News Column

Shutdown Halts Flow of New Craft Beers

October 11, 2013
beer

Hoppin' Frog Brewery is ready to release a new barrel-aged version of its popular and award-winning B.O.R.I.S. the Crusher.

At least it was.

Then that pesky federal government shutdown got in the way.

Now the Akron brewery sits in limbo, waiting for a little-known federal agency to reopen so the label for its new beer can be approved.

"It's very unfortunate," said owner and brewer Fred Karm, who wanted to have the beer on store shelves next month for Christmas sales. With the shutdown dragging on, that timeline is up in the air.

The Alcohol and Tobacco Tax and Trade Bureau, or TTB for short, is responsible for approving new breweries, recipes and labels. But with that agency processing only taxes from existing permit holders and not handling applications for anything new, breweries hoping to open and those wanting to come out with new brands are stuck.

The shutdown is especially painful for the growing craft industry, which specializes in creative styles, seasonal brews and limited release beers.

"One could think of this shutdown as basically stopping business indefinitely for anyone who didn't have certain paperwork in place back in mid-August," said Paul Gatza, director of the Brewers Association, which represents more than 1,900 U.S. breweries.

The closing isn't expected to have much effect on such industry giants as MillerCoors or Anheuser-Busch, or even some craft brewers. They can continue to produce existing products as usual.

The TTB, which declined an Associated Press request for comment, announced earlier this year that brewers didn't need federal approval for their individual brands if the beers are sold exclusively within their own state. But there was some confusion Wednesday among brewers about what actually needs a federal OK.

John Najeway, co-owner of Thirsty Dog Brewing Co. in Akron, said formula and recipe approval is still needed for unusual brews -- those that involve more than the basic ingredients of water, malt, hops and yeast.

"[The shutdown is] probably killing 75 percent of anything that is new or creative," he said.

Thirsty Dog has a coconut rum porter aged in rum barrels and an India pale ale aged in rum barrels ready to release over the next two months, but the labels aren't approved, so as of right now, they can't be sold out of state. The brewery already had obtained approval for the new recipes.

In Karm's case, Hoppin' Frog sells not only outside Ohio, but also internationally. And the brewery often releases new beers.

Karm said he's going to have to bottle his new B.O.R.I.S. beer without labels and add them later when federal approval comes -- a move that will cost more money.

"It becomes a problem," he said.

The shutdown also is hindering breweries from opening.

'Projects fall apart'

Scott LaFollette, owner and brewer at Blank Slate Brewing in Cincinnati, noted that it takes a long time for a brewery to launch, and brewers are paying rent and other expenses well before the grand opening.

Some projects also are relying on Small Business Administration loans.

"You're potentially going to see brewery projects fall apart because of this," LaFollette said.

Columbus Business First reported that Zauber Brewing Co. can't move to its new, larger location in Grandview Heights.

"Everything's frozen in place," owner and brewer Geoff Towne told the business publication. "My application is sitting in a pile on someone's desk collecting dust."

Mike Brenner is trying to open a craft brewery in Milwaukee by December. His application to include a tasting room is now on hold, as are his plans to file paperwork for four labels over the next few weeks. He expects to lose about $8,000 for every month his opening is delayed.

"My dream -- this is six years in the making -- is to open this brewery," Brenner said. "I've been working so hard, and I find all these great investors. And now I can't get started because people are fighting over this or that in Washington. ... This is something people don't mess around with. Even in a bad economy, people drink beer."

Craft brewers around the country say TTB was taking as long as 75 days to approve applications before the shutdown. Now they're bracing for even longer waits.

And tempers are flaring.

Tony Magee, owner of Lagunitas Brewing Co. in Petaluma, Calif., posted messages on his Twitter account this week ripping the shutdown.

"[Expletive] Feds are gonna shut down the already incompetent .Gov while hundreds of small breweries, including us, have labels pending. Nice." That was followed with "Wanna regulate? Perform or get out of the way."

The Associated Press contributed to this report. Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com. Read his beer blog at www.ohio.com/beer. Follow him on Twitter at @armonrick.

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(c)2013 Akron Beacon Journal (Akron, Ohio)

Visit the Akron Beacon Journal (Akron, Ohio) at www.ohio.com

Distributed by MCT Information Services

Original headline: Federal shutdown stops flow of new craft beers



Source: (c)2013 Akron Beacon Journal (Akron, Ohio)


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