Blame the US Shutdown for Missing the Newest Seasonal Craft Beers and Spirits
America will have to wait for the new creamy version of Magic Rabbit chocolate and peanut butter flavored whiskey.
America will have to wait for the new creamy version of Magic Rabbit chocolate and peanut butter flavored whiskey.
The liquor’s planned January debut is another casualty of the government shutdown, which has ground to a halt Treasury Department approvals alcoholic beverage makers must obtain before introducing a new product or making changes to their recipes or labels.
Delays in craft breweries' Christmas beers and wines
The consequences extend from delays in availability of some craft breweries’ Christmas beers and new California wines to the forced postponement of new herb-flavored hard seltzers.
“It’s huge,” said Rob Pinson, who provides counsel to Tennessee distillers as well as other wineries and breweries as a partner with New Orleans-based law firm Adams & Reese. “If you can’t get the product out into the market, you can’t make money.”
The logjam holds back an industry already struggling. US spirits exports are sinking amid Trump’s trade war, and overall alcohol sales are falling as younger consumers, women and health-minded drinkers cut back. Just 54% of adults now say they drink, according to a Gallup poll released in August, the lowest level in polling going back to 1939.
Cleveland Whiskey, a small Ohio craft distiller with 13 employees, has had to delay first runs of the new creamy version of Magic Rabbit, an idea that grew out of customers using the booze to liven up milkshakes and sundaes, chief executive officer Tom Lix said.
Release of new whiskeys on hold
In all, the release of nine new whiskeys are on hold, a delay that will likely cost the company hundreds of thousands of dollars in lost sales, he said.
“That’s significant to our business, that’s the difference between hiring and not hiring people,” Lix said by phone. “I can’t print labels and I can’t bottle product until I have approvals.”
The US Treasury’s Alcohol and Tobacco Tax and Trade Bureau, which also issues permits to open new wineries and breweries, furloughed more than 86% of its employees, according to its shutdown plan. It currently has “suspended all non-excepted operations,” a notice on its website said.
A Treasury Department spokesmen didn’t respond to a request for comment.
Alcohol and Tobacco Tax and Trade Bureau stopped work
The agency, which handles more than 200,000 applications annually for approval of alcoholic beverage formulas and labels, typically in a matter of days, has stopped work just as the industry begins its busiest quarter. That threatens to delay some seasonal ales and lagers breweries planned for the Christmas holidays and winter since the manufacturers hadn’t submitted new recipes or labels before the shutdown, Pinson said.
Still, many craft breweries secured approval for holiday-themed beers before the shutdown, said Bart Watson, the chief executive officer of the Brewers Association, a Colorado-based trade group representing craft beer makers.
The backlog could have a cascading effect. During the 35-day 2018-2019 shutdown, approvals backed up as long as five months as unprocessed applications piled up, according to the Wine Institute, a Sacramento, California-based trade group representing California wineries.
“We’re now hearing from wine producers who are being forced to delay the bottling and production of wines slated for release as early as this holiday season,” Julie Berge, a vice president with the trade group said in an email. “For many wineries, these are delays they simply can’t afford.”
Among Pinson’s clients are two hard seltzer makers who both had to delay launches of new herb-flavored drinks because they couldn’t get needed label and formula approvals, the lawyer said. He declined to identify the manufactures.
Florida-based St. Augustine Distillery Co., already hit by higher import costs for glass, labels and corks along with a drop in local tourist traffic that has depressed sales, has been dealt a fresh blow.
Distillery's comeback plan is here
The distillery’s comeback plan includes a product redesign shifting from vintage-style labels to cleaner, easier-to-read packaging its managers hope will help its liquors compete with national brands in new markets.
While new vodka, gin, and rum labels have received approval, the company is still waiting on clearance for its bourbon release, submitted a few weeks ago. The pending launch features a gold-and-black label, adorned on a custom glass mold with “The Spirit of Florida” stamped onto the base.
“To the reader, getting a label approved feels like making a mountain out of a molehill,” said Richard deMontmollin, vice president of production. “But I can tell you that it definitely kind of sweeps the legs out from under us.”
The distillery had planned to unveil the refreshed packaging ahead of the holiday season, typically its busiest time as shoppers look for giftable bottles. While deMontmollin said he couldn’t pin a dollar figure loss on the delay, it’s “certainly impactful,” he said.
“The timing couldn’t be worse,” deMontmollin added. “We’re being squeezed on every side, and not being able to put out a brand new product certainly reduces one chance of success that we have amidst all these other troubles.”
