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Kid Rock to have his own craft beer

It seems we aren’t alone in South Carolina with beer-hating government officials. It can even strike the Beer Mecca. Thanks to Vocated and the Beave for sending this video along to me:

http://www.cnn.com/video/#/video/us/2009/02/14/or.1900.beer.tax.kgw

In Oregon, they are considering increasing the excise tax on beer brewers from $2.60/barrel to $49.61/barrel. If my math is correct, that is a whopping 1,808% increase! According to Kurt Widmer from Widmer Brothers Brewery in Portland, Oregon, that could yield a $2 to $4 increase per six pack. I know that both sides of an argument like this are likely to spin things in their favor, but I don’t care what your position, an 1,800% tax increase seems absurd. Do they have any idea the damage and long-term impact of doing that?

The Oregon brewing industry has thrived over the past 20 years and risen to the top of the American craft brewing scene. (I won’t argue which state is best, but no one can dispute Oregon is in the discussion.) Much of the reason Oregon breweries have flourished is because of low taxes and brewery-friendly laws. Oregon hasn’t increased the excise tax since the 1970s. But, as is usually the case, the government sees something doing well and they want their share.

I’m not sure where most of our government officials went to school and if they required an economics class as part of their degree, but it certainly doesn’t seem like it ($850 billion “bail-outs” aside). If they raise the taxes on beer, the price of beer will go up. What happens to the supply and demand curve when price is shifted up? Demand goes down.

Beer is not gasoline or water. People will buy less if the price goes up. The term is called “price elasticity of demand.” I rarely buy Rogue beer anymore, despite the fact that it is one of my favorite breweries, because it costs $12.99/six pack here. I would never pay $15 or $16 for a six pack, at least not in 2009 dollars, unless it was my birthday.

If beer sales go down enough or it causes a lot of breweries to go out of business because they can’t compete at the new price points, the state may actually generate fewer tax dollars, despite the higher tax rate. For once, could we possibly try thinking long-term instead of grabbing the dollar right in front of our face?

Now I’ve gone and gotten myself all worked up. I need a beer… (And yes, I have an MBA, for what it’s worth.)

I read some sad news yesterday. Due to South Carolina’s archaic and restrictive beer laws, the Charleston Beer Exchange has had to stop doing their in-store beer tastings. It is ridiculous how backwards and hypocritical South Carolina’s laws are pertaining to beer. This is especially evident when you look at our neighbor North Carolina, which has far fewer restrictions, and you see how craft beer is flourishing there. The numbers say it all:

The disparity gets really bad when you look at the top craft beer states such as Oregon and Colorado. Portland, Oregon alone has 46 breweries and brewpubs. FORTY-SIX! Now that is my kind of town!

Obviously, South Carolina is a little behind the curve. We’re often behind the times, so we’re used to it. But why the hate against beer, when wine is given more rights? Wine shops can have wine tastings. Wineries can sell their own wine in gift shops. I don’t know a ton about the legal aspect of this debate, and it may simply be a licensing issue, but it’s obviously not clear or easy to obtain the necessary licenses.

I do know for a fact that in South Carolina breweries can either distribute OR sell on-premises. That means they have a choice, distribute to bars, restaurants and stores, or you can be a brewpub and sell your own beer. You can’t do both. That causes a lot of problems for our local craft brewers.

Distribution costs are high, so being able to sell at their own facility would help profitability. Also, having brewery tours, tasting rooms and beer gardens is a good way to draw in customers and provides a great public relations opportunity. It’s no wonder we only have 13 commercial brewers in this state.

I know it sounds kind of silly to argue about this when we still have a world full of real tragedies like racism, poverty and right-to-life issues, but these beer regulations are real issues that affect small businesses and people’s livelihoods. Small businesses need any edge they can get to draw in customers and provide them with a positive and memorable experience so they will come back. That level of customer service is vital in order to compete with the big box companies.

In 2007, Pop the Cap South Carolina lobbied and won a huge victory for beer when the ABV limit was raised from 5% to 14%. That organization has morphed into the South Carolina Brewers Association, and they have taken up the torch for beer advocacy.

The SCBA has been working with Representive Bill Herbkersman and they have a bill ready to go before the state house that will allow microbreweries and brewpubs to dual license. I’ll keep you posted once this bill has a number and we can pester our legislators to get with it.

When you look around the country, you can see the potential for craft beer. I want to see that in my state, too.

On Friday, Big Gnome launched it’s new podcast series called Lunchbox. Big Gnome is a Greenville-based marketing and public relations firm and I received the honor of being the first interviewee for the podcast.

Nicole grilled me on some tough questions, many of which I couldn’t answer because I have the memory of a golden retreiver. We discussed the trials and tribulations, highs and lows, of being an aspiring beer blogger. I find it to be a heart-warming and inspirational tale, so I hope you listen and reach for the stars.

Here’s a link to the podcast:

Big Gnome Luchbox Episode 1

You can also subscribe to Lunchbox on iTunes. Just search for Big Gnome.