Government Shutdown Frustrates Craft Breweries
The partial government shutdown has now stretched into three weeks, making it the longest in the United States’ history. With no end in sight for the president and lawmakers to reopen the government, 800,000 federal employees go without pay. The shutdown’s ripple effect is impacting small and independent craft breweries as well.
‘Breweries Should be Prepared’
Laura Dierks is the founder of Brooklyn’s Interboro Spirits and Ales. Dierks’s two and a half-year-old brewery employs 30 workers. The brewery expanded capacity in summer 2018 to keep up demand and start distributing beers out of state. Dierks needs federal label approval to sell beer across state lines, but the government agency that fulfills such request is closed. The result of the closure has created a backlog of Certificate of Label Approval (COLA) requests that will not be reviewed until after the government reopens. That puts the young brewery in a precarious position, in need of revenue to support the lives of those who work for Dierks, some of which were hired in anticipation of the growth, as well as the need to offset the expansion investment.
“We added capacity and hired new full-time positions to support the new volume of beer,” Dierks tells us. “Now, with interstate sales as part of our baseline revenue, we can’t leave New York because we can’t get COLAs.”
City Barrel Brewing Company hoped to hold its grand opening in Kansas City February 22, but most of the new beers they’d planned to sell haven’t been cleared yet.
“I have four beers that we were planning on releasing on opening day, and I only got one of them approved through the system before the shutdown,” co-founder James Stutsman told the Kansas City Star.
“Breweries should be prepared for the labeling and permit process to take longer than previously estimated,” according to Katie Marisic, federal affairs manager at the Brewers Association, publishers of CraftBeer.com. “Also, be aware that when the government is funded again there could be a backlog. Breweries should plan accordingly.”
Shutdown Impacts New Breweries
The shutdown isn’t just keeping new beers from reaching thirsty beer fans. Breweries need federal approval simply to run their business. The closure of the Alcohol and Tobacco Tax and Trade Bureau has created a similar abundance of requests for Brewer’s permits that go unprocessed. In Gloucester, Massachusetts, Jamie Klopotoski has been waiting for her brewery, Agape Beer Company LLC, to get approval since October.
“In December, my permit was marked as ‘Review in Process,’” says Klopotoski. “The initial estimate was 80 days for processing from the date of application, which actually would have been January 10. But with the government shutdown, that date is now delayed until who knows when!”
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Klopotoski hopes that Agape Beer will still be able to open by their May goal, but she knows that the likelihood of opening on time is now in jeopardy as the shutdown drags on.
To add to the disruption, the shutdown has also closed the Small Business Administration. This means that some new entrants will have difficulty opening without the government’s federally assisted loan program. This affects the purchase of new equipment, ingredients, and everything else a new business may need to hit the ground running. Suppliers are also affected by the government’s closure. Opening a new business is wrought with uncertainty, but the shutdown has added even more pressure to main street businesses eager to open their doors.
Breweries Run Promotions for Government Workers
Small brewers are eager for a resolution and recognize that furloughed workers need community support. Interboro’s Laura Dierks is among the craft breweries offering free pints to government workers who are working without pay or those who have been furloughed. Nebraska’s Zipline Brewing is offering Furloughed workers free growler fills. Washington, D.C. brewers recognize that their community has been particularly affected, so they’ve stepped up to support federal workers. The sooner the shutdown ends, the sooner all brewers can get back to work.