E-Malt.com News article: USA, WI: Wisconsin microbreweries continue to grow

Wisconsin’s beer production is flat, according to excise tax figures from the state Department of Revenue. Last year, the state collected $9.3 mln in excise taxes from state retailers and wholesalers. That’s down about three percent from 2010, and the lowest level in at least five years, Htrnews.com reported on July, 7.

“(Beer sales) have been flat for the last couple of years,” said Chris Thorne, a spokesman at the Beer Institute, a Washington D.C.–based national trade association.

“The truth is, in a tough economy, a struggling economy, people tend to cut back on things like beer.”

But the excise-tax figures don’t paint the full picture of Wisconsin’s beer consumption. While production growth seems stalled, the state’s beer drinkers still drink in huge quantities. And the state’s trend towards microbrewing continues to grow.

In April, the most recent month for state figures, brewers and distributors paid taxes on 394,362 barrels of beer — that’s 130,402,398 12-ounce beers.

The state tracks these production figures to collect its beer tax, which stands at $2 per 31-gallon barrel, one of the lowest such tax rates in the nation; the tax has been unchanged since 1969. Small breweries, with annual production of less than 300,000 barrels, can qualify for a $1 per barrel tax credit on the first 50,000 barrels brewed.

The state doesn’t track beer sales, but if all those taxed barrels were sold, it would be beer enough for all of the 4.1 mln people in Wisconsin who are aged 21 and over to drink a cold one every day in April.

State reports indicate no shortage of drinking options, and not all of the choices were produced in state. According to collection reports, 203 brewers and distributors paid taxes for beers brewed in places such as Nicaragua and Japan, as well as beers brewed in places like Green Bay, Stevens Point and Oshkosh.

But most comes from two brewing giants. In April, MillerCoors and Anheuser-Busch together brewed about 80 percent of the beer taxed for consumption in Wisconsin.

MillerCoors paid taxes on the equivalent of more than 59 mln beers in April; Anheuser-Busch paid taxes on more than 45 mln beers. At $2 per barrel, that’s a bill of $359,136 for MillerCoors, $275,927 for Anheuser-Busch.

Still, many Wisconsinites drink foreign beers. Crown Imports, a beer importer and distributor that markets beers like Corona and Modelo from Mexico and Tsingtao from China, paid taxes on about 3 mln beers in April. Dutch brewing giant Heineken paid taxes on about 1.7 mln beers in Wisconsin that month.

And Diageo, the British beverage company with a portfolio that includes Irish beers Guinness and Harp, as well as Red Stripe from Jamaica, paid taxes on 1.1 mln beers in April.
Still, there’s much to be said for supporting the local brewer. State records show small breweries across the state, in towns like Plover and Potosi, paying up the beer tax on small batches of brew. Including the $1 tax credit, the 491 31-gallon barrels of beer brewed by Potosi Brewing Company generated a $491 tax bill. The 172 barrels brewed by O’so generated a $172 tax bill.

In Chilton, Bonita Rowland, owner of Rowland’s Calumet Brewery, said the business of these craft brewers remains strong.

“If (customers) are going to drink a beer in a bar, they are going to drink a craft beer,” said Rowland, who sells beers including Calumet Rye and Fat Man’s Nut Brown Ale. The brewery was taxed $21 for 21 barrels.

Pete Madland, executive director of the Tavern League of Wisconsin, said there’s been a shift in recent years to what his industry calls “off-premise consumption.”

“More people are buying their beer and enjoying it at home rather than the taverns,” he said.

In Plover, Marc Buttera, co-founder of O’so Brewing Company, which produces beers like Hopdinger and Night Train, said that even in a down economy, people spend money on beer.

“It’s an affordable luxury,” he said. “They will spend money on a good beer.”

But Buttera said the poor economy in recent years has made it tougher for breweries to get capital to start or expand operations. He said finding a bank that would provide financing for his brewery’s expansion took 18 months, after he was turned down 10 times.

“We finally found a bank that believed in us, but it really takes finding some personal, local connection,” Buttera said “The big banks aren’t going to lend to you.”

Buttera said it’s increasingly tough for breweries to find shelf space in retail outlets, and he fears that the industry could be in a bubble that will soon burst.

“(But) I think the breweries that are doing their homework and the science work will survive,” he said.

Sheboygan’s Grant Pauly wants to catch the micro-brewing wave. He recently launched 3 Sheeps Brewery, producing beers like Baaad Boy Black Wheat. Pauly said that while overall beer consumption is going down, craft beer consumption is on the rise.

“Which means they are primarily taking (market share) away from the domestic lagers,” he said.

“But we are enjoying our slow but steady rise.”

Pauly’s business launched four months ago; his beer is already pouring through 55 taps around the state.

“We’re really happy on how we’re starting out,” he said. “Our ride has been quick.”

In downtown Appleton, Pat Flanagan, owner of Flanagan’s Stop & Shop, said he hasn’t seen an impact from the economy on beer sales.

“Microbrew beers are the hottest things in the world right now,” he said. “Micros are on fire.”

Mike Zamzow, an owner of Bull Falls Brewery in Wausau, which produces German-style beers, including a Zwickel Bier and a Weizenbock, said he thinks the growth in microbreweries will continue.

“The craft brewers in our country have only been able to hit about 6 percent market share, in the entire beer market,” he said. “There’s plenty of room to grow.”

In April, Zamzow’s brewery was taxed $212 for 212 barrels.



01 August, 2012