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TTB are government employees and in a Budget related shut down they are not at work approving anything.
Steven Lay

Steven Lay

Craft Beer, Lesson Learned from a Former Federal Budget Crisis

Craft Beer, Lesson Learned from a Former Federal Budget Crisis

A decade ago there was another problem for craft beer brewers--A goverrnment shut down. It hurt the craft beer folks who need TTB (Tax and Trade Bureau) approvals to start brewing new seasonal styles and having labels approved for printing. In 2023 we are at another budget crisis.

I recently wrote an article about the vagaries in business forecasting in the craft beer industry. The most recent surprise, that could not have been forecasted, was the government mandated response to the pandemic, a total economic shutdown. That historic event took a severe toll on craft beer industry, brewery taprooms, brewpubs and restaurants, and that does not factor into consideration the negative impact it had on vendors, employees, supply chain, agriculture, and manufacturing either.

Historic numbers do not depict the full impact. In 2020 there were 8,700 craft breweries, which saw a 9% decline in beer production, and retail sales were down 22% over 2019.  Of the 716 new brewery openings in 2020, approximately 360 breweries closed, that is alarming. Another pandemic with similar governmental responses, like 2020, is not likely again.

Consider another historically difficult surprise for craft beer forecasters–a surprise government shutdown in 2013. How can you forecast such an event that had never happened previously in history?

The government shut down in 2013 affected the beer industry across the board, however that event had exponential impact on craft beer because small producers do not have the advantages of large operators. For example, macro brewers have benefits of large-scale inventory production and distribution capabilities, whereas craft beer is about catering to local and regional markets and do not command a large infrastructure to respond to sudden business changes.

Here is an explanation of just how a government shutdown can severely impact a small craft beer business. “Breweries operate under federal, state, and local laws and require multiple licenses and permits. A large brewer has better control over such administrative tasks such as when they apply for permits, but if the government were to shut down, then mandatory applications for production and labels would go unseen at a regulator’s office. In this case the TTB,” as reported by Ben Popkin in Motley Fool, April 2014.

Simply, in October 2013 Alcohol and Tobacco Tax and Trade Bureau (TTB) was closed due to the government shut down due to the lack of a Federal Budget, “therefore, no one was at home at the TTB to process needed approvals for many craft brewers submitting last minute requests.”  Small brewers with seasonal beers and packaging requirements need TTB approvals, the TTB was “not available.” This affects craft brewers more than large ones because seasonal beers play a larger part in the craft brewing business, as Popkin noted.

Assuming the budgeting process this year moves along in a timely manner before the new Federal Fiscal Year starts on October 1, there will be no catastrophes. “In the event of a shutdown, the government stops issuing passports, closes national parks and monuments, halts NASA operations, and puts many other functions on hold (and the TTB ceases operations temporarily),” as posted on the website

Just something else to respond to or at least think about.

The moral of the story, if you are a craft beer producer and you are planning new packaging, new products, or marketing those special seasonal styles, get your TTB (Tax and Trade Bureau) submissions in the queue before the last minute.