Thousands of new state laws were passed across America this year, and dozens affect fermentation businesses — small and large — as well as home fermenters.
Government agencies are loosening some strict health code and alcohol regulations, laws that made running an artisanal business difficult. There are also new opportunities being created that allow craft breweries to expand their operations, such as entertainment districts where beer can be sold and enjoyed legally.
Read on for the breakdown of 2019 food laws passed in each state
SB16 — Expands state alcohol licenses to include recreational areas. After the Alaska Alcoholic Beverage Control Board began cracking down on alcohol licenses in 2017, several recreational sites were denied licenses to sell alcohol. The bill, known as “Save the Alaska State Fair Act,” now expands license types to the state fair, ski areas, bowling alleys and tourist operations.
HB2178 — Removes red tape for small ice cream stores and other milk product businesses to manufacture and sell dairy products. The bill, called the “Ice Cream Freedom Act,” allows smaller mom and pop businesses to make milk-based products without complying with state regulations designed for large dairy manufacturers.
HB1407 — Prohibits false labeling on agricultural products edible by humans. That includes misleading labels, like labeling agricultural products as a different kind of food or omitting required label information.
HB1556 — Ends the “undisclosed and ongoing investigations” of the Alcoholic Beverage Control Board, the Alcoholic Beverage Control Division, and the Alcoholic Beverage Enforcement Division.
HB1590 — Limits the number off-premise sales of wine and liquor in the state to one permit for every 7,500 residents in the county or subdivision. Small farm wines are the exception to the new law.
HB1852 — Allows a microbrewery to operate in a dry county as a private club, without approval from the local governing body.
HB1853 — Amends the Local Food, Farms, and Jobs Acts to increase the amount of local farm and food products purchased by government agencies (like state parks and schools).
SB348 — Establishes a Hard Cider Manufacturing Permit. Cider brewers can apply for the annual $250 permit, authorizing the sale of hard cider. Producers may not sell more than 15,000 barrels of hard cider a year.
SB492 — Establishes temporary or permanent entertainment areas in wet counties where alcohol can be carried and consumed on the public streets and sidewalks.
AB205 — Revises the definition of beer to mean that beer may be produced using “honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials, and adjuncts in fermentation.”
AB377 — A follow-up to the state’s landmark California Homemade Food Act in 2018, the new bill would clarify the implementation process of last year’s bill. The California Home Food Act made it legal for home cooks to operate home-based food production facilities. The law, though, was only enacted if a county’s board of supervisors voted to opt-in to offer the permits. Only one county in California has opted in (Riverside). County health officials are avoiding singing on the bill because of potential food safety risks.
AB619 — Permits temporary food vendors at events to serve customers in reusable containers rather than disposable servingware. The “Bring Your Own Bill” also clarifies existing health code, allowing customers to bring their own reusable containers to restaurants for take-out.
AB792 — Establishes a minimum level of recycled content (50%) in plastic beverage bottles by 2035. The world’s strongest recycling requirement, the law would help reduce litter and boost demand for manufacturers to use recycled plastic materials.
AB1532 — Adds instructions on the elements of major food allergens and safe handling food practices to all food handler training courses.
HB5004 — Raises minimum wage to $15 by 2023.
HB6249 — Charges 10 cents for single-use plastic bags by 2021.
HB7424 — Raises sales tax from 6.35% to 7.35% for restaurant meals and prepared foods sold elsewhere, like in a grocery store. Also repeals the $250 biennial business entity tax.
HB130 — Bans single-use plastic bags by 2021.
SB105 — Raises minimum wage to $15 by 2024.
HB125 — Facilitates growth and expansion of craft alcoholic beverage companies, raising amount of manufactured beer to 6 million barrels.
SB82 — Prohibits a municipality from regulating vegetable gardens on residential properties.
HB134 — Regulates where beer and wine can be served, now including public plazas.
HB151 — Charges licensing fees for temporary food establishments based on the number of days open. Fees will gradually increase through 2022.
HB3018 — Amends Food Handling Regulation Enforcement Act, requiring a restaurant prominently display signage indicating a guest’s food allergies must be communicated to the restaurant.
HB3440 — Allows customers to provide their own take-home containers when purchasing bulk items from grocery stores and other retailers.
HB2675 — An update to state liquor laws, the bill removes hurdles for craft distilleries to operate. Craft distilleries would be allowed to more widely distribute their products themselves, rather than distributing under the state’s three-tier liquor distribution system that separates producers, distributors and retailers.
SB1240 — Imposes a 7 cent tax on each plastic bag at checkout, with 2 cents staying with the retailers. The remaining 5 cents per bag would fix a statewide budget deficit.
HB1518 — Creates a special alcohol permit for the Bottleworks District. The $300 million, 12-acre urban mixed-use development in the Coca-Cola building will serve as a culinary and entertainment hub in downtown Indianapolis.
SF618 — Increases the limit on alcohol in beer from 5% to 6.25%.
SF323 — Canned cocktail and premixed drinks served in a metal can, up to 14% alcohol by volume, will now be regulated like beer.
HB311 — Requires proper labeling of cell-cultured meat products that are lab produced.
HB468 — Expands defined items permitted for sale by home-based processors.
HR251 — Designates week of September 23-29 as Louisiana Craft Brewer Week.
SB152 — Establishes definition for agriculture products. Prohibits anyone from mislabeling a meat edible to humans.
SR20 — Designates week of September 3-9th as Louisiana Craft Spirits Week.
LD289 — Prohibits stores from selling or distributing any disposable food containers that are made entirely or partially of polystyrene foam (Styrofoam).
LD454 — Provides funding and staffing needed to give local students and nutrition directors the resources needed to purchase and serve locally grown foods.
LD1433 — Bans two toxic, industrial chemicals (phthalates and PFAS) from food packaging. Maine becomes first state in the nation to ban the two chemicals.
LD1532 — Bans all single-use plastic bags in the state. Law will be enacted by April 2020, at which time shoppers can pay 5 cents for a plastic bag. Maine is the fourth state to pass a ban, joining California, New York and Hawaii.
LD1761 — Increases amount of barrels craft beer and hard cider manufacturers can produce in a year. The cap increased from 50,000 gallons to 930,000 gallons (approximately 30,000) barrels. The law also makes it easier for a small brewery to get out of a contract with a large distributor.
SB596 — Defined mead as a beer for tax purposes.
HB1010 — Updates state beer laws by increasing taproom sales, production capabilities, self-distribution limits and hours of operation. Known as the Brewery Modernization Act, the law is aimed to create jobs and increase economic impact.
HB1080 — No restrictive franchise law provisions for brewers that produce 20,000 barrels a year or less.
HB1301 — Sales tax will be collected on Maryland buyers from online sellers, helping small businesses compete with online retailers.
HB4111 — Raises minimum wage by 75 cents a year until it reaches $15 in 2023.
HB4959 — Gives state Liquor Control Commission the power to seize beer, wine, mixed spirit and mixed wine drinks, in order to inspect for compliance with the state’s extraordinarily detailed and complex “liquor control” regulatory and license regime. Bill also repeals a one-year residency requirement imposed on applicants for a liquor wholesaler license, after the U.S. Supreme Court invalidated a similar Tennessee law as a violation of the U.S. Constitution’s commerce clause.
HB4961 — Prohibit licensed liquor manufacturers from requiring licensed wholesalers to give the manufacturer records related to the distribution of different brands, employee compensation or business operations that are not directly related to the distribution of the maker’s brands.
SB0320 — Eliminates mandate that businesses with a liquor license must post a regulatory compliance bond with the state.
HF1733 — Updates the state’s omnibus agriculture policy law, including: create a custom-exempt food handlers license for those handling products not for sale; extend the state’s Organic Advisory Task Force by five years; allow the agriculture department to waive farm milk storage limits is the case of hardship, emergency, or natural disaster, and modify milk/dairy labelling requirements; modify labelling for cheese made with unpasteurized milk; expand the agriculture department’s power to restrict food movement after an emergency declaration; modify eligibility and educational requirements for beginning farmer loans and tax credits.
SB2922 — Prohibits labeling non-meat products as meat, like animal cultures, plants and insects.
HB84 — Changes tax on wine to 27 cents per liter, and a tax on hard cider at 3.7 cents per liter.
SB358 — Raises alcohol license fee for resorts from $20,000 to $100,000 each.
LR13 — Establish and enforce definitions for plant-based milk and dairy. Proper product labeling would be enforced for milk and dairy food products that are “truthful, not misleading, and sufficient to different non-dairy derived beverages and food products.”
SB345 — Authorizing pubs and certain wineries to transfer certain malt beverages and wine in bulk to an estate distillery; authorizing a wholesale dealer of liquor to make such a transfer; authorizing an estate distillery to receive malt beverages and wine in bulk for the purpose of distillation and blending; revising when certain spirits that are received or transferred in bulk are subject to taxation.
HB598 — Establish a commission to study beer, wine, and liquor tourism in New Hampshire. The commission will specifically develop a plan for tourism, including establishing tourist liquor trails with signage along the highway, suggest changes to liquor laws that would enhance tourist experiences at state wineries, breweries and liquor manufacturers and suggest how to allow a “farm to table” dinner featuring New Hampshire produced food items and local alcoholic beverages.
HB642 — Defining ciders with alcohol content greater than 6% (but no more than 12%) as specialty beers.
A15 — Raises the state minimum wage to $15 an hour by 2024, raising in $1 increments every year.
SB1057 — Establishes a loan program for capital expenses for vineyards and wineries in New Jersey.
SB149 — Change name of Alcohol and Gaming commission to Alcoholic Beverage Control Division.
SB413 –Allows breweries to: sell beer at 11 a.m. on Sundays; have private celebration permits for events like weddings and graduation parties; no minimum standards (50 barrels a year or 50 percent of all sales coming from beer brewed on site) for businesses to hold a small brewer license; eliminate excise tax, with breweries paying $.08 per gallon on the first 30,000 barrels produced.
“Fermenting foods requires attention to detail and knowledge that not everyone has,” reads an article in the Greenfield Recorder in New England. The newspaper featured Jim Wallace, recipe developer at New England Cheesemaking Supply Co. Wallace says, to be a fermenter, “You have to be a bit of a mad scientist. (As) a mad scientist, you need to be answering questions.” In his home fermentation cellar, Wallace ferments wine, cheese, beer, kombucha and vegetables. He also teaches workshops, classes that have become more popular as more people tap into fermentation “a global food phenomenon — renewed interest in resurrecting forgotten food tradition.”
Read more (Greenfield Recorder)
Thanks to new state law, “Maryland is fermenting as a rising powerhouse in the craft beer brewing industry,” writes the Baltimore Sun. Breweries in Maryland have an economic impact of over $910 million. As multiple breweries across the nation still face restrictive laws that keep them from operating at full capacity, new legislation in Maryland increased the number of barrels a brewery can sell from 500 per year to 5,000. After the local municipality of Carroll County changed zoning to allow breweries in industrial zones, there are now seven breweries in the county. Brewery Fire co-owner Jesse Johnson said: “The mayor and council laid out the rest carpet for us.” A brewer for 10 years, Johnson said counties are usually horrible to work with when opening a business brewing and selling alcohol, but Maryland’s lawmakers have “been a dream to work with.”
Read more (Baltimore Sun)
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.
Craft brewers are catering to a new beer drinker: healthy, active lifestyle drinkers. Though craft brewers are thriving, it’s a smart adaption to add low calorie beers to their products. A study found 52 percent of beer drinkers want to reduce their alcohol consumption this year, the top reason being: “opting for healthier lifestyle.” Beer brands have often ignored the development of watery, light beers. But as millennials – who drove craft brewery growth – enter their 30s and focus on health and wellness, lower calorie beers are becoming an important part of breweries flavor lineup.
Read more (New York Times)
Kombucha brands biggest competition are not other kombucha brands – it’s soda and functional beverages. Sales continue to hemorrhage in the soda category as consumers shun sugar-filled drinks. And kombucha companies have a great opportunity now to grab that market share.
A panel of leaders in the kombucha and beverage industry shared their insights on the future of kombucha at KombuchaKon, Kombucha Brewers International’s 6th annual conference. They agreed the fermented tea is not a fad, but brands “have to be nimble and creative” to thrive in an increasingly crowded market.
“The future is really, really bright,” said John Peirano, the vice president of marketing at Humm Kombucha. “It’s super exciting – and we’re just getting started.”
Local Brands Will Reign
As more and more kombucha brands enter the industry, the brand’s biggest strengths will be selling to their regional market.
“There are all these local brands retailers are going to want because they care about what’s happening locally,” Peirano said. “Local brands are going to be really, really important.”
John Craven, editor of beverage industry news site BevNET, has covered the beverage world for nearly two decades. He said marketing brands locally works in the kombucha category, but not in any other beverage space.
“Prior to (kombucha), if you said ‘I want to build a regional brand,’ I would have said ‘That’s not a thing,’” Craven said.
Educating Retailer & Consumer
Retailers want to give \consumer’s a variety of product choices, Craven added. They’re more likely to commit to selling kombucha if there are multiple brands and SKUs on their store shelf.
“With (kombucha), it’s OK to like a bunch of different brands,” Craven said. It’s normal for a kombucha consumer to switch between different brands and flavors. “That is one thing this category has going for it that’s really unique. … It definitely has defied traditional beverage logic in that regard.”
Litigation against kombucha brands continues to top headlines, as lawsuits claim alcohol content is misrepresented or sugar levels are understated in different brands. In the next few months, KBI will be releasing their own standards defining kombucha.
Truth in labeling will drive trust with the consumer and the retailer, Peirano said. “It’s important that what’s inside the bottle is on the label,” he added.
“As category leaders, we also have to be category captains. We have to go to the retailers with really strong selling stories. And those selling stories aren’t just about Humm. Those selling stories are about the category and what will drive the most profitability for that retailer category and that shelf set, so they can be successful.”
Refrigerated kombucha and the fermented beverage category has grown 31.4 percent year-over-year, according to data from SPINS market research. And household awareness continues to climb – it increased 20 percent in 2018.
Kombucha is sold in the refrigerated section, some of the most expensive space on a grocery shelf.
“I think it’s all our responsibilities, if we want to continue to grow this category, we’ve got to go out and education and tell people about the magical, beautiful benefits of what kombucha brings to the table from a functional health standpoint,” Peirano said.
Brands Need to Remain Fresh
The kombucha industry is already dominated by a handful of national brands – GT Kombucha, Kevita, Health Ade, Humm Kombucha and Brew Dr. control the majority of market share. The panel agreed smaller brands can still successfully enter the category, but the top sellers are locked.
“There’s not room for a dozen million dollar-plus brands,” Craven said. “But the reality…is that some of these (smaller) brands will be acquired and will probably be absorbed and evolved, ruined, whatever, which makes an opportunity for the next brand to come along.”
“There are a lot of functional products out there…the beverage history lesson is consumers are really fickle,” Craven added. He pointed to Vitamin Water as an example, a brand that rapidly grew popular in the beverage industry but then lost sales. “The consumer keeps moving on to the flavor or the function of the month, so to speak.”
Craven does not think kombucha will be a victim like Vitamin Water because kombucha includes value-added health benefits. The kombucha brands that survive the next decade, though, must be adept to change. They must evolve with new flavors and brewing styles, while maintaining affordability, consistency and health benefits.
Growing Kombucha Enhancement: CBD
One of those kombucha styles keeping the industry fresh: CBD. Conrad Ferrel, founder and CEO of True Büch, said combining the benefits of the cannabis plant with the functional compounds in kombucha makes sense.
“The evolution of cannabis used with kombucha, it’s a natural marriage,” Ferrel said. “If you want to have kombucha for sleep, there will be a specific kombucha for that. If you want it for pain management, it will be there. It will be functional and specific to the certain (medical aid) people want.”
There are 140 compounds in the cannabis plant, but so far only two – THC and CP – have been studied, added Ferrel. CP is a value-added compound, known to aid in improving medical ailments. But science is lagging.
“As the world gets used to the science … the struggle is to sell people something that for years was considered a drug, now we’re trying to sell people on the fact that it’s good for you,” Ferrel added.
Hard Kombucha Gaining Traction
Hard kombucha is another brewing style keeping the kombucha category competitive. It’s evidence of how many beverage categories kombucha bleeds into – like alcohol, tea, juice, flavored water and functional beverages.
Kyle Oliver, quality assurance scientist at Boochcraft, said regular kombucha has an ABV of .5 percent to 2 percent. Hard or high alcohol kombucha goes above that level. Boochcraft has 7 percent ABV. The ABV is higher because hard kombucha goes through a secondary fermentation process, where more yeast and sugar are added.
“Our organisms we want in our kombucha are spoilage organisms in other industries (like wine and beer),” Oliver said. “The higher ABV doesn’t kill probiotics, they’re able to still grow in that environment.”
Craft cheese sales lag behind craft beer sales, despite the similarities in the two industries. Craft beer sales in America totaled $27.6 billion in 2018, while craft cheese sales totaled $4 billion. Experts tell VinePair why cheese doesn’t keep up with beer’s growth: cheese’s short lifespan (less than two months), greater risk of cheese mishandling by a distributor during the supply chain and the high price of artisan cheese. What can a cheese brand do? Experts advise increasing social media promotion. Craft beer has thrived on social media because people love seeing the hops being picked, brewers experimenting near the fermentation tank and the beer displayed in glassware. Craft cheese brands don’t self promote the same creation process, like a goat that made the milk or a family that runs the dairy farm. Cheese brands could also benefit from better merchandising, experts say. Beer labels are constantly and creatively changed and updated, but cheese labels remain the same for years.
Read more (VinePair)
Sour is taking over our taste buds. A New York Times Style Magazine article explores how sour flavor is “dominating our dining discourse.” The article lists fermenting, kombucha, sourdough, kimchi, drinking vinegar, cocktail shrubs and sour beer as evidence of sour’s ascent in American’s palates. Samin Nosrat, author of the book of cohost of the Netflix series both titled “Salt, Fat, Acid, Heat,” says acid is one of the building blocks of flavor and makes our mouth water. “...your body gets confused — maybe I want more?”
Read more (New York Times Style Magazine)
There are beer wars over fermentation practices between two of the country’s biggest beer brands. MillersCoors is suing Anheuser-Busch over a Bud Light Super Bowl ad that shamed Miller Lite and Coors Light beers for using corn syrup during their brewing process. The controversial ad shows the Bud Light King trying to figure out what to do with a giant corn syrup barrel delivered to their castle by mistake. The Bud Light knights attempt to deliver the barrel to both the Miller Lite and Coors Lite castle, since both beers have corn syrup in their ingredients. MillersCoors says the ad is false advertising. The brand says corn syrup is used in brewing to aid the fermentation process, but their final product does not include corn syrup. MillerCoors also alleges that Anheuser-Busch is playing on consumer’s fears of corn syrup. Focus groups show consumers view no difference between corn syrup and high-fructose corn syrup. Dietitians say corn syrup is not unhealthy in brewing, but high-fructose corn syrup is an additive linked to obesity. The lawsuit also alleges Anheuser-Busch also uses corn syrup as a fermentation aid in some of the brand’s other drinks (Stella Artois Cidre and Bud Ice). MillerCoors is asking Bud Light to stop the ad immediately and pay all of MillerCoors’ legal fees.
Read more (CNBC)