If there’s one thing Donald Trump hates, it’s beer. Unlike Barack Obama, who was something of a craft brewer, Trump doesn’t drink. If there’s one thing we know Trump adores, it’s the GOP tax plan (even if it won’t work in the long run). But the Trump and GOP tax reform did small breweries a big favor.
The new tax reform could be disastrous for some professions, but a few lines of work stand to benefit. Even though he doesn’t drink, the tax reform spearheaded by Donald Trump and the GOP will be great for craft breweries. These numbers show why.
- The number of craft breweries in the United States
Before we discuss the economics and how it impacts craft breweries, let’s look at what we’re dealing with. There were 5,562 independent breweries in the United States in the middle of 2017. Another 2,700 breweries were on the horizon at the same time. As we will soon find out, thousands of jobs (No. 4 on the list) and billions of dollars (No. 7) are on the line.
Next: An industry trend that looks poised to continue.
- The pace of growth across all craft brewing segments from 2015 to 2016.
Every year since 2010, craft and independent brewery openings have far outpaced the number of closings. From 2015 to 2016, there was a 16.2% jump. At that rate of growth, every state will have a great craft beer scene in the near future.
Next: All breweries are impacted, but especially small ones.
- Percentage of U.S. breweries considered craft
The GOP tax reform will help all alcohol producers. When it comes to beer, independent breweries will really feel the impact. The Brewers Association estimates 98% of all U.S. breweries are small, independent operations. The next two items on our list show just how much these small brewers will benefit.
Next: More than 100,000 jobs will be affected.
- Jobs supported by craft brewers
The midyear report from the Brewers Association we mentioned in item No. 1 estimates there are 129,000 full- or part-time jobs supplied by small brewers. That figure doesn’t even take into account the jobs that are related to craft brewing, like delivery drivers and equipment suppliers. The 129,000 total is sure to jump significantly since it was calculated before 2,700 new breweries opened for business.
Next: The number that will make those workers and brewery owners happy.
- Tax savings for small brewers under the new tax plan
As we mentioned before, every brewery will benefit from the GOP tax plan. It adds up to $142 million in tax savings, but the craft scene saves the most. The behemoth brewers like Budweiser will see tax savings of roughly $62 million, but that’s only 1.9% of their $3.1 billion tax bill. The $80 million-plus in tax savings for craft brewers is 21.2% of their current $377 million tax bill.
Next: Significant per-unit savings for the smallest brewers.
- The per-barrel tax levied against the smallest breweries
Though more than half the people polled oppose the GOP tax reform, craft brewers have reason to celebrate. Instead of paying $7 per barrel produced, operations that make less than 2 million barrels annually pay just $3.50 for the first 60,000 barrels. Each barrel is 31 gallons, so small breweries have to brew 1.86 million gallons before they have to pay anything more than $3.50.
Next: A big number that could be on the rise.
- Financial impact made by independent breweries in 2016
Even though most of the beer you see on the shelf is made by a handful of conglomerates, craft beer is economically significant. The supply chain that starts with independent breweries contributed nearly $68 billion to the economy in 2016. That number should continue rising as more small breweries open and they invest more in their businesses thanks to the tax savings.
Next: But what if you’re more of a wine person?
- Wineries producing up to 750,000 gallons get a huge tax break
The craft beer industry reaps big benefits from the new tax code, but wineries and distilleries get in on the act, too. A Wine Institute press release has more specifics, but wineries producing up to 750,000 gallons per year save anywhere from 55% to 69% on their tax bills. Another significant change? A wine can now be 16% alcohol by volume (up from 14%) to qualify for the lower tax. Cheers to that!
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