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1 1 (July 21, 2021)

handle is hein.crs/goveeca0001 and id is 1 raw text is: hSn, ~ In~ ih A1Ji~ 44 del ~ ~14 I Updated July 21, 2021 Craft Alcoholic Beverage Industry: Overview and Regulation American production of craft alcoholic beverages-whether beer, wine, liqueurs, distilled spirits, cider/perry, mead, or fermented drinks-has increased in recent years in response to rising demand. In 2020, there were an estimated 21,745 businesses producing craft beverages in the United States, with sales ofroughly $32billion annually (Table 1). Sales from craft alcoholic beverage businesses account for roughly 8% of total annual U.S. alcohols ales. In July 2021, President Biden announced an executive order on promoting competitionin the American economy intended to address market concentration across a range of industries. The executive order includes actions intended to protectthe vibrancy ofthe American markets for beer, wine, and spirits, and to improvemarket access for smaller, independent, and new operations. Congress has previously taken steps to support smaller alcoholic beverage produceis. It passedthe Taxpayer Certainty and Dis aster TaxRelief Act of 2020 (P.L. 116-260), which made permanent temporary reductions in federal excise taxes on alcoholic beverages (Table 2). These industries also receive indirect support through agricultural res earch and farmprograms in periodically updated omnibus farmbill legislation. Definitions of Craft Beverages There is no statutory or universally agreed upon definition of what constitutes craft production in the U.S. beverage industry. The concept of what is considered craft is often controversial. In general, the craft beverage industry is characterized by small-scale production-usually by independent or startup companies-and by localized production and distribution, including direct-to-consumer sales. Often the termartisan is used to indicate small-batch production or the use of non-traditional ingredients (e.g., alternate grains, herbs, andbotanicals) in production. Some definitions also focus on the degree of innovation, on-site venues, and community involvement. Distilled Spirits The American Craft Spirits Association (ACSA) defines a small-scale disti lledspirit plant as producing les s than 750,000 proof gallons, or about 394,314 cases (12750- milliliter bottles of80-proof spirits/case) annually. ACSA reports there were 2,265 small-scale distillers in the United States in 2020 with sales totaling $6.1 billion, or about 2% of total annual U.S. spirit sales (Table 1). In contrast, the American Distilling Institute defines a craft distillery as producing up to 100,000 proof gallons annually (about 52,575 cases) and corresponding to levels eligible for reduced federal excise taxes (Table 2). However, there is limited data and information onthis segment of the industry. Available data indicate that there were 1,703 active permits for distilleries producing fewer than 100,000 proof gallons in 2019, along with another 45 active permits for facilities with between 100,000 and 750,000 proof gallons. Separate dataare also notavailable forcraft liqueurs. Table 1. U.S. Craft Alcoholic Beverage Market, 2020 Selected Craft Number Sales %Total Definition Operations ($billion) Sales Spirits (<750,000 proof gal.) 2,265a 6.1a 2.3% Beer (<6 million barrels) 8,764 22.2 23.6% Wine (up to 49,999 cases) 10,716 3.7b 5.5% Total 21,745 32.0 =8% Source: CRS from ACSA, Brewer's Association, and Wines & Vines. Notes: Data will vary under different craft producer definitions. a. Data for distilleries with <100,000 proof gallons are not available. b. Partial estimate, reflecting direct-to-consumer wine shipments only. Beer The Brewers As sociation defmes craft brewer as producing annually fewer than 6million 31-gallon beer barrels-about 83 million cases (24 12-ounce cans/case). In 2020, there were 8,764 craft breweries in the United States with retail s ales of $22 billion-about 24% of the U.S. beer market, according to the Brewers Association. By volume, craft beer accounted for about 12% of the totalU.S. beer market, highlighting the relatively higher market value of craft beer. Beer includes both malt- and sugar-basedhard seltzers (27 C.F.R. Part 25). Additional federal labeling and advertising rules apply to malt-basedhard seltzers (27 C.F.R. Part 7). Wine Small-scale wineries span a more diverse range of business sizes and product categories. Wines & Vines, an industry marketing company, defines a small vintner as one that produces 5,000-49,999 cases of wine annually. A very small vintner is defined as one that produces 2,378-4,999 cases, and a limitedproduction vintner produces fewer than 1,000 cases. Wines & Vines reports there were 10,716 wineries in the United States producing up to 49,999 cases ofwine in 2020. Totalretail sales data for this market segment are not readily available. A possible proxy- direct-to-consumer shipments-were valued at $3.7 billion, but this likely understates overall sales for smaller-sized wineries. Wine industry statistics include not only grape and other fruit (orrice) wines but also othertypes of agricultural wines, such as cider and perry (made with apples and pears, respectively) and mead (considered a honey wine). Depending on how it is produced and its alcohol content, some cider, perry, and mead may be considered tobe more similar to beer. Separate industry statistics for cider, perry, and mead production are notreadily available, but many of these producers are likely smaller-sized operations. It is not clear, however, whether reported wine orb eer s ales include

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