Expanding craft brew industry hit by tariffs

MILFORD — Connecticut’s craft brewing industry is booming — growing from a dozen in 2012 to more than 80 this year.

But the industry faces challenges and setbacks including state regulations on how much beer small breweries can sell directly to consumers, high excise taxes and, now, higher production costs due to the Trump administration’s tariffs on steel and aluminum.

Ned Lamont and Susan Bysiewicz, the Democratic nominees for governor and lieutenant governor, visited Tribus Beer Co. in Milford Thursday to tour the facility and announce their plans to encourage continued growth of Connecticut’s craft breweries, distilleries and wineries.

“The reason I want to do this is I started up a business,” Lamont said. “I understand small businesses, and I understand how important it is sometimes just to get the government out of the way. Clear out some of the underbrush.”

Lamont’s plan includes eliminating limits on beer sales and lowering the excise tax.

Connecticut is home to more than 80 operational breweries with another two-dozen in the works, employing nearly 11,500 people across all aspects of the industry, from brewing to wholesale and retail. In-state business and personal taxes generated from the beer industry totaled more than $420 million, and the industry contributed a more than $745 million to the state economy in 2017, according to data from the Independent Craft Brewers Association.

But the industry is reeling from a hit by the Trump administration’s tariffs on steel and aluminum.

Aluminum cans make up more than 10 percent of the cost of manufacturing beer in the United States, making it the single largest cost in beer production. The majority of beer manufactured nationwide comes in aluminum cans, and a 10 percent aluminum tariff could cost the industry around $347 million annually.

The federal government temporarily reduced the federal excise tax on craft brewers by half, but their profit margins still face a potential decrease due to the tariffs.

Lamont’s plan would cut the state’s excise tax on craft breweries by more than half from $7.20 to $3.30 per barrel to be more competitive with neighboring states and make it easier for brewers to expand their business. Lamont said the tax savings will help offset the increased cost of aluminum due to the Trump tariffs.

“Craft breweries serve as a bright spot in our state’s economy,” Bysiewicz said. “However, the continued growth of Connecticut’s craft beer industry is under siege from Trump’s aluminum tariffs.”

Tribus is one of the state’s newest breweries, having just opened its doors in August and it does not yet can its beer for distribution. Tribus co-founder Matt Weichner said the brewery is already looking at doubling the production scale and preparing for distribution, which requires purchasing expensive new equipment made from steel, which is also affected by the tarrifs.

Lamont’s plan also includes lifting the 9-liter limit on retail sales, a measure that has been opposed by distributors in the state every time it’s come up in the legislature. Distributors argue it could turn breweries into monopolies, armed with the power to manufacture, serve and sell more of their beer.

“Distributors can compete just fine,” Lamont said.

For breweries like Tribus, the limit discourages them from canning their beer for distribution.

“We’re already looking to expand ... and starting to can, and this 9-liter limit law is getting in the way of when we do start producing these cans, we want to sell them in-house,” Weichner said.

Kaitlyn Krasselt / Contributed photo Ned Lamont, Democratic nominee for governor, samples beer at Tribus Beer Co. as brewery co-founder Matt Weichner looks on.