Shelton Brothers issue statement regarding New York's repeal of beer tax and fee exemptions

Just think how much you could save on beer if NY cut all its welfare, social services etc. . . allowed child/slave labor, repealed minimum wage. . . they wouldn't have to tax beer so heavily (or arguably at all) if there was no desire to redistribute wealth, equality, protect children/minorities etc. . .

Whether or not you like it, people will talk about different things on BA and they're not always 100% on topic. I didn't realize sidebars must be policed.

Oooh, you're so persecuted.

ON TOPIC: has anyone figured out the alleged connection to the tax break and bonuses?

I would suspect that Brooklyn feels that if they withhold the bonuses to their employees, they might further misdirect people's anger towards Shelton Bros for decisions that occurred in NY.

Instead of "dey took ur jobs" it would be like "dey took ur bonuses at ur jobs"

Fwiw, I think I found the source of the "this will increase the cost of a pint by a dollar" claim. I can't say I'm surprised that the math is a little...fuzzy.

A dollar increase is what, a ~15% increase in price? Assuming the relative markup remains the same at each point along the way, that means that the $4 increase at wholesale is a 15% increase, meaning his kegs were previously about $27.

I'd like to buy one of Kelso's now-$31 kegs.

It's BS like this, where brewers pull numbers out of their ass to make it seem like a couple pennies per pint amounts to an apocalyptic event, that undermines the credibility of everyone that is trying to blame the Sheltons for torpedoing the NY brewing industry. It would be much more effective to simply say "the Sheltons are self-obsessed d-bags" (which, as far as I can tell, is reasonably accurate) than to make up numbers that are obviously bogus.

moral of the story: not all brewers are math wizards

(i didn't check your math either as i am only a wizard of soduku)

NY beer math seems akin to changes in prices at the pump not commensurate with the price/supply/demand of oil/refining/transportation (aka Big Oil villains). . . (let's not get bogged down in oil/gas, merely an illustrative point of comparison, yes there are differences, let's debate the underlying issue, if need be.)

Basically, find a justifiable reason to increase prices ($3.50 per keg is the tax rate), but extrapolate that to $1 a pint and scapegoat someone else for your choice to pile on and profiteer even further.

Beer industry doing the same thing as the big oil speculators they often vilify. . .

Man, this thread regressed from an honest debate to a shit-throwing contest pretty quickly. Let's keep things in perspective, people. We're talking about a beverage, not the cure for cancer.

Yeah that happens when one side of the argument lacks substance.

I think you hit the nail on the head. Isn't it ironic that this happened immediately after the formation of the New York Brewers Guild? It's a conspiracy, I tell you! New York breweries WANTED Shelton Brothers to sue NYS and paid off the judges to pass this legislation. Now, they have can use this tax as an excuse to rake in MILLIONS from their loyal customers, all while laughing maniacally! MWAHAHA!

/sarcasm

Now that we've "solved" (lol) the issue of how much this will affect the consumer, has anyone seen/heard any proposals about a solution to this? Apparently the head of the NYS Brewers Association was in Albany lobbying on Monday. Of course, there's not news coverage about a potential solution...

Tell me who is raising the cost to $1 extra per pint then if not persons in NY between brewer-bar for a $3.50 a keg tax? There's no conspiracy, people in the NY beer world either suck at math, love fear mongering, or are all about duping their customers as to why their price increased $1 per pint.

We've heard everything from Shelton Brothers who, not surprisingly, quoted the lowest price saying it would only be a $0.02 increase per pint, to others saying $0.25 per pint, all the way to $1 per pint. I've also seen three or four different figures quoted as to what the actual taxation will be.

Truth of the matter is, you have an issue here riddled with slim, vague information and reactionary knee-jerks. Anyone attempting to actual calculate this will find their time wasted. At this point, all we could REALLY debate about, in earnest, is whether or not we find this situation legally or theoretically fair. Anything above and beyond that is hearsay.

I would assume the bonuses are based on profit (percentage of profit or certain benchmarks or etc) and since the tax+fees lowers profit margins, they lower bonuses also.

Well, no. Either these costs are going to be passed onto consumers or they're going to lower breweries' profit margins, both can't happen.

Also, Pangaea, I trust jesskidden's numbers from a few pages back. That dude always knows what he's talking about.

Well, the direct cost is pretty clear: it's $0.26/gal at most, plus labeling fees. We heard that Barrier, one of the smallest brewers, giving us a ballpark for upper limit of the influence of the labeling fees, will incur an additional cost of $7000 in labeling fees over their 500 barrels. We also heard that Brooklyn, one of the biggest brewers, says the elimination of the exemptions will cost them $500,000 over 180,000 barrels.

Using Barrier as the upper bound, this change adds an additional cost of $0.08 per pint at the wholesale level, which maybe winds up being $0.40 at the bar.

Using Brooklyn as the lower bound, this change adds an additional cost of $0.011 per pint at the wholesale level if spread over Brooklyn's entire production. If instead, you assume that all of Brooklyn's NY beer is sold in NYC, and you spread this cost out over only that beer, it winds up being an additional cost of $0.0325 per pint at wholesale. After markup, this wind up being something like $0.05 and $0.20 respectively. Remember, the only difference here is how you want to do the accounting.

The reason this thread has values ranging from $0.01 to $0.25 is because each brewer is affected differently depending on their batch size, where their sales occur, and how much the increase is marked up between the wholesale and retail levels. Hopefully the math I've shown above is well-documented--the only assumption I made is that the tax gets marked up by about 400%, which is erring on the high side according to academic studies (most say the effective markup on an excise increase is about 100%).

I'd also urge everyone to note that any price hikes beyond the actual value of the tax are going straight into the pockets of the bar or store marking up the beer. There's no rule that says you can't diverge from a set markup structure. So while that pint of Barrier may cost you $0.40 more, 80% of that increase is revenue for the bar. Don't give them a free pass when they raise their prices, throw up their hands, and say "there's nothing we can do."

Brewers, reporters, or BAs are welcome to do the math themselves. But I'd hope that anyone that's going to be throwing around numbers would at least be able to support them with a back-of-the-envelope calculation or cite one. That $1 figure was just pulled out of someone's ass, as far as I can tell, as are claims that this will cause brewers to fail.

Well, the courts decided the legal portion of that, so any debate here is kinda moot...

Except state excise taxes are paid only on beers SOLD in the state, so Brooklyn's beer shipped out of New York pay no NYS excise tax but do pay it (in most cases, it's their distributors' responsibility to pay it) to those other states. So, besides knowing the number of Brooklyn brands registered a year, how much Brooklyn beer is sold in the State vs. in the City, you'd have to know how much beer Brooklyn sells outside of NY.

____

Here's an interesting tidbit- apparently the registration fee is charged only on beer, liquor, other alcoholic beverages and wine under 7%- normal abv wine is exempt. Seems like one quick solution to part of the problem is for Hindy, Oliver, Matt, et. al. to march over to Albany and get the beer industry the same deal the large NY wine industry got for itself.

Brand Label Registration is required for all liquor, beer, cider, wine products, and wine specialties sold in NY. It is also required for wines containing 7% alcohol or less. While wine over 7% alcohol does not require registration, it does require submission of an appointment letter and Federal label approvals.

Or you could just give them the $0 registration fee that cider enjoys.

I don't mean debating the old policy. That is moot, as it's been declared unconstitutional. I'm talking more about debating the merit of the new policy.

cosmicevan and beerandraiderfan:
could you guys please take this to a private conversation? neither of you is going to give way and/or 'win', and you're clogging up a perfectly good thread where some of us could learn something.

and I did say please...

I disagree. And your claim is belied by the record. "Please" refrain from having factually inaccurate opinions.

I hear you on that. Plenty of ridiculous things that are "legal", plenty of "illegal" things that seem just fine. I don't believe this is one of them, but I still think it is perfectly fine to discuss the merits of something regardless of its status under the law.

"This is a court of law, young man, not a court of justice."
--Oliver Wendall Holmes

I think that quote sums up what I'm trying to say.

P.S. its not necessarily moot unless all appeals are exhausted. . . i.e. the SCOTUS decides it or declines certiorari. . . but even then you could still argue its not even legally moot.

Actually, both happening is the norm. Tax Incidence.

Empirical evidence tends to show that beer retail prices increase by more than the amount of the increase in excise. Brewers probably take a hit, consumers definitely take a hit, and the markup men in the middle make more money.

Here's one paper that studied the effect of the doubling of the federal excise tax in 1991. They found that the retail price increased by at least 1.85x the amount of the tax, with larger multiples for more expensive beer.

I wonder 2 things.

1. Are there any current NY brewers who can honestly say that they wouldnt' be in the business had they been charges these taxes and fees from day 1?

2. Are there any NY state beer consumers who can honestly state that they've only ever consumed beer made in the state of NY - in other words that the tax and passing on the cost (and it will ONLY be excessive if the BAR charges it) will seriously add to their typical beer expenditure? On a night of drinking mixed origin beers - are you really going to notice the extra 4 or 5 bucks that the NY beers cost you?

NY should institute a new $150 tax credit for having "Brewed in NY" on a beer label ... oops the TTB will only allow that to appear on beers brewed in NY? Not NY states fault, they charge everyone the $150 label registration fee, the tax credit is totally different

finally, you are coming around and talking sense my man! cheap beer for all!!!

not to mention, if they would allow child/slave labor, i could finally put my kid to work for a decent wage. she hardly makes enough to cover a 6 pack a week.

I'm glad Dan was a Lawyer before he started importing beer. Better for us on this end...

All I know is I don't like picture he paints of brooklyn first of all for one reason or another their prices have already gone up a dollar a six pack in my area. I dont know what the increase equates to less our mark up and the distro markup but the price has increased. They are now close to ten dollars a six which is about par for the course in my opinion. But to make it seem like they are whiny and just need to bump up their prices and suck it up seems absurd to me. First of all almost everything Shelton brings in is expensive (everyone looking forward to $100+ westy sixes?) and if a customer base is an uneducated one or even just one that does not want to pay 5-8 dollars for an 11oz bottle that stuff will sit on the shelves for a long time, and Shelton doesn't give a shit because they already got payed.

I'm not saying there are not people willing to spend more I'm just saying telling someone to say fuck what our loyal customers might have a problem with/expect from us were gonna bump our prices like its no big deal. Which is clearly something Shelton doesn't have a problem with because the mouth breathers target their products and dont have a problem paying more for them. What they were trying to do MAY have been admirable I don't know why they thought the suggestion of eliminating those fees would go over well with the state.(Hey NY I know you like money but how bout you stop making everyone pay these registration fees? No? well in that case heres a few people you should also be collecting money from.) I don't know of any government that will not take the opportunity to generate more revenue. but dragging brooklyn through the mud like that was pretty classless in my opinion.

Most customers at least in my state don't know/care who Shelton is all I'm going to hear about is why does my BCS cost more this year, why did Matt and Phin's go up in price?

i think i finally figured it out...you are Ron Paul, right?

We do like money...and beer.

Our legislature just likes money. Maybe they should have a beer.

Haha I didn't mean to slight NY at all, Id like to meet a politician from any state that would turn there back on MORE money.

But yeah maybe If they drank more cold beer they would dispense less hot air.

Well, offhand...let's see... there were the NY state legislators and governor who passed and signed this now invalid law giving the NY State breweries the exemption from the state excise tax and registration fee.

And then there's the many co-sponsors in the House and the Senate of the so-called BREW bills to further lower the Federal Excise Tax for small brewers (they already pay less that large brewers- thanks to a law passed back in the 1970's).

I like that this is a very civel and well thought out thread. Kudos to the participants.

thanks so much for putting the figures up...i did the math a few days ago while debating someone on twitter and tried to make the same point...although less thoroughly as you did. the essiential point is that if New Yorkers do end up paying a $1 more per pint then several levels ( distributors, breweries AND retailers) are the ones cleaning the pockets out...not Shelton...and not even the state of NY.

Yes...Texas is worse. Think it's $1000 per label in Texas....or some other absolutley ridiculous amount. Don't know the full list but I think there are other states with high labeling fees.

It looks like the fee is $25 per label per container size in Texas [pdf form].

I could be wrong ...but I know I've heard from multiple importers and breweries that there are some onerous per beer fees in Texas. It's what keeps some of the small batch importers almost completely out of the market. Maybe it's a different fee they are talking about.

Just checked. It's the brewery liscence fee. $4000 for breweries for two years with beers of ABVs stronger than 5% and $2000 for breweries less than 5%.