Monthly Mash July 2018 Part I

The Monthly Mash
Volume 3.7
Member-Owned, Industry-Driven
ACSA Mission:
To elevate and advocate for the community of craft spirits producers.
From the Desk of Margie A.S. Lehrman, Executive Director
Dear Craft Spirits Friends:
I was born in Johnstown, New York, the birthplace of Elizabeth Cady Stanton, a pioneer in the early women’s rights movement in the U.S. Returning from the W9: Spirit of Collaboration Summit in Louisville, Kentucky last Friday, it occurred to me that Stanton’s lively spirit, passion, determination, diplomacy, ingenuity, and energy is what it will take to enable our craft spirits industry to operate within a truly healthy business climate.
Whether ACSA is tackling global trade issues or offering programs to upgrade safety at your DSP or walking the halls of Congress to help educate members on the importance of making permanent the reduction of the Federal Excise Tax, we cannot and will not yield to the challenges we face.
There continue to be many impediments. So, what are we doing?
Communications were streamlined with the relaunch of the ACSA website. If you have yet to register your distillery with up to 5 members of your team now able to be associated with your account, do so now. And, take advantage of the member-only forums.
ACSA continues to fight for your FET reduction with this past month being no exception. We donated our first PAC [political action committee] check to Representative Erik Paulsen, [R-MN] one of our biggest advocates with the Craft Beverage Modernization and Tax Reform Act. While there, we visited over five offices, meeting with Congressional staff to remind them how you are reinvesting your FET savings and asking (again and again) that they make the reduction permanent. It’s your turn to do your part. Keep reading to assume your assignment. Click here for more information on our PAC.
The Kentucky Distillers Association was a gracious host to the global Spirit of Collaboration G-9 Summit, bringing together domestic and international trade groups in the whiskey trade. With more than 10% of our own craft spirits producers now exporting, I was able to personally share your stories on both the potential threat of and current tariffs placed on your whiskey. We left with the mantra: Raise glasses NOT tariffs!
We planned the next round of ACSA education, with a regional program in Long Beach, California featuring a robust curriculum to make safe your employees, equipment, and livelihood.
Your businesses grow because of the support and service of our suppliers. Although we just announced the opening of our trade show that will take place at the Hyatt Minneapolis February 10 th-12 th 2019 [during our annual convention], that show already sold 1/4 of its space. It promises to offer more of the products and services you need to help you flourish.
We continue to help elevate your craft spirits brands by providing more opportunities to showcase your products. Four craft distillers won the lottery to participate in BEVCON, the lively bar and beverage industry conference. It’s not too late for you to register to learn about beverage trends and network with those in the trade. And, as an ACSA member, you receive a 25% discount on the registration fee.
Who said July was a slow month?
Elizabeth Cady Stanton provided a framework to demonstrate how, when working together, challenges can be surmounted. Thank you for being a part of that ACSA team.
Cheers –
Margie A.S. Lehrman
ACSA Joins Other Industry Groups in Kentucky to Urge World Leaders to Restore Open and Fair Trade of Spirits
ACSA Executive Director Margie A.S. Lehrman was among the executives with the world’s top whiskey associations who called upon global leaders to engage in timely dialogue that results in the prompt removal of recent tariffs between long-time friends and allies, particularly those imposed on spirits exports.
At the “W9—Spirit of Collaboration Summit,” hosted by the Kentucky Distillers’ Association on July 25 and 26, representatives from nine international whiskey and distilled spirits organizations joined together to speak with a united voice.
“This historic, unprecedented meeting in Kentucky reflects the commitment and passion of leaders of whiskey associations to ‘RISE UP’ and be a part of the solution rather than sit idle and watch a trade war play out,” Lehrman said. “The trade associations remain hopeful that the U.S. will continue to talk and settle trade differences to avoid hurting the alcohol businesses which impact employment, from the farmers in the fields, to the distillers at the still, to the mixologists in the bars and restaurants.”
KDA President Eric Gregory said the group unanimously approved a resolution declaring open and fair trade to be essential for the future of the iconic industry—even though they couldn’t agree on who makes the best whiskey, or whether it’s spelled “whiskey” or “whisky.” The resolution also welcomes the commitment announced yesterday by the U.S. and the EU to de-escalate the current trade dispute and address tariff issues and calls for the removal of tariffs.
“In Kentucky, we like to say that bourbon brings people together,” he said. “It’s actually a lesson that our legendary industry learned long ago—that we can accomplish more by working together than standing apart. The global whiskey industry has been built on centuries of friendship, partnership and kinship. Today, we call on world leaders to likewise work together, over a glass of whiskey or their favorite nonalcoholic beverage. All nine members of this historic summit stand ready to assist and reach a solution.”
The gathering marked the first time these nine associations have come together to discuss collaborative solutions to recent trade policy decisions that could have long-term economic impacts on each of the country’s distilled spirits industries and negatively affect consumers worldwide.
Participating trade associations included:
● American Craft Spirits Association
● Distilled Spirits Council of the U.S.
● Irish Whiskey & Spirits
Associations
● Japan Spirits & Liqueurs Makers
Association
● Kentucky Distillers’ Association
● Scotch Whisky Association
● Spirits Canada
● spiritsEUROPE
● The Presidents’ Forum
Ulrich Adam, Director General of spiritsEUROPE, said, “Spirit drinks are appreciated around the world. Wherever local economies grow and markets open, we see a rising demand for our whiskies, vodkas, Cognacs or gins. “As true champion of open and fair trade, we very much value any efforts by public authorities to negotiate tariff removal and the elimination of non-tariff barriers. This helps our spirits companies, large and small, to be commercially successful abroad. The benefits are manifold and substantial – and go well beyond our sector, including our suppliers, distributors, and customers around the globe.” Distilled Spirits Council Interim President and CEO Clarkson Hine said, “The Distilled Spirits Council of the U.S. is joining with our counterpart organizations from around the world to send a strong message of support for free and fair trade of distilled spirits.
“We welcome the announcement made yesterday by the President and the EU as an important step in the right direction,” Hine said. “U.S. whiskey exports are a great American success story, and these trade disputes threaten the global competitiveness of American-made whiskeys that create jobs throughout the entire supply chain, from farmers to distillers to the retail market and consumers. We stand side-by-side with our domestic and international colleagues to urge continued dialogue that restores the tariff-free market access that has benefited producers and consumers for the past two decades.”
According to the Distilled Spirits Council, global U.S. spirits exports set a new record in 2017, reaching $1.64 billion. American whiskeys, specifically Bourbon, Tennessee Whiskey, and American Rye Whiskeys accounted for nearly 70 percent of the total, and thus are the key drivers of this export success.
The summit concluded with a ceremonial planting of a white oak tree on Whiskey Row in front of the Frazier History Museum, home to the Kentucky Bourbon Trail® Welcome Center™ opening at the end of August as the official starting point of the KDA’s world-famous KBT tours. According to U.S. guidelines, Bourbon whiskey must be stored in new, charred oak containers, many of which are shipped overseas for use in crafting other whiskies.
“Oak is a tie that binds all our whiskies,” Gregory said. Gregory praised the energy and insight each of the members brought to the two-day gathering, and said the group hopes to formalize its partnership and meet annually. “It only makes sense, as we share so many common issues, interest and opportunities. “It was an honor to host such a distinguished group of global citizens here in Kentucky,” he said. “To welcome our extended whiskey family to the Birthplace of Bourbon in order to work together for the greater good of all is an extraordinary privilege. We look forward to the next family reunion.”
6th Annual ACSA Convention and Vendor Trade Show: Call for Presentations & Exhibitor Registration Now Open !
We invite you to share your expertise with the craft spirits community at ACSA’s 6th Annual Distillers’ Convention and Vendor Trade Show, February 10-12, 2019 in Minneapolis, Minnesota. If you’re interested in presenting,  please submit your proposal no later than August 15th . ACSA prides itself on professional education providing the greatest possible learning experience for our industry. Each individual Call for Presentations will be personally vetted by the ACSA Education Committee.
Additionally, exhibitor registration is now open for those who wish to exhibit at the vendor trade show. We offer 8’x10′ single booths and 8’x20′ double booths where suppliers to the industry can showcase their products, services and solutions before a gathering of craft spirits producers from across the country.
Update from Washington:
Permanent FET Relief, Trade Tariffs Dominate the Conversation
On December 22, 2017, the President signed into law H.R. 1 the Tax Cuts and Jobs Act of 2017. As many now know, it contained the first major legislation in modern history that will directly support and grow America craft distillers, by reducing the Federal Excise Tax (FET).
The legislation has been a top priority fo the American Craft Spirits Association’s (ACSA) for many years and its passage marks a major victory for the craft spirits industry. It also finally provides parity for our industry with our counterparts in craft beer and wine, by reducing the FET from $13.50 to $2.70 per gallon for the first 100,000 proof gallons removed from bond.
Due to the realities of a complicated budget and “scoring” process, however, the FET reduction is for the years 2018 and 2019 only. This is typical of many new tax provisions that have time deadlines. Many have been “extended” for years and then made permanent.
ACSA is already working hard on its own, and with other alcohol beverage groups, to make this a permanent part of the tax code. A summit of the key organizations took place in February 2018 and all the major beverage alcohol groups committed to making this permanent.
In May 2018 ACSA partnered with DISCUS and held a fly-in to Washington D.C. with well over 100 attendees. As part of that event, craft distillers from a number of States met with Senators and Members of Congress to discuss the FET reduction. Our group met personally with key supporters like Senator Ron Wyden (D-OR), Senator Roy Blunt (R-MO), Senate Todd Young (R-IN) and the Chief of Staff to Senator Rob Portman (R-OH). ACSA President Chris Montana also met with our champion in the House, Rep. Erik Paulsen (R-MN).
Just in the past month, ACSA Executive Director Margie Lehrman met with Rep. Kevin Brady, who serves as Chairman of the U.S. House Ways and Means Committee (the chief tax writing Committee in the House). There are plans to have the House consider another tax reform bill in September 2018. She discussed making permanent the FET reduction as part of the new tax bill. Margie also met with Erik Paulsen (R-MN), as a follow up to ACSA’s President, Chris Montana’s visit, and discussed getting this in the House new tax bill.
While we believe we are well positioned to be included in the new tax bill, we cannot be overly confident and ACSA is encouraging all craft distillers to visit with Members of Congress during August, when they will be on an extended district work period, taking meetings and visiting with small businesses.
Besides participating in the G-9 Summit, ACSA has also been active in raising alarm of the looming trade war in Washington, D.C.. We joined other groups and recently sent letters to Senate Majority Leader Mitch McConnell and Chairman Kevin Brady noting the hurtful impact these tariffs are having on our industry. We also met recently with the Trade Subcommittee Chairman Rep. Dave Reichert (R-WA) about upcoming hearings on the impact of the trade wars and expressing our interest in testifying should more hearings be held.
The consensus in Washington is that the President himself if driving these trade talks and agreements with the EU, Canada and Mexico could be forthcoming, but the President will be the final decision maker. The anxiety being expressed in Congress and in the business community, including craft distillers, on a regular basis, is thought to be having some impact on White House decision making.
SPIRITED RESPONSE: MONTHLY POLL
Do you export?
Yes
No
Has the U.S. position on trade impacted your export plans for the remainder of 2018?
Yes
No
Has the U.S. position on trade impacted your export plans for 2019?
Yes
No
If you export, do you expect a decline in overall sales?
Yes
No
If you answered “yes” to the previous question, how much of a decline do you expect?
Less than 10%
10 to 20%
21 to 30%
31 to 40%
More than 40%
Have trading partners asked you to lower your prices?
Yes
No

©2018 American Craft Spirits Association; All Rights Reserved. Member Owned, Industry Driven.

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