Shelton Brothers issue statement regarding New York's repeal of beer tax and fee exemptions

I hate to agree with a Yankee fan.

OK, lemme find a disagreement point. Other than Cantillion... I don't love the products the Sheltons import. Let's keep in mind here- the "beers" that prompted this LAWSUIT pursued by the Sheltons are a bunch of asinine gimmick beers that have no value whatsoever other than childish amusement. What, was it "Santa's Butt" that really prompted a lawsuit? "Pickled Santa"? Maybe it was "Reindeer Droppings"?

The people defending the Sheltons... THOSE are the beers you are going to bat for.

Reindeer Droppings.

 

So does this effect High and Mighty or just the beer that Shelton distributes?

 

I view the Sheltons actions with skepticism, as they are known d-bags.

Lawsuit was self -serving as they knew they had legal grounds to force the state of NY 's hands. They deserve all the hate directed towards them.

Its really a non -issue for me to boycott Shelton...I was done ticking their beers in 2004 )

 

Concerned you can't get Beer of the Gods @ DE or LH any time soon? ) Recommend an avoidance of this crappy brand too.

 

Not directly. If Shelton won based on their first goal (get rid of all fees), then yes, this point would be totally true. But as it is, everyone will be charged the "same" fee, even the cheap imports. The field wasn't lowered, it was raised to be level.
Indirectly, however, the locals will raise their prices. My magic 8-ball sees cheap imports as no big deal more so than they are now. But the pricier imports will be closer in price to the locals.

 

I've never said that it contradicts. I've never said they are "having it both ways." And I've never said they are doing anything "immoral." You're arguing against something I never said.

I do not think they did anything immoral. When I say "moral" or "emotional," I'm just referring to the non-legal side of things. If what I'm referring to isn't clear, I'm just not sure what else can be said/how else I can say it.

And I'm not saying that it is explicitly contradictory in a factual, objective sense.

Instead, I think that their statement loses "emotional" appeal when it calls the fees "onerous," yet says the newly-exposed brewers are overreacting and the fees are no big deal. If those comments are referencing the application to them, then it makes sense, i.e. it's not contradictory. But I take 2 issues even with that: 1) I don't think they made it clear enough in the statement; and 2) It's the nature of their business that causes them to have more brands. Even with everyone paying the fee, they still have to pay more fees overall and more as a % of their sales.

Basically, I think it makes them look worse than it could if the statement were better-written. That doesn't detract from the dry fact that they were absolutely correct about the law being unconstitutional, and it doesn't detract that their legal argument also appealed to fairness [at least in some ways]. But to me, the above-referenced parts of their statement make them, say, a less lovable hero.

 

Incidentally, I'm not really arguing against you, I just don't think you're being coherent.

I wrote out a lot of stuff but then realized that I've said it all before and if you don't agree with me then whatever. I think Shelton did nothing wrong and don't really care if other people think they did.

 

I did say they can't have it both ways; my bad. And "moral" was admittedly a bad word choice, you are right; I was just trying to further explicate my use of the word "emotional," since it wasn't being understood as I intended.

Again, I don't think they did anything wrong; I just don't find them entirely sympathetic, nor do I find them as sympathetic as they could be because of how they wrote the statement, as I [at least attempt to] express above.

 

Let's just hope that the NY legislature figures out the math and reinstates the tax breaks so that 1) they bring in the same revenue as before and 2) they apply equally to ALL small brewers and labels. If before they didn't tax the first 200K bbls for in-state breweries, perhaps in the future they can refrain from taxing the first 50K bbls for anyone. That would only hurt the bigger craft breweries in NY, and would be a major help to an exponentially greater number of genuine micros.

 

Not that long ago this same forum was praising Jester King Brewery out of Texas for going up against the state of Texas and winning. This is exactly the same situation with different results. Shelton's intent was to remove or at least level the playing field when it came to "brand registration "fees. The state of New York took it upon themselves to remove the small brewer exemption, not Shelton Brothers.

 

Heh, and then Shelton Bros sues because they import 20,30,whatever breweries?

 

In terms of sheer numbers, Brooklyn has quoted that this will cost them over $500k a year in additional expenses, and Captain Lawrence has said it's anticipating over $100k. Luckily, those guys have the financial security to overcome and high enough demand that a small price bump to consumers won't hurt them.

The real tragedy of this is with small nanobreweries in NY. Barrier Brewing in Oceanside brews single-batch beers 31 gallons at a time. The diversity and uniqueness of their product line is the entire purpose of their company. Last year, they brewed over 40 different types of beer, which in 2012 will cost them $6,000+ just for application fees, not to mention the extra $4-8 bucks per barrel. That's a huge financial setback for a small, two-man business with barely any fat to trim. They'll have to rethink their entire business strategy and undermine their own mission statement to overcome this.

And their beers don't cross state lines, so this application fee becomes mandatory for the PRODUCTION of beer, whereas with Shelton Brothers, it's only being taxed on beers that they decide to DISTRIBUTE in NY. If they don't project enough profit to make it worthwhile, they have the option of pulling their distribution and going elsewhere. I think that's the unfair level of this that people seem to be missing. Out of state breweries DECIDE to pay the fees. NY breweries are FORCED to pay it.

I think the fee is unfair for everyone and should be reconsidered, but it's far more imposing for local brewers, in my opinion.

 

The extra cost to Barrier, inclusive of taxes and registration fees, is about $20 per barrel ($6000 in fees and ~$5/bbl in tax over their ~400bbl annual production). On a per-growler basis, the additional taxes/fees are only $0.30. On a per pint basis, it's $0.08. Barrier can easily pass their costs on to their customers. Are Barrier's beer so cheap that their customers will even notice this price increase?

If Barrier and other brewing companies can't absorb this tiny cost increase, they should have started rethinking their business strategies long ago.

 

I say extend the tax exemption to all. Win / Win.

 

We pay 17$ per barrel (.55$) to the state of Vermont in excise taxes any beer over 6% abv sold out of our retail shop or via our distribution company. We pay .265$ per gallon on any beer under 6% abv sold out of our retail shop or via our distribution company.
The fact that New Yorkers didn't have to pay this tax beforehand was a very unique privilege. And, in fact, it is still less than we pay in Vermont.
A tax rate of 14 cents per gallon on all beer sold or used in New York State, and an additional tax of 12 cents on any beer sold in New York City... well... once again, it's still less than the tax rate in Vermont. Just trying to put things into perspective...
It isn't necessarily costing the breweries "money." They just need to raise the price of their beer by 26 cents a gallon... or 4$ per half barrel keg. That's 3 cents per 14oz glass of beer.

 

That's tacked onto the cost of production, and not taking into consideration the double taxation for anything they sell in NYC (which, for most NY breweries, is at least half their production). Maintaining steady markups from the brewery, to the distributor, to the retailer, things grow quickly. You're probably talking closer to $0.25 per pint to the end user when you factor in percentage-based margins each step of the way. It isn't an exorbitant increase, but considering the fragmented nature of the market and the nature of the industry, a $0.25 per pint increase could make a noticeable different for a small-batch brewery.

 

Really? A quarter in the on-premises price of a pint is probably smaller than the bar-to-bar variation in price in NYC. It sure as hell isn't going to necessitate a reevaluation of a business plan!

Btw, I just did a quick search on Google Scholar to see what the price/tax coefficient is for beer. It looks like it's probably somewhere in the neighborhood of 1.5-2, which means an excise tax increase of $0.08/pint would result in a retail price increase of $0.12-$0.16/pint.

 

I don't think it'll effect the quantity of people physically coming to the brewery, but that isn't where a place like Barrier makes money. Their brewery is smaller than the living room of my Queens apartment and they're only open for growler fills twice a week because of the time and effort they need to put into production. And I don't think the $0.25 price hike will change peoples perception of the brewery.

However, I think a $0.25 price hike ONLY to NY breweries will close the price gap between their products and others on tap at the bar and make it more likely for people to choose alternative products.

Take Southampton Abbot 12, for example. Fantastic Belgian Quad, comparable in quality to any Belgian, that in NY you could find for $11.99/bottle, far cheaper than actual Belgian ones. Close the price gap, though, and consumers may be much more likely to go for the imports.

I mean, I obviously hope I'm wrong, but I think small price fluctuations affect local brands more than they do big established breweries with higher inelastic demand.

 

Thats exactly why its unconstitutional. The Founding Fathers didnt want states setting up tariffs against each other, it would tear the country apart.

 

Yeah. It seems like the general consensus here is that New York State handled this as poorly as they handle everything else. The original exemptions did, undeniably favor local business which, under constitutional law, isn't cool. But the new plan is far more imposing on local businesses than it is on out of state breweries, which doesn't seem to make sense either.