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Sep 20, 2014

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RBPMail 3.08, August 1997

Real Beer Page Mail (RBPMail) began as a modest update to craft-brew events on the WWW. It evolved into a news digest and sometimes editorial forum. We present its contents here much as they were emailed to subscribers. Often, links you will see are out of date, and businesses referred to may also be long gone.

In this issue:


If you like what you read here and want more every week, subscribe to BEERWeek. Much of the content within is digested from BEERWeek, the paid subscription supported industry email newsletter. Get your free sample today at

http://www.beerweek.com

THIS ISSUE BROUGHT TO YOU BY BEERWEEK

For over seven months we've been co-publishing BEERWeek with The Celebrator Beer News. This valuable industry news digest is delivered every week with a compilation of digested breaking news, new product releases, events, openings and closings along with many novel reports and reporting found exclusively in BEERWeek. For the next two months, we will present world-wide headline articles from BEERWeek in RBPMail, sort of like an extended cable channel preview weekend. If beer is your avocation or profession, this is the resource for you. To clarify, RBPMail is the FREE news digest mailed monthly; BEERWeek is supported entirely by your subscription support and -- as the name implies -- never misses a Monday. Read on or subscribe at: http://www.beerweek.com

CALIFORNIA MICROS SUE A-B

El Toro Brewing Company has filed a Class Action lawsuit against Anheuser-Busch, claiming that El Toro and many other small breweries were unfairly terminated from distribution agreements through actions by A-B, actions which they allege violate the Sherman Act and Clayton Act. The suit charges that "With the intent to and with the effect of reducing interbrand competition in the craft brew market and eliminating competition from craft brewers in the overall market, Anheuser-Busch had exercised its market power to significantly change a pattern of distribution which had originated in a competitive market and which had persisted for several years." The suit was filed in U.S. District Court for Northern California by Corey, Luziach, Manos & Pliska, LL of Millbrae, CA. The lead attorney is Dario de Ghetaldi. A similar suit was filed by St. Stan's Brewery, Modesto, CA.

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CHINESE BREWERY GOES PUBLIC

China's Guangzhou Zhujiang Brewery Group Co. plans to issue 360 million yuan in convertible bonds, according to a company official. The bonds will be convertible to stock. At this time, the brewery is awaiting approval from the China Securities Regulatory Commission. China has recently announced a four billion yuan quota for convertible bonds. Beijing has stated that the size of each convertible bond offer must be a minimum of 100 million yuan, and have term limits of no less than three and no more than five years. Zhujiang plans to use the proceeds to boost capacity and purchase other domestic breweries.

BULGARIAN BEER PRICES RISE

Sofia, Bulgaria - The price of beer in Bulgaria will go up in September - although it was not announced by how much - according to Petar Paunkov of the Beer Producers' Union. The reason is the poor quality - and low quantity - of Bulgarian barley and high energy charges. Beer producers imported 20,000 tonnes of brewery barley this last spring to cover a consumption gap. To secure next year's crop and improve barley quality, beer producers plan to offer futures contracts to cash-strapped barley producers.

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ARMY CUTS BEER RATION IN KOREA

The US Army's cut back in the beer ration to the 37,000 G.I.'s stationed in Korea has been opposed by big brewers who say the policy is costing them millions of dollars. The previous ration of 30 cases a month (24 bottles a day) was rescinded by military authorities because of illegal sales to the Korean black market. The new ration is 8 cases a month per person (6.4 bottles a day). The beer sells duty free in the PX system for about $12 a case and can bring as much as $48 on the black market. Brewers are opposing the new policy because of lost sales (estimated to be at least 50%) and because of fears that the reduced rations will be applied to other military markets as well. The Beer Institute in Washington, D.C. has lobbied the House of Representatives to amend the Pentagon's budget bill to reinstate the larger beer rations. Total shipments of beer to Korea were 1.3 million cases of Budweiser, Miller, Stroh's, Coors and others. The military also covers the cost of delivery. (Source: Eric Schmitt, The New York Times, July 5, 1997, pg. 1)

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JUDGES RULE IN FAVOR OF A-B RE: GIVEAWAYS

As reported in the July 14 BEERWeek (and July RBPMail), a California State Judge Diane Dwayne had temporarily shut down an Anheuser- Busch rewards program begun June 30, after the California Department of Alcohol Beverage Control had filed a suit against A-B on June 27. The July 21 edition of Ad Age reports that a state judge issued a preliminary ruling on July 15 permitting A-B to resume the program. The ruling was based on the view that, even though Anheuser-Busch broke state codes banning giveaways tied to sales of alcohol, state regulators had failed to enforce promotion laws consistently in the past. Both sides now await a court order that will clarify or modify the judge's position. Meanwhile, A-B may complete the running of its current program into the fall.

A-B, ATLANTA BREWING CO. FORGE ALLIANCE

A-B's distribution network will widen Atlanta Brewing's sales, while A-B will own part of the Southeast brewery. Atlanta Brewing President Greg Kelly said he would be "proud if Atlanta Brewing Co. were in the same league as Redhook or Widmer," two craft breweries that in recent years marched down the aisle to exchange vows similar to those reported at the A-B/Atlanta Brewing nuptials. For the complete story, read the August/September edition of Southern Draft Brew News, available in early August. Subscribe at: http://www.southerndraft.com

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BREWWORKS NOW A WYNKOOP OPERATION

According to an article by Jane Prendergast in the Cincinnati Enquirer, July 4 , BrewWorks at the Party Source, opened just eight months ago, will be run by Wynkoop Brewing Company. BrewWorks was billed as Covington, Kentucky's $11 million economic development prize when it opened. Currently, signs on BrewWorks brewpub/restaurant doors state that the facility is now operated by Wynkoop, a Denver, CO, craft brewing company. The BrewWorks name will stay, and employees have been told they will be able to keep their jobs. The original Party Source store, on 12th Street in Covington, and in Bellevue will continue to be run by owner Ken Lewis. John Hickenlooper, president of Wynkoop, announced plans to open seven new brewpubs this year, bringing the company's total to 13.

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********** WEB WATCH **********

HOMEBREW-NANZA!

We've been promising at the bottom of every issue of RBPMail to provide an ever-expanding list of information and resources to make your regular surf our way a satisfying experience every time. Little by little we've been adding content that adds up to just about anything you'll want to know about beer. This month, we're proud to present some incredible homebrew resources we've been able to support and bring you.

THE BREWERY

Surf. Bookmark. Inform spouse you will be gone for awhile. http://www.brewery.org/

THE HOPS PAGE

Glenn Tinseth's extensive page on the subject. http://www.realbeer.com/hops/

SPENCER'S BEER PAGE

The first beer page and an excellent resource. http://www.realbeer.com/spencer/

CAT'S MEOW 3

1009 Recipes. Searchable. Yeeeeehaw. http://brewery.org

THE RECIPATOR

Check out Mark Riley's online recipe calculator with a growing database of recipes created using the program. http://brewery.org

DAVE BROCKINGTON'S TASTING NOTES

http://brewery.org/brewery/taproom/DBindex.php

GAK'S TASTING NOTES

http://www.beerismylife.com

PALMER'S STARTER KIT

This is a GREAT place to learn everything you know to get started. http://www.realbeer.com/jjpalmer/

BREWINGTECHNIQUES

The best brewer's magazine going according to several internet surveys. Find back articles online and more. http://www.brewingtechniques.com

BREW YOUR OWN

As the name suggest, this is a magazine all about homebrewing. Archived articles and approachable design and content make this a must-surf. http://www.byo.com

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************* REAL BEER PICKS *********************

BREW BUS!

Summer is winding down, but the Portland Brew Bus is not. If you are headed to Portland on a weekend, let these guys drive you to their favorite craft-brew destinations. If you're headed to Portland mid-week, you can still charter their service. Details and reservations are available at: http://www.brewbus.com

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HORSE BRASS POLISHES PORTLAND TOUR

While in Portland in body or spirit, head to the Horse Brass. Faithful followers of RBPMail know our admiration and fondness for publican Don Younger and his legendary Horse Brass Pub. For over 20 years they've been satisfying craft-consumers and supporting local brewers by providing a tap when they come to the market. The website is full of historical information, gossip, all things British and lovingly maintained as another room in the tavern by Joy Campbell, fulfilling the mission of being "a bit of England, where good companionship is the order of the day." http://www.horsebrass.com

CABO, CABO, CABO CHAMELEON

The Cabo Group continues to evolve to deliver quality products in the hottest markets in the beverage industry. The company was formerly a distributor of Mexican beers in the United States. Currently the company delivers niche beers, specialty beers, and spirits both domestically and internationally. See their brands at: http://www.cabogroup.com

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SHADOW MOUNTAIN DOES IT ALL

Shadow Mountain is a brewery, a brewing equipment manufacturer, a computer company and more. They’ve got a great Java quote generator with prices that look near impossible to beat (we priced a fully-equipped 15 barrel brewhouse with generous fermenting and conditioning capacity at $125,000!). You can also check out their family of beers and order merchandise at: http://www.shadowmountain.com

BECOME A BEER BARON ON YOUR PC

We've got a strange combination of pleasure and guilt in turning you on to our latest fascination: The Metersteiner Beer Manager game. The guilt comes from knowing you'll be hard pressed to stop at the free "four-year" version. It's a SimCity-type game you can download right off of the Web that puts every armchair brewery operator right in their place -- in front of the PC (sorry, no Mac or Unix product available) and in the thick of brand war battle. The Beer Manager game engine is based on many random elements; the competition is fierce and the market is brutal! Share our little problem by going to: http://www.beermanager.com

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BEAUMONT ON THE ROAD IN EUROPE

Want some great reading from a road trip unfolding? Spare no time in heading to the opinionated, witty, occasionally acerbic and always fair World of Beer with Stephen Beaumont. Read the back issues too. If you have not signed up for his email newsletter, treat yourself to the second url below. http://worldofbeer.com http://worldofbeer.com/update.php

BIG SAVINGS ON FUN BEER VACATIONS

Just for reading RBPMail you've qualified for some great savings on events you'll probably want to attend anyway. If you respond before September 1, 1997 you can receive a $25 discount on BEER CAMP or a $200 discount on BREWS CRUISE '98. One writer called the former event "the best place in the world to drink beer that weekend." Mention Real Beer to earn your discount and start planning your getaways now. The next Oldenberg Beer Camp will be held September 12-14, 1997. Cost is $349 per person based on double occupancy (but don't forget about the $25 Real Beer discount). For additional information, point your web browser to: http://www.oldenberg.com

A brand new event happening in March 1998 combines the excitement of Beer Camp with the sheer indulgence and pleasure of a week-long Caribbean cruise. BREWS CRUISE '98 will cost $2099 per person, double occupancy (again, remember the Real Beer discount). For additional information, call Magellan Travel at 1-800-375-8549 for a reservation package, or point your browser to: http://www.oldenberg.com

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QUICKIE EMAIL SURVEY

Thanks to all who have been replying to our Quickie Surveys. We draw one winner each month for the prize of Michael Jackson's The Great Beers of Belgium distributed by Vanberg & DeWulf (http://www.BelgianExperts.com).

RESULTS FROM LAST MONTH'S SURVEY: We asked, "How many BRANDS of beer do you have in your refrigerator at any one time?" and learned that nearly two thirds stock 1-4 brands and fully another third stock more. We asked you the question about styles this month to see if this diversity exists within a family of beer styles or not. Here are what your proud 'fridges look like: 1-4 Brands = 62% more = 33% Can we come over and play? Last's months Quickie Survey winner is geologist, Ed Nealson. You rock, Ed! Enjoy the Michael Jackson book from http://www.BelgianExperts.com

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*********** Brewed Fresh For You! **************

The Real Beer Page announces a diverse group of brew websites to check out: Bloomington Brewing http://www.bloomington.com
Bad Frog http://www.badfrog.com
International Brewpro http://www.brewpro.com
Cooper's Brewery http://www.conbev.com
Elk Grove http://www.elkgrovebrewing.com
Golden Gate http://www.goldengatepark.com
Hales Ales http://www.halesales.com
Lucky's Teeth http://labattblue.com/Lucky/
Molokai Brewing http://www.MolokaiBrewing.com
Newlands Services http://nsibrew.com
ProBrewer http://www.probrewer.com
Routh Street, TX http://routhstreetbrewery.com
Source Packaging http://www.sourcepackaging.com
Toronto Beer Fest http://realbeer.com/torfestbeer/

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LOUISIANA RELAXES DIRECT SHIPPING LEGISLATION

On July 9, Louisiana Governor M.J. Foster, Jr. signed a bill to legalize the direct shipping of 60 bottles of wine a year to Louisiana consumers. The passage of the bill was the result of negotiation on the part of the Wine Institute with Louisiana wholesalers, administrators and legislators in the hope it will become a model for other states regarding direct shipping of wine. Florida, Georgia and Kentucky all have laws prohibiting shipping by out-of-state licensees, and it is a third degree felony. Fourteen other states have been engaged in legislative activity re this subject. Louisiana is one of fifteen states that have made it legal to ship limited amounts of wine directly to adults. This impacts over one thousand commercial wineries who can't reach their market by any other means. The effect on the brewing industry is felt by beer of the month clubs, which are prohibited in certain states from shipping beer directly to the consumer, because they circumvent the traditional three tier system.

OREGON LIQUOR COPS BAN INTRASTATE BOM DELIVERY

The Oregon Liquor Control Commission decided it is unlawful for Oregon consumers to join Beer Across America, a national microbrew-of-the-month club, according to a company press release dated July 15. The current Oregon membership base of over 1,000 customers has been informed that they can no longer participate in the program. Oregon residents can legally purchase wine from out- of-state retailers for personal consumption and have it shipped to their home or business. This latest enforcement by the OLCC pertains only to beer. OLCC officials take exception to the fact that the order information is processed at the company's Illinois headquarters, although Beer Across America has proposed to assign the information to a retailer in Oregon for shipping purposes. The OLCC insists that order-taking for Oregon residents be based in Oregon. "In this age of telecommunications and the Internet, the physical home of any company's order-taking business should be irrelevant," the company stated. "It certainly is to the consumer." http://www.beeramerica.com

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NY TRIES TO REMOVE ONE PUB/ONE OWNER LAW

A New York Post article by Richard Wilner, reported that several New York City brewpub owners are "caught in a post-prohibition era law that limits them to just one establishment." State lawmakers passed a bill earlier this month allowing ownership of up to five brewpubs. The State Assembly, however, still holds the bill in committee. It was unanimously approved by the Assembly economic committee, and sent on the Assembly Ways and Means chair, who indicates that he (Deny Farrell) has not yet reviewed the bill. End of session is about two weeks away. Two NYC brewpub owners are anxiously following the progress of the bill: Jon Bloostein, owner of Heartland Brewery in Union Square and Joe Quattrocchi, Commonwealth Brewery, Rockefeller Center. Bloostein has leased space at 6th Avenue and 51st Street and will have to give it up if the Assembly does not pass the bill this session, while Quattrocchi lost $400,000 when he leased the historic Delmonico's site near Wall Street and had to give it up when the old law was re-interpreted. http://www.heartlandbrewery.com

PORTLAND BREWING TAPS INTO COLLEGE PUBLICATIONS

Portland Brewing Company, Portland, OR, has begun a newspaper ad campaign targeting alternative and college publications, according to the July 21 Ad Age. The $400,000 campaign is expected to appear in college papers in California, Colorado, Oregon and Washington, and is being handled by Portland's Moffatt/Rosenthal and Cass Communications, Los Angeles. The campaign takes a position of poking fun at microbrew snobbishness and mainstream beers, according to a M/R staffer. http://www.portlandbrew.com

SAM ADAMS AIDS SUPPORT PROMOTION

Boston Beer Company is featuring a promotional vehicle for on- premise retailers. Consumers make a donation to a local AIDS charity and fill out a special Heart of Gold card identifying them as supporters. The cards can then be displayed around the bar to encourage customer involvement and to show how much money has been raised. For more information, contact Lucy Sholley, 617-368- 5000. http://www.samadams.com

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********* BEERWEEK HEADLINES **********

The following are news headlines and features from the last month.

BEERWeek of July 7 - 14, 1997
* Army Cuts Korean Beer Ration -- Big Brewers Cry Foul!
* Yakima Brewing Celebrates 15th Anniversary
* A-B Invests One Billion Plus in Mexican Beer Market
* Anheuser-Busch Opposes "Real Beer Here"
* 1998 AOB International Events Announced
* Bass Is Really Really Really Out of Contention
* G-o-o-a-a-l-l-l pour le Bud - Mais, non!
* Guinness/Grand Met/LVMH Still Carrying Baggage
* 1997 California State Fair Commercial Beer Awards
* New CA Labeling Law for Malt Beverages
* Redhook Helps Avert Plane Crash
* Beer and Cigars at Camp Getaway

BEERWeek of July 14 - 21, 1997
* Sierra Nevada's Paul Camusi to Retire
* New President & COO for Pete's Wicked
* Wynkoop Takes Over Kentucky's BrewWorks at the Party Source
* A-B to Appeal to California Courts
* Louisiana Becoming Safe for Direct Shipment of Alcohol
* Old NYC Law Dampens Brewpub Expansion
* Miller Sales Up: Advertising Campaign or Discounting?
* Russian Brewery Brews Pilsner Urquell?
* GABF Gears Up for Big Event
* GABF Magic Bus Ride
* Chinese IPO's? (An hour latter your... )
* Bulgarian Beer Prices Rise * Flooded Wisconsin Brewery's Friends Help Out
* Red River Beer Helps Midwest Flood Victims
* Gosser Helps Sponsors Art Biennale
* Molson Dry Gets Wet
* Lav-en-dar Cigars, Oh My!
* Weston Re-Opens

BEERWeek of July 21 - 28, 1997
* Oregon's OLCC Bans BOMs
* Wynkoop Repeating Itself - in a Good Way
* ASCAP & BMI Face the Music
* Opinion: "Estate Brewery" Trademark a Good Idea?
* New Stout from Dublin - My Goodness?
* Red Tail Draught Exceeds Expectations
* A-B Registers Shelf Offering
* Judy's Last Hurrah
* Backroads Meets Backroads at Anderson Valley
* Maps on Tap: New AHA Membership Perk
* Sapporo USA Relocates Offices
* Mexican Beers Awarded POPAI's
* Bud Graduates 40,000+ from Bud "School"
* Moss Bay Ales Now Officially Hale's Ales

BEERWeek of July 28 - August 4, 1997
* California Micros Sue Anheuser-Busch Over Distribution Deals
* Favorable A-B "Buy-the-Gear" Court Ruling in California
* Portland Brewing Ads Target College Papers
* Obscure Delaware Legislation Thwarts Homebrewers
* Montana Breweries Organize
* Sam Adams Rules Down Under: What's Next - - Koch-o-dile Dundee?
* Sam Adams "Hearts of Gold"
* New Brewery Bus Tours in Colorado
* Corsendonk Now on Tap
* Big Rock & Ducks Unlimited: Wise Quacks
* Cigar Party Kit from Murphy's
* Hale's Ales Expands MicroKeg Production
* Colorado Agency Takes on New Brewery Clients
* Beamish Now Available in San Francisco
* Westchester Brewing Voted Top Micro
* The Beers You Could Have Had at OBF

Each issue also includes:

* Openings * New Publications * New Releases * New Events and Festivals Update * Beer Events in the Next Two Weeks * Beer Quote of the Week

BEERWeek is the subscription-based newsletter delivered by email each Monday for the industry professional or serious beer enthusiast who needs it regularly. To subscribe, go to http://www.beerweek.com and get it now.

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REDHOOK ENABLES PILOT TO LAND IN ONE PIECE

Three bottles of Redhook ESB softened the landing of a small plane in Colorado. The landing gear on Ben Cahan's plane could not be lowered as he and a friend returned from a fishing trip. After circling the airport for about an hour, Cahan obeyed the suggestion of a mechanic, who radioed him to "pour all available liquid into the hydraulic system." They poured the contents of three Redhook ESBs, the front wheel came down a little farther, and the back wheels moved a little, too. Then they landed. A serious crash landing had been averted. If the wheels had not come down far enough, the propeller could have hit the ground first. (For story verification, Nelson Jay, Redhook, 206-634-4208.)

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********** HEALTH WATCH **********

SLEEP-DEPRIVATION EQUALS DRIVING INTOXICATED

New research by a team of Australians reveals that it is more dangerous to be sleepy behind the wheel than it is to be driving under the influence of alcohol. "Moderate levels of fatigue produce higher levels of impairment than the prescribed level of alcohol intoxication," researchers said in a letter to the science journal Nature. Researchers made their conclusions after observing 40 people in two experiments. "In one they were kept awake for 28 hours (from 8:00 until 12:00 the following day) and in the other they were asked to consume 10 to 15 grams of alcohol at 30-minute intervals from 8:00 until their mean blood alcohol concentration reached 0.10 percent." In both experiments, a computer test of hand eye coordination was used. Following their experiments, the research team concluded that staying awake for 24 hours makes people react as badly as those who have blood alcohol levels of 0.1 percent.

ALCOHOL MAY LOWER ULCER RISK

Researchers say alcohol may play a role in decreasing the risk of duodenal ulcers. The disorder, which affects the gastrointestinal tract, hits some 300,000 American each year, UPI reported July 22. The Harvard University study on alcohol and its relation to duodenal ulcers was conducted by Dr. Walid Aldoori who observed two groups totaling 48,000 men: those who drank alcohol and those who did not. He found the risk of ulcer decreased from 24% to 53% among drinkers, depending on the level of consumption. "We observed a small inverse relation between alcohol consumption and risk of duodenal ulcer." Researches add that those who drank smaller amounts of alcohol benefited the most from decreasing their risk of duodenal ulcer. They commended light drinking of beer, wine or spirits.

DRINKING FENDS OFF HAIR LOSS

New scientific research shows that those who drink to excess rarely go bald, the Australian Associated Press reported July 27. "If you force him to drink too much alcohol, it is very unlikely he will lose his hair," said Hugh Rushton, fellow of the Institute of Trichologists. Also siding with the findings is Glen Lyons of the Kingsley Clinic in London. Lyons said a person who doesn't drink is inclined to have more stress in his or her life, and stress can contribute to hair loss.

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FAMOUS PUBLICAN BIDS FAIRWELL

"This is a very special moment for me," Judy Ashworth told the crowd gathered for Lyon's Brewery's June 21 Hoppiness Festival. "Number one," she said into the microphone, "I'm alive." Surrounded by family, friends, fans and the firemen of Dougherty Regional Fire Station 1 who revived her following her April 26 heart attack (BEERWeek, April 28, May 5), Judy gave her farewell speech at her final festival as owner of Lyon's in Dublin, CA. Judy joked about her near-death experience, "I looked down that tunnel, and all I saw was a Bud Light, and I said, 'No way!'" she laughed, drawing applause from the crowd. She finished with words heard by thousands of ears over many years. "Thanks, you, guys," she concluded, stepping down off the stage. "Enjoy the beer!" Judy's last party will be at the pub August 9th. All are invited.

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ANNOUNCEMENTS:

DOUG EDDY TO LEAD SALES AND MARKETING

Real Beer, Inc. is pleased to announce a vital new member to the Real Beer team with Doug Eddy. For the past several years Doug and Christine Eddy have been delivering the beautiful full-color craft brewer's calendars from Copper Kettle Concepts. You'll also recognize their excellent work in our partnering on the Events Calendar at http://www.realbeer.com/rbp/rbp.events.php. Doug saw our posting in the classified/help wanted area on the Professional Brewer's Page, wanted to make a change of environment and coasts but not of industry, so we decided to tie the knot. Doug is tasked with heading up our sales and marketing efforts and his first major event in this role with us will be the Great American Beer Festival. Come by and welcome Doug or email your sentiments to doug@www.realbeer.com

REAL BEER PARTNERS WITH BREWORLD

Real Beer, Inc. (http://www.realbeer.com) announces a joint marketing and publishing agreement with BreWorld (http://www.breworld.com) effective immediately. The agreement allows both companies to market the other's advertising space to their clientele, an important feature for companies looking to tap consumers in remote markets. "This is a great boon for both of our audiences because it means a more unified and expanded presentation of information." said Pat Hagerman, President of Real Beer, Inc. "We've been North American in much of our content areas by logistics only, not by design. This relationship allows us to truly deliver world-wide content and audience." Advertisers benefit from regionalized audiences and users enjoy more richly focused editorial. For one example of some of the integrated content, see the European Events listing at: http://realbeer.com/cgi-bin/events/rbp.events.cgi?cont=EUR

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Who Benefits from Beer Tax Breaks? - Guest Editorial

Peter Egelston, pioneer in the Northeast U.S. brewpub scene, wrote this month's editorial in a posting on the ProBrewer’s message board, a new webspace for professional brewer's to network with others within the industry. Although the appeal in the message is brewer to brewer, it has strong consumer implications and deserves increased awareness.

July 21, 1997 The Federal Excise Tax Rollback Scam

Over the last year or so, I have noticed a number of articles in both the trade and mainstream press about a proposal in Washington to roll back the Federal Excise Tax on beer, which was doubled in 1991, to pre-1991 levels. The argument in favor of this rollback is based on several presuppositions:

1. The first is the trendy political mantra "Taxes bad, tax cuts good."

2. Second is the belief that the reversal of a bad decision (or policy) produces a good outcome.

3. Next is the assumption that a rollback of the FET will be good for consumers.

4. And finally there is the assumption that a rollback of the FET will be good for the brewing industry and, by extension, the American economy.

I think this proposed rollback is a patently crappy idea; a scam designed to line the pockets of some of the least deserving members of the brewing community. It would be disastrous for small brewers, and have little or no impact on the price consumers pay for beer.

Let's step back and take a closer look at the federal excise tax, and how the 1991 increase in that tax filtered down to consumers. Prior to 1991, brewers paid the FET at a rate of $9.00 per 31-gallon barrel. Small brewers, defined as those with an annual production of less than 200,000 barrels, were eligible to pay a reduced rate of $7.00 per barrel. The 1991 increase doubled the rate to $18.00, but the reduced rate for small brewers remained at $7.00 per barrel. The 1991 excise tax increase added about 65˘ per case to the producer's cost. Did the end user see a 65˘ per case price increase? Absolutely not! By the time the tax increase passed down to the consumer that 65˘ had been marked up twice along that way - both at the wholesale and retail levels - so that Joe Sixpack saw a price increase more in the neighborhood of $1.20 a case.

Now, let's have some fun and imagine that the FET was rolled back to its pre-1991 level. The editorials paint a rosy picture where beer prices drop, 50,000 jobs are miraculously restored to the beer industry (partially replacing the 60,000 that were "lost" in 1991), and the shortfall in federal tax revenues will be made up by "balance sheet improvements from the new jobs that would be created and the improved economy." (cited from Frank McNeirney's column entitled "Tax Cut Rumblings" in January, 1997, All About Beer)

Come on. Let's imagine what might really happen. First of all, remember that the excise tax is paid by the producer; from the standpoint of the producer, it is no different than the price of malt, case cartons, or any other cost of goods sold. An increase in that tax must either be absorbed by the producer (fat chance), or passed along to the consumer, as was the case in 1991. A reduction, by the same logic, will also be absorbed by the producer or passed along the line in the form of lower prices.

Now, for the sake of argument, let's imagine a hypothetical national brewing concern called Burns & Allen Brewing Co., whose annual taxable production is, say, about ninety million barrels. A nine dollar per barrel reduction in the FET will result in a windfall of $810,000,000, going straight to B&A's bottom line. That's more than three quarters of a billion dollars a year, folks, free money, courtesy of Uncle Sam. Now, pretend for a moment that you are Mr. Doggie Burns III, President of B & A Brewing. Are you really going to pass $810,000,000 along to your wholesalers in the form of a 65˘ per case price reduction? Try explaining THAT to your stockholders.

OK, now let's pretend that in a lapse of fiduciary sanity B&A Brewing decides to pass that 65˘ to its distributors. Are the distributors now going to reduce their price to retailers by 87˘ a case? Remember, they marked up the tax increase five years ago, and it's only fair that they take it back, right? And will the retailers now take that 87˘ and pass $1.16 savings on to you and me? Forgive me if I sound skeptical, but I can't imagine why Doggie Burns III (or any real major American brewer) would voluntarily give away $810,000,000 of annual windfall profit, or why B&A's wholesalers would give away the profit they make each year on that $810,000,000, or why retailers would give up the profit they make on that original $810,000,000.

The problem is, that $810,000,000 may be involuntarily surrendered to the various states who are likely to raise their own excise tax rates to offset the reduction in the FET. Of course, in that case it will be the wholesalers and small brewers who are left holding the bag. B&A Brewing will still get its $810,000,000 windfall; small brewers will effectively lose their reduced excise tax rate, since increases in state excise taxes will be applied equally across the board, regardless of the size of individual breweries; and wholesalers, who in most states are responsible for paying state excise taxes will be forced into the unenviable position of absorbing the increased taxes, passing them along to retailers (who will them pass them along to guess who), or hoping that B&A Brewing and its brethren will pass their reduced FET windfall along to them in the form of price reductions or rebates to offset increases in state excise taxes.

Imagine that! Doggie Burns III of B&A Brewing gets his $810,000,000 windfall (compliments of his pals on Capitol Hill), small brewers see their taxes double and consumers get stuck with a price increase to boot. Talk about adding insult to injury!

In conclusion, let me get back to four points the points I started with:. "Taxes bad - tax cuts good." Suffice it to say that this simplistic notion did not serve Senator Dole's presidential aspirations well. It is nothing more than demagoguery; nobody buys it anyway.

2. Raising the FET was a bad decision. Any excise tax, in my opinion, is a bad tax because it is effectively hidden from the consumer, who will ultimately pay for it. Reducing that tax now will not necessarily undo the damage done, however. Because it is a "hidden" tax, its reduction is hidden, too.

3. Rolling back the FET to its pre-1991 level will have no positive effect, and most likely some very negative ones. Whether consumers ever see a penny of the reduced tax will depend solely on the beneficence of Doggie Burns III and his ilk.

4. I feel my ire rise when I read all this sentimental crap about how this tax giveaway will restore thousands of lost jobs and improve the economy. It is clear that the push to reduce the federal excise tax on beer is nothing more than a cynical attempt of the large domestic brewers, through their well-funded trade association - the Beer Institute - to get a huge windfall at the expense of taxpayers. Look closely at members of Congress who have signed on to this bill. See the strings attached to their limbs? The wholesalers, through the NBWA, have thrown their lot in with the big brewers, but I expect that this is the result of a lot of behind-the-scenes arm-twisting. Ask your distributors privately how they feel about this (I did) and you get a different point of view.

Part of me is confident that at this point even Congress is not stupid enough to give billions of dollars of tax revenue back to a handful of huge brewing companies, but stranger things have happened. I don't relish the thought of seeing my small-brewer tax differential disappear, and I certainly don't look forward to seeing the large brewers armed with billions more dollars, some of which will no doubt be earmarked for making life miserable for us small, annoying craft brewers who have been nibbling away at their market share.

I have posted this because I would like to find out what anybody else thinks about this? Well...?

Post your response to this editorial at:

http://www.probrewer.com/cgi-bin/probrewer/message.cgi?mode=message&id=81

The views expressed here are not necessarily those of the publishers, but they come pretty darn close...

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