Wednesday, January 28, 2009

Contract Brewing, Part I - The Source Document

Posted by Jeff
If you listened to Beer Talk Today last night, we told you that this document would be available here today. I'll stay relatively silent about it for now, because we'll have a lot more about the details of this document next week. But, we decided to publish this so that you could see for yourselves what we are talking about. We thought about just publishing the parts that were relevant, but we didn't want to edit the document and face charges of having significantly altered it. The only thing that has been removed from this document is the name of the person that provided it and their phone number. I hope the breweries that are listed here recognize that disclosure is the better part of discretion in this case; this is a public tax document, after all.

I hope you find this document as interesting as I did. Keep in mind it only reflects the amount of beer produced for which taxes were paid in September of 2008. We called the Excise Tax Processing Unit and spoke with multiple people there. In addition to all of the other support for our assertions that we provided last night and will reiterate next week, we were assured by the folks at the Unit that any taxes paid are paid at the place of production.

So, please, comment. What do you think?
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8 comments:

  1. I'm very glad the UW-Plattville paid thier taxes on the single barrel of beer they brewed.

    I also think it's interesting that Brewery Creek in Min.Point paid tax on the same amount of beer as Water Street in Milwaukee AND that JT Whitney's didn't produce any beer that month.
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  2. One of these days I'm going to write a story about the UW-Platteville thing, it's pretty cool.

    As for Brewery Creek, I'd be curious to see if that were true for every month, or just September. In other words, does Water Street brew that amount EVERY month and Brewery Creek brew that amount once every other month or every third month or something? Plus, that's the end of tourist season for them; by late October Mineral Point gets pretty quiet.

    As for Whitneys...it seems like they are really cutting back on the amount and styles of beer that they are brewing. It's possible that they were just trying to let some kegs empty out.
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  3. This document has a history of showing misinformation. Once a month I receive this information to see how Wisco breweries are doing and I have found that the information is correct 50% of the time. It is most likely that Sandcreek and even possible JTW sold beer during the month. Typically Ex-tax is for packaged product ready to ship for the micro and sold product for the brewpub. I had tried to find the discussion on Ex-tax but I was unable. What was the discussion about?
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  4. As to the above comment, the discussion will pick up next week. The post refers to the live broadcast that will be podcast next Tuesday and Thursday.
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  5. Anonymous #2: I can't validate the accuracy of the document, but you're incorrect regarding the nature of beer excise tax. It's a tax on beer brewed, not beer sold. A brewer is required to measure their beer in a "tax determination tank", which is typically either a serving tank or a bright beer tank (the tank that beer is bottled/kegged from). They can later claim tax deductions for unsold beer, but it's only allowed for a limited number of specific situations.
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  6. I should clarify that each batch of beer is only taxed once. A batch is brewed, fermented, transfered to the "TD" tank, measured, packaged (if necessary) and gradually sold.
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  7. Under the new Wisconsin brewery Law SB224 what is allowed with contract brewing? Would a brew pub be allowed to contract brew with another brewery? Or would a contractor be allowed to brew their beer at a brew pub? I have poured over the legal document and as most legal documents go, it is difficult to understand the true intent.
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  8. Correction! I was half wrong about excise taxes. For off-premise consumption, the taxes are paid when the beer is removed. Brewpubs (or an on-premise tavern of a production brewery) still need use TD tanks and pay excise taxes on beer before it's sold.

    I don't know how SB224 affects contract brewing. My gut feeling is that brewpubs won't be allowed to have their beer contract brewed elsewhere because they're not allowed to have a separate brewing facility of their own. As for a brewpub contract brewing beer for someone else, I'd guess it would be fine as long as it doesn't push the total sales of alcohol above 50% of revenue (which I believe is required due to the law stating that brewpubs are required to qualify as restaurants).
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