industry update glass packaging institute board meeting, april 30, 2015
TRANSCRIPT
Industry Update
GLASS PACKAGING INSTITUTEBOARD MEETING, APRIL 30, 2015
Slide 2
The Business of BeerThe Business of Beer
Number of Breweries in US1900 to 2014
February 1977 FET break provides a reduced excise tax rate for brewers that produce no more than 2 million of $7.00 tax on first 60,000 barrels.
In 1979 President Carter legalizes home brewing.
US Domestic Beer Production1990 to 2014 (31 Gallon Barrels)
Source: TTB and Beer Institute, 2014.
Slide 5
Per Capita Consumption of Malt Per Capita Consumption of Malt BeveragesBeveragesUnited States 1980 to 2013 (total gallons/total United States 1980 to 2013 (total gallons/total population)population)
Source: Beer Institute, 2014
Slide 6
Beer, Wine, Liquor in Gallup Poll
Young Males 18-29* years old
Source: Gallup Poll, 2014; *legal drinking age is 21 - BI does not condone underage drinking
Slide 7
Slide 8
Overall Beer IndustryOverall Beer Industry
• Beer volume grew by 0.5 percent in 2014 –
first year of overall volume increase since
2008 recession.
• The gains came mostly from imports and the
craft segments.
• Lower unemployment rates and lower gas
prices could have contributed to the
upswing.
• But is that enough? Overall this year
trends show a mixed bag – some channels up
but some flat or down.
Slide 9
Package MixPackage Mix
Slide 10
Share of U.S. Package mix in Share of U.S. Package mix in GlassGlass
Slide 11
Threats and Trends to BeerThreats and Trends to Beer
Threats
•Volume declines as
consumers switch to
more expensive beer
•Loss of market
share to wine and
hard
liquor/equalization
•Increased
regulation or
harmful legislation
Trends
•Cider booming
•Continual growth of
small brewers
•Consolidation
Slide 12
Taxes: The Most Expensive Taxes: The Most Expensive IngredientIngredient
Slide 13
The Fair BEER ActThe Fair BEER Act
The Fair Beer Excise and Economic Relief (Fair BEER) Act creates a
graduated federal excise tax structure while maintaining a level
playing field. Under the Fair BEER Act, all brewers and beer
importers would pay a rising scale of federal excise tax:
No excise tax on the first 7,143 barrels; $3.50/barrel on barrels 7,144-60,000;$16/barrel on barrels 60,001-2 million; and$18/barrel on every barrel above 2 million.
Barrelage Current Law
1-60,000 If annual U.S. production is under 2 million barrels, reduced rate is $7/barrel on first 60,000 barrels
60,001-2,000,000
Every brewer and beer importer pays $18/barrel
2,000,001+ Every brewer and beer importer pays $18 per barrel on all barrels. No reduced rate on first 60,000 barrels
Importers All importers, regardless of size, pay $18/barrel on all beer
Small Brewer Definition
Capped at 2M barrels (U.S. production only)
Barrelage Fair BEER Act
1-7,143Rate reduced to $0/barrel on first 7,143 barrels
7,144-60,000Rate reduced to $3.50/barrel on production between 7,144-60,000
60,001-2,000,000
Rate reduced to $16/barrel
2,000,001+Rate is $18/barrel with lower rates as shown above for first 2M barrels
ImportersRates for all importers and all brewers are the same, making the structure WTO compliant
Small Brewer Definition
Unnecessary to define by barrelage
Under the Fair BEER Act, all brewers and beer importers, regardless of size, pay the following taxes on a graduated scale.
How is the Fair BEER Act different from current How is the Fair BEER Act different from current law?law?
Slide 15
Support for the Fair BEER ActSupport for the Fair BEER Act
Co-Sponsored by 64 House members and 8
senators
Endorsed by:
• Beer Institute
• National Beer Wholesalers Association
• National Barley Growers Association
• National Association of Beverage Importers
• Hops Growers of America and the Washington Hops
Commission
• Glass Packaging Institute
Our goal is to either pass the Fair BEER Act or
compromise with the BA to find common ground.
Slide 16
Other IssuesOther Issues
• FDA regulation of spent grains potentially
imposes new costs.
• Rule to require menu labeling of
nutritional information, including calorie
count.
• 2015 U.S. Dietary Guidelines, working with
the Brewers Association and the Wine
Institute to remove “standard drink”
reference.
Slide 17
Our Answer to Equalization: Know Our Answer to Equalization: Know Your Drink…Not all alcohol is Your Drink…Not all alcohol is the samethe same
Slide 18
Thank you!Thank you!
The Beer Institute and its member companies
want to work together for the common good of
the entire industry.
Our goal? To be United for Beer
Jim McGreevy
202.737.2337