An alcohol policy expert calls for an end to antiquated alcohol excise tax laws, which are unfairly penalizing kombucha producers across the country. Though kombucha only has trace amounts of alcohol (generally below the 0.5% alcoholic beverage threshold), it is “nearly impossible for kombucha producers to control the entire supply chain,” writes Jarrett Dieterle, Director of Commercial Freedom for R Street Institute and the author of forthcoming book “Drink For Your Country.” If not properly refrigerated once it’s left the manufacturer for distribution, kombucha will continue to ferment and raise the alcohol level. Dieterle said it’s unfair to make kombucha makers pay fines of more than $10,000 when they can’t control how the drink is stored once it enters the supply chain. Protecting kombucha, he says, should be a priority for federal lawmakers.
Read more (Washington Examiner)
The yogurt Los Angeles Times calls “the best yogurt in America” was forced out of California in 2011. White Moustache, which sells Greek and Persian yogurts with seasonal fruit common in Iranian cuisine added, moved to Brooklyn in 2012 after California Department of Food & Agriculture shut them down. According to California state law, making a milk-based product in a facility separate from the facility where the milk was pasteurized is illegal. Though White Moustache founder Homa Dashtaki produces her famous yogurt in New York, she now sells it in California — Manhattan’s brand of Eataly opened a Los Angeles store, and Dashtaki’s family members oversee production for the West Coast store.
Read more (The Los Angeles Times)
Should a fermented food process need a patent? PepsiCo has filed a patent to ferment oat flour and dairy milk together. PepsiCo-owned Quaker Oats is creating a “spoonable or drinkable” clean-label product comparable to yogurt. The process involves co-fermenting a grain, dairy and a set of metabolites. This patent is unique because, while there are existing food products that combine unfermented and fermented dairy and grains, none co-ferment grain and dairy at the same time. In their application, PepsiCo notes that consumers are increasingly consuming fermented food products for health benefits.
Read more (World Intellectual Property Organization)
Brewers may finally get a break on a costly tax levied against them since 1791. Bipartisan lawmakers in both the U.S. House and Senate are backing legislation that would permanently reform taxes on brewers, winemakers, distillers and alcohol importers.
The bill – called the Craft Beverage Modernization and Tax Reform Act (CBMTRA) – reduces the federal excise tax on alcoholic beverages. It lowers tax rates for beer, wine and other fermented spirits, like cider. Small brewers save on average $80 million a year without the extra tax.
“Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined,” writes the Beer Institute, a trade organization. “If all the taxes levied on the production, distribution and retailing of beer are added up, they amount to more than 40 percent of the retail price.”
Alcohol excise taxes were the first tax on a domestic product by the U.S. government, and one of the government’s first revenue sources. First collected in 1791, the taxes led to the infamous Whiskey Rebellion tax protest. The purpose of the tax was to help war debt from the Revolutionary War.
Today, though, the government still taxes goods like alcohol and tobacco as part of the “sin tax” logic. Such goods are considered harmful, as alcohol and tobacco consumption is linked to heavy healthcare costs, some paid by taxpayers. Excessive alcohol consumption causes 88,000 deaths a year, an estimated economic impact of $249 billion.
In 2017, the first version of the CBMTRA was passed, under a two-year provision that will expire at the end of 2019. That legislation amended tax law, including:
- For smaller domestic brewers producing fewer than 2 million barrels a year: Reduce federal excise tax from $7 per barrel to $3.50 per barrel for the first 60,000 barrels.
- For all other brewers and beer imports: Reduce federal excise tax from $18 a barrel to $16 a barrel on the first 6 million barrels
- For large brewers with a barrelage over 6 million: Federal excise tax kept at current $18 a barrel.
Brewers, lobbyists and trade associations are pushing for the tax reduction to remain permanent. They point to the huge economic impact the alcohol industry has on the U.S. economy. The U.S. beer industry alone created more than 2.19 million jobs that paid more than $101 billion in wages and benefits in 2018. And, with the increasing popularity of craft brewing, those numbers are rising.
“The craft brewing industry can be found in nearly every Congressional District in the U.S. and contributes more than 500,000 jobs, including an additional 15,000 directly added at small breweries just last year, showcasing the positive momentum supported by temporary provisions,” said Bob Pease, president and CEO of the Brewers Association. “The industry is responsible for contributing more than $76.2 billion to the U.S. economy and is a success story for American industry.”
The wine industry, meanwhile, supported 1.73 million jobs that paid more than $75.7 billion in wages in 2017. Though the cider industry doesn’t have specific numbers on jobs, the cider market grew faster in 2018 than the beer, wine or spirits industry.
“Many of our members are small producers with direct investment in agriculture here in the United States,” said Paul Vander Heide, president of the United States Association of Cider Makers. “This will provide them additional security for their families and capital to invest in growth opportunities for their business.”
After the CBMTRA enactment in 2017, 99 percent of small brewers saw a 50 percent reduction of their federal excise tax. A survey by the Brewers Association found those savings sparked a variety of economic gains for the craft brewing industry:
- 73% of breweries are purchasing new equipment, upgrading their tasting rooms and breweries, moving to new buildings, etc.
- 53% of breweries are hiring new employees
- 39% are increasing their employee benefits by raising pay, offering insurance and expanding vacation time
- 21% are increasing their charitable contributions
- 58% are doing two or more of the above-mentioned actions
Added Bobby Koch, president and CEO of Wine Institute: “The savings will allow wineries across America – most of which are small, family-owned businesses – to hire new employees, upgrade equipment, and invest in the future growth of their wineries.”
Information and updates on the bill can be found on the Congress website. The bill was introduced by Rep. Ron Kind, D-Wisconsin, Mike Kelly, R-Pennsylvania, Sen. Ron Wyden, D-Oregon and Roy Blunt, R-Missouri.
A salmonella, E. coli or botulism outbreak can destroy a food brand. Entrepreneurs must be vigilante about food safety, understanding their suppliers, copackers and labels.
Linda Harris, the department chair for the Food Science & Technology Department at the University of California, Davis, shared advice for new food producers to safely launch a business. Harris spoke with her UC Davis colleagues during an education session at Natural Products Expo West. Fermented products, which undergo unconventional processing, are not exempt from food safety measures. Harris emphasized putting “raw” on a label doesn’t protect a brand from food regulations.
“What I would caution someone who would be putting raw on their label is, first of all, understand what you mean by the word raw,” Harris said. “Having raw on your label doesn’t eliminate your responsibility to do the hazard analysis for your product. If a pathogen is a significant hazard, you still have to control for it. … It doesn’t get you off the hook by putting ‘raw’ on the label.”
Recalls as Cautionary Examples
Harris jokes she specializes in being a downer. As a food microbiologist, she shares cautionary examples of brands responsible for food poisoning. Food companies ask Harris for advice on how to maneuver food safety regulations, and Harris admits she still has to look up regulations because they are so complicated.
“You must understand how to control your hazards,” Harris said. “For some entrepreneurs, some smaller processors, that’s been a bit of a challenge to do because.”
She shared the example of the mystery green powder. Many food producers use green powders to make their product – but Harris says brands need to understand the ins and outs of their ingredients. Testing alone will not deal with vulnerabilities. Companies need to ask questions, like: Does the supplier label exactly what’s in the ingredient? If it’s labeled, is it accurate? What processes are used to make the ingredients? Does the process enhance safety? What contaminants are in the ingredients? What kind of controls are in place?
The 2016 Garden of Life RAW Meal Organic Shake & Meal outbreak was one such example. Salmonella in the powder infected 33 people in 23 states. The Salmonella was traced back to a supplier’s ingredient. Can food processors trust each one of their ingredient suppliers, Harris questioned?
“A very challenging thing to do by any strength of the imagination,” she said, especially for a small processor. “How do you know when you’re buying your powders that there aren’t things beyond the Salmonella or the bacteria that I’m concerned about or pesticides or other chemicals or heavy metals that might be present?”
As more natural food brands enter the market, processors are sourcing unique ingredients, many from international suppliers.
“(When) youre not able to see that process or interact with that process, I think that’s a real concern,” Harris adds. “That’s where I see small entrepreneurs being especially vulnerable because they don’t have the power to say ‘I am going to buy 50 pounds of your powder, so I’d like to have a full tour of your facility.’ You lose some of that power compared to being a large manufacturer where millions of dollars are at stake.”
Question Every Step
Harris shared tips for avoiding food safety disasters.
- Check with regulators early and often. From USDA and FDA inspectors to state government agencies, Harris said she’s found government regulators are very willing to share feedback on food safety.
- Tour supplier and processor facilities. The SoyNut Butter E. coli outbreak of 2017 was another supplier mistake. After 32 people became infected from SoyNut Butter, the brand recalled the product. During their investigation, they found their contract manufacturer was operating in unsanitary conditions. The facility was dusty, equipment hadn’t been cleaned for 15 months and there was no hot water or soap. Harris noted, if the food company simply walked through the facility, they would have quickly seen issues.
- Use a copacker. Copackers are food safety experts, and a great option for small companies to avoid safety hazards. Copackers will take a recipe, make the food product and package it. They are the food safety experts, so a new food company doesn’t have to master food safety. Still, Harris warned, tour the copacker facility. “If you think just a small processor is vulnerable to issues with copackers… even major companies can I think get into a lull of not making those checks and not following up to make things are going well,” she said.
- Ask lots of questions. Harris advises, if a food brand is putting ingredient or processing trust in another company, be prepared to double check their facilities and healthy claims.
Harris recently had to practice what she preaches. As the department chair, she had to axe the students plan to make vegan ice cream for the university’s Picnic Day. The powder the students found was sourced from a Midwest company who wouldn’t share details on how they eliminate pathogens. So Harris did not give students permission to buy the powder for vegan ice cream.
“If you’re in this area, I think you do need to be able to understand what you’re doing and why you’re doing it,” she said. “When you go to your supplier to ask them how are you controlling for these things in the ingredient you’re giving me, that you expect transparency.”
Fermented Products Not Exempt
Fermentation often creates a false air of safety, Harris said. Just because fermentation has a global tradition doesn’t mean fermented foods are all created under safe conditions.
In 2013, The Cultured Kitchen had to recall their cashew cheese after 17 people became infected with Salmonella. Testing found the fermented cashews were the source of the outbreak. The copacker had multiple critical equipment malfunctions, like an uncalibrated thermometer and no kill step.
Fermented food, Harris stresses, are extremely safe. Fermented foods have a long history of safety. But new products and ingredients that are fermented which have historically never been fermented before, makes food safety murky.
For more information on food safety, check out the UC Davis Food Safety website.
To celebrate its 100th anniversary, Danone is releasing its collection of 1,800 yogurt strains to the public. In a press release, Danone said the announcement coincides with Danone’s “commitment to promoting open science, a movement toward openness in scientific research, sharing and development of knowledge through collaborative networks.” Danone would like others to use the strains for research purposes. The French company is also granting access to its current collection of 193 lactic and bifidobacteria ferment strains deposited at the National Collection of Cultures of Microorganisms, held in the Biological Resource Center of Institut Pasteur in Paris. The first Danone yogurt was made by Isaac Carasso in 1919 in Barcelona. Barcelona’s own children suffered from poor gut health, and he was inspired by research from the Institute Pasteur that detailed the role of ferments in gut and overall health. Barcelona began selling his first yogurts, which were fermented with lactic ferments, in Barcelona’s pharmacies.
Read more (Danone)
On the cusp of an announcement from KBI on standards defining kombucha, GT Dave — founder of GT’s Kombucha — gave KBI a $1 million endowment to protect authentic kombucha. Speaking to attendees at the annual KombuchaKon, GT said: “Kombucha is now being mass produced by some newer brands that have entered the market and they are positioning them for a mainstream palate. These barely fermented products are missing the heart and soul of what the industry of kombucha should be, and it’s looking more like a new age soft drink.” GT believes kombucha brands need to be upfront about what techniques they’re using to make their kombucha, like pasteurization, hyper-filtration, artificial carbonation, concentrate use and/or spinning cone technology.
Read more (Food Navigator)
Consumers are in favor of allowing plant-based food to use traditional dairy terms on their labels — but dairy farmers are strongly opposed to it. Last year, the U.S. FDA issued a public comment period to examine if plant-based foods and beverages should use the traditional dairy names: milk, cheese and yogurt. The results are out. Of those comments, 76 percent were in favor of using dairy terms on plant-based products, 13.5 percent were against and the remaining 10.5 percent were inconclusive. Of the commenters that identified themselves as dairy farmers, nearly all were opposed. Dairy farmers are concerned consumers will believe plant-based foods are nutritionally similar to cow’s milk (94 percent) and that consumers are being misled with a dairy term on a plant-based item (91 percent).
Read more (Linkage Research)
Oregon lawmakers are attempting to end the alcoholic beverage tax placed on kombucha. One of the fastest growing fermented produce and beverages, many kombucha brands are based in Oregon, and state leadership on both sides of the political fence realize how critical kombucha is to Oregon’s economy. “I’ve met with kombucha manufacturers in Oregon who have told me how this outdated tax is holding back their industry,” said Rep. Greg Walden (R-Hood River). “This bill will help these small businesses keep more of their hard earned money to reinvest in their businesses and create jobs in our communities.” The bill – called Keeping our Manufacturers from Being Unfairly Taxed while Championing Health Act (or KOMBUCHA) – would increase alcohol-by-volume limit for kombucha from 0.5 percent to 1.25 percent. Currently, fermented beverages containing at least 0.5 percent of alcohol by volume are taxed through federal alcohol excise taxes.
Read more (Oregon Public Broadcasting) (Photo by: Humm Kombucha)
The voices of organic and natural advocates are critical to public policy, and change in the food system starts with farmers, food producers and even parents feeding their family in a healthy, sustainable way.
“Your voices matter more than ever. You are the reason we’ve seen so many changes in our food system over the past 85 years,” said Sen. Debbie Stabenow (D-Michigan), keynote speaker at Natural Products Expo West in Anaheim, Calif. Stabenow is the Ranking Member of the U.S. Senate Committee on Agriculture, Nutrition and Forestry and the co-author of the 2018 Farm Bill. “We’ve made progress, but there’s a lot more to do. That’s where all of you come in. “
Legislation is catching up with consumer desire. For the first time in U.S. history, organic food is permanently protected and protected under the current farm bill. The farm bill is the government’s primary food and agriculture policy tool, and it’s renewed every five years.
Organic food is a movement that’s been rising for decades, Stabenow said. Though it may feel like the organic industry just took off, Stabenow said “It’s moving more quickly now because of the incredible demand from the public. … Organics is the fastest growing part of our farm economy, so we made it a priority in the farm bill.”
“Now more than ever before people are paying attention to what they eat. They want to know where their food comes from and how it’s grown. … People are also becoming more interested in the hands that plant the seed, the soil in which they grow and the impact on our family’s health.”
The farm bill is the best example of how food policy has changed. The first farm bill was established in 1933, during the Great Depression. A national organics program wasn’t put in the bill until the 1990s.
The organic industry has grown from $3.6 billion in 1997 to over $50 billion today.
Stabenow is proud of the policies added to the 2018 Farm Bill, passed in a difficult political climate. Republicans control all parts of the federal government. And President Donald Trump has pushed for such tight regulations on the organics program that he’s been accused of “waging war” on the organics industry. But bipartisan support helped pass what Stabenow called “the most progressive farm bill yet.”
The major bill highlight for the organic industry was the establishment of permanent, mandatory funding for organics. Stabenow compared it to organics previously sitting at the “kid’s table” with temporary funding for organics that was depleted and reevaluated every five years.
“I’m proud to say we’re now at the adult’s table,” Stabenow said. “What does that mean? It means organic research and provisions will live on past the current farm bill. It means farmers markets and food hubs and community food provisions will continue to grow the local food movement.”
With organics finally protected, Stabenow said, it’s time to look at new ideas. What can propel the next farm bill with healthy and sustainable policies?
“As creators, as innovators as advocates you really are the engine driving our country to a more sustainable future, and I can’t think of anything more important than being able to do that,” she said.