge, located about 15-20 miles west of Lansing, the Michigan state capital city. While wandering aimlessly about town – which didn’t take long – I built a bit of a thirst and popped into a locally recommended watering hole and quickly realized it was a mistake. They had Oberon and Fat Tire, otherwise was a wasteland of macro beer.
Without much comment, here’s the latest “innovation” from the self-titled “King of Beers”:
“Relax. Don’t worry. Have a home brew.”
