If you were unmoved by the plight of millions of federal workers, aid recipients and national park cacti affected by the 35-day shutdown of the federal government, consider this: It’s coming for your beer.
Alcohol is highly regulated by both state and federal governments, and while the regulation remained in place during the shutdown, the administration of it did not.
For breweries, this created delays in two key bits of federal red tape: the brewers permit — one of the first green lights necessary to make beer — and label approval for new products. Last week’s deal to fund the government for three weeks during negotiations on a permanent solution is obviously good news for brewers, but the damage done by 35 days of administrative inactivity will take weeks to clear.
The details of these regulations mean the shutdown is affecting different breweries to dramatically different degrees depending on their business model. Some are in a bind that threatens to scuttle their business before it even starts, others are mildly inconvenienced and others still could capitalize on a looming vacuum in the market.
The worst off are those breweries with their federal permits in limbo. Many have already sunk significant costs into building their brewery and are waiting for the nod from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) to fire up its brewhouse.
One of those situations is in Wisconsin: Mosinee Brewing in the town of the same name near Wausau. It opened in mid-November, pouring Wisconsin craft beer pending its federal permit, which company president Jacquelyn Forbes Kearns told WSAU-TV it was expecting in late December or early January — right when the shutdown began.
“They have a fully operational brewhouse that is ready to go, but they can’t make beer because they’re waiting on the federal permit,” said Mark Garthwaite, executive director of the Wisconsin Brewers Guild.
Garthwaite called the shutdown an “unforced error” that creates dire straits for a business at a nascent, delicate stage with a lot of money tied up in something it can’t use. “That’s a big deal for someone like Mosinee. They’re paying rent, they’re paying for equipment, but they can’t make beer. And that’s kind of crazy.”
Garthwaite said Mosinee’s is the most dire shutdown situation he’s heard of in Wisconsin. Agonic Brewing in Rice Lake also is awaiting a permit, but the business is still under construction so the need is less urgent.
Label approvals, though, have the potential to affect dozens of Wisconsin brewers. The TTB must sign off on alcohol labels if the product is going to be sold across state lines.
This affects the state’s bigger breweries — MillerCoors, of course, and the big contract brewing operations of Minhas Craft Brewery in Monroe and City Brewery in La Crosse. But many of the state’s craft brewers — among them Lakefront, Ale Asylum, Central Waters, Stevens Point, Milwaukee Brewing — also ship to multiple states. Then, Garthwaite noted, there’s a bunch of smaller breweries in western Wisconsin that ship over the border to the Twin Cities because it’s the biggest metro area nearby.
Now, languishing label applications does not mean beer is going to dry up. Every beer that’s on a shelf now — or ever has been — either had TTB approval or didn’t need it. There’s going to be plenty of beer.
The shutdown has affected brewers’ plans for new beer, and that’s where, for better or worse, the action is in the craft beer world. In 2018, the TTB approved 800 new labels for Wisconsin companies making beers and fermented malt beverages like hard sodas and iced teas.
With the lights back on at the TTB, the backlog of label applications — and permits to approve, which Garthwaite hopes would get priority — means the new beer pipeline is likely to be dry for at least a few weeks as the logjam clears. That could create openings for new beers from smaller breweries that don’t seek TTB approval to step in and tout their sparkling new wares.
While most of Wisconsin’s label-approval angst is tied up in concern for planned future releases, one brewery has already felt real effects. Midmonth, Central Waters Brewing truncated the release of its new Tangerine New England-style IPA from Wisconsin, Minnesota, Illinois, Iowa, Philadelphia and New York City to just Wisconsin. As of last week, the label approval was sitting in the virtual queue at the TTB.
One Wisconsin brewery in particular has a lot of real estate at the intersection of new products and out-of-state sales: Octopi Brewing in Waunakee. It’s primarily a contract brewer, meaning Isaac Showaki’s outfit makes beer for other companies, some of which are not in Wisconsin. And one of Octopi’s house labels of sorts is Untitled Art, a label that trades entirely in beer-geeky, on-the-edge beers that it rarely makes twice. Untitled Art had the distinction of winning Wisconsin’s last TTB approval before the shutdown: a draft label (those need to be approved, too) for Coconut Milk Stout on Dec. 20, the last day the lights were on at the bureau.
I figured if anyone outside of Mosinee would be hurting from the shutdown, it’d be Showaki. But while the delays are a concern, when we talked last week before the deal was reached to reopen the government, the shutdown hadn’t really affected his business yet.
Showaki said that between Untitled Art, Octopi’s other brands and its contract clients, he had about 30 labels in TTB limbo.
Had the shutdown persisted another week or so — or if Congress and the president aren’t able to reach a longer-term funding deal and the government closes again — it could threaten new seasonal releases for summer, a lucrative high time for beer sales. Octopi makes house labels for a few national retailers, and Showaki said that if those big orders end up hitting shelves in June instead of May, it’s an entire month of lost sales that won’t be made up.
“We have another month before we really have to start worrying,” he said.
Untitled Art is particularly vulnerable. Showaki said 50 to 60 new beers were planned for the brand this year. A few were approved before the shutdown, but that ambitious release schedule is unlikely to be met because of what he expects to be six or so weeks of shutdown-related delays.
In just two years, Untitled Art has become a wide-reaching brand, selling in 17 states and a handful of European countries. Releasing its batches only in Wisconsin is not viable, Showaki said. “We rely on our distribution partners a lot,” he said. “We’re producing way way more beer than our local distributor (Pequod Distribution) could handle.”
At Madison’s Ale Asylum, co-founder Otto Dilba handles the brewery’s dealings with the TTB. He said the brewery has a couple of labels awaiting approval, the first of six to nine different beers planned for 2019.
About 80 percent of Ale Asylum’s sales come from in Wisconsin, but new products like its seasonal IPAs do well in its out-of-state markets of Minnesota and Illinois, Dilba said.
The shutdown “doesn’t put you out of business, but it certainly hurts your ability to do the freshness and the newness that everybody wants these days,” he said.
Still, Dilba noted, a lengthy shutdown would have been a lot worse for regional brewers a few years ago, before “hyperlocalization” really took hold of beer buying habits: “Most breweries are paying closer attention to the people who are closer to home already.”
Showaki noted that Wisconsin brewers have another feather in their cap, regulation-wise: Many states require TTB approval before a beer can be sold, period. That’s not the case in Wisconsin.
It’s important to note that Garthwaite, Showaki and Dilba all prefaced their comments about the shutdown’s impact by noting many, many others are suffering more from it than they are, including the furloughed federal workers and other business sectors.
“Nothing is really unaffected,” Garthwaite said. “This is far more invasive of a problem than most people tend to really fully grapple with. Just because it’s not a crisis doesn’t mean it’s not a problem. You learn how much business relies on approval processes and funding for small business loans, and so much else.”
National beer writer Stephen Beaumont was disappointed with the focus on new beer and novelty at the expense of quality, classic styles that have stood the test of time. His call to reverse this trend has become a legitimate social media campaign: #FlagshipFebruary, a month to celebrate the beers that made craft beer a thing.
It’s particularly timely considering the recent government shutdown may hamper releases starting, oh, around February.
Brewers were seeing delays in needed brewers’ permits and federal label approval for new releases because of the shutdown.
“However it comes to fruition, it’s not a bad time to go back to those flagships that got you here,” said Otto Dilba, the Ale Asylum co-founder who listed Sierra Nevada Pale Ale and Capital Wisconsin Amber among his formative flagships.
Here’s a few classic Wisconsin and Midwest beers I’ve got on my shopping list to reconnect with next month: Tyranena Rocky’s Revenge, Sprecher Black Bavarian, Lake Louie Warped Speed, New Glarus Moon Man, O’so Night Train.
Off on a Tangent
Tangent, a restaurant and taproom that’s an offshoot of Vintage Brewing and host to a new line of beers from Vintage brewmaster Scott Manning, has opened at 803 E. Washington Ave. The beer, made mostly at the company’s Sauk City brewery, embraces Manning’s oddball streak and impressed at its preview at last summer’s Great Taste of the Midwest.
Change is brewing
Brewing is underway at Madison’s newest brewery, Delta Beer Lab, 167 E. Badger Road. Opening day for the outfit helmed by Tim “Pio” Piotrowski is scheduled for Feb. 18.