Saturday, April 26, 2008

A Quick Look at Beer's Economic Impact

For a couple years now I've tried to get beer folk to check out Beer Serves America, a site the collects data for the national brewing scene and breaks it up state-by-state. I haven't done the due-diligence to see who owns BSA, but I suspect there is a natural bias if that were investigated. That said, I think these numbers are pretty darned close, the ratios certainly seem appropriate when comparing states like California, Oregon and Colorado (the big three brewing states).

I'm looking at this now because after Assemblyman Beall proposed his idiotic tax there have been a lot of emotional responses and arguments made that may or may not move a real conversation forward. I believe that if you see the numbers you should be able to reason that our brewing industry is good for the economy as it is, and as it grows its financial benefits will too. Remember, Beall is asserting that the tax increase on beer is purely economics, that the industry isn't paying its "fair share" in our state's cost. Let's take a look.


6,599 Jobs | $531,614,283 Wages | $4,212,218,647 Economic Contribution

9,272 Jobs | $598,797,248 Wages | $1,593,161,856 Eco. Cont.

85,211 Jobs | $2,060,954,758 Wages | $5,147,394,705 Eco. Cont.

Admittedly, not all of the 100k jobs listed here are solely dedicated to beer, we know that wholesalers and retailers likely have portfolios that are broader than beer. That said, look at the economic contribution column for a second. This is what the industries listed put into the economy in order to pay the wages and create the jobs. In the brewing industry this is mostly material costs: bottles, grain, hops, etc.

At the craft brewers conference last week each attendee was given a bottle of IPA in a box. On the box listed all the companies involved in bringing that beer to us, the are:
  • Green Flash Brewing
  • Port Brewing
  • Lost Abbey
  • San Diego Brewers Guild
  • Brewers Supply Group
  • Hopunion
  • Briess Malt
  • Cargill Malt
  • California Glass
  • Sterling Press & Packaging
  • Crisp Malting
  • WS Packaging
  • White Labs
One beer that made it to production through the efforts of twelve businesses. Now, if this beer were to make it to your local bottle shop you could add distributors, wholesalers and retailers, not to mention the added staff at the brewery needed to represent the company. This stuff isn't magic, it doesn't show up on shelves on a wish, and every finger that touches the product before it is bought wants their cut.

Now, imagine what would happen if a massive tax increase was introduced upstream, way upstream. Beer prices, of course, would blow up. However, I think it would be safe to assume that many brewers simply wouldn't make beer for off-premise sale, opting to sell to the people that come to their location. Actually, many brewers may just cut their losses and walk away. That leaves wholesaler's out, distributor, reps - out. All of a sudden that job column number is less, wages are less... and the tax paid for those is less! So, naturally, if we were to follow Beall's logic, if the industry is contributing less to the economy, shouldn't we just tax them more? It doesn't make any sense.

Before closing, let's look at taxes, while we're at it.

Total Taxes (Bus. Personal, Consumption):

4.5 billion dollars in taxes generated by the brewing industry, for California alone, and someone has the audacity to claim they're not paying their fair share?

Now, of course, the economics of beer is only the beginning of neo-prohibitionist arguing. Beall has gone on to make some statements I simply don't think can be proven, statements that are clearly penned to raise fear and create ill-will toward our state's brewers. Those statements perhaps deserve another several posts. Today, however, just see how brewers benefit the state of California - by the numbers.