This week I am sure you are aware of the current battle with the State of Washington and the possible raising and extending the beer tax. This is one of the most progressive and highest beer taxes proposed in the country. So I asked the brewers/breweries the following question and below are there answers. I got an overwhelming response so I am posting every reply I received.
The question – The Governors proposed plan is to Extend and Raise the Beer Tax here in WA State. How do you feel this proposal will affect your brewery?
Slaughter County Brewing –
I don’t think there’s much I can add to the points everyone has been trying to make already. We’re a new and really small brewery, as you know, so my perspective comes mostly from the research and business planning I did while considering what kind of a brewery we should be and from comparing and contrasting different brewery sizes and business models. From that perspective I think this is a small brewery killer.
Here’s a few disjointed rants: 🙂
Doing this unfairly burdens the smaller brewer, and I fear it’ll put some of our nanos right out of business. It’s going to really discourage new small startups. This is still a growing industry that creates jobs in this state — this growth and the jobs it provides will contract. There are many small businesses out there that are in a position where they’re not making (or making very little) money yet — when costs go up — which is especially especially infuriating when they go up artificially, like this — you have to rob Peter somewhere to pay Paul; We have to cut someone’s hours to save on payroll and the owners end up picking up the slack, becoming overworked and not getting to where they can get ahead of the game and grow more, expand, and hire more help.
This type of increase is absolutely asinine. … and the money they’ll make by screwing over the small working brewery (and the craft beer drinkers) won’t even amount to a net loss to the state when you figure in the tax discount the big brewers will be getting. … and the way it was pitched and passed with a “Beer vs Children” argument is straight up neo-prohibitionist propaganda. Taking money out of the state and putting parents out of work isn’t good for kids.
If I understand it right, Washington will become one of the highest taxed markets in the country. The additional tax burden will raise the cost of wholesale Washington beer — other beers from over state lines will then be more attractive to bar owners looking for a better bang for their buck. This will knock Washington beers off of taps at local pubs and off store shelves — especially the bigger stores. This means that we won’t be able to sell competitively — taking a double hit; first the increase in the tax, and second, the loss of customers.
The margins on wholesale kegged craft beer aren’t all that great — when you consider the cost of a new keg, stickers or labeling for it, a taphandle to leave with the bar, gas costs and other overhead for delivery, you usually have to sell that same beer into the same bar 2 or three times before you start to see a return on it — now this tax is going to slow that down and it will take longer to see that return — and a portion of that return has be to used to run the brewery and buy ingredients. This is why it’s really hard to become profitable as a nano, and this tax is going to kill the smaller brewer.
Scott Kirvan – Owner/Brewer