Government Shutdown & the Impact on Craft Beer

January 8, 2019

With the current US Govt Shutdown & no end in sight, an unintended consequence for the beer industry is the impact this will have on the ability of breweries to release new SKUs as many states require your TTB COLA approval before you can get your state brand registration.

For those of you not in the industry, a beer (wine & spirit labels too) label needs to be approved at the Federal level by the TTB (Alcohol & Tobacco Tax & Trade Bureau). This is a requirement many state alcohol control boards require before you can get your state brand registration done. Thus, if the TTB is not approving any COLA (Certificate of Label Approval), then by default you can not get you state brand registration approved in many states.

Being in NY where this applies this is something breweries in NY, but also out of state breweries that sell into NY need to start thinking about. The Shutdown will impact new SKU distribution to many states in the coming months if the Shutdown continues.

Who this effects the most are the breweries who’s business model is to release a new SKU every week or so to satiate the “variety driven /whats new” craft beer market which could now be in jeopardy. Hopefully no one is in the predicament where you brewed a batch of a new SKU and the COLA is now in limbo–what do you do now? Also, when the Shutdown ends, there will be a tremendous backlog of COLAs the TTB will need to wade thru so one could still feel the effects several weeks after the TTB is running again.

What to do? One can bring back an old favorite SKU of course. For some, doing a collab with a brewery in a state where TTB COLAs are not required, but of course your distribution to other states will still be effected so not a total solution. Another option is to look at exports as TTB COLAs are not needed.

How does this impact the consumer? If the Shutdown continues you will see a slowdown of new SKUs coming out from the usual breweries you buy from unless they happen to be in a state where TTB COLAs are not needed for State brand registrations and most of their sale are in that state.

Thus regardless of your stance on the Shutdown, it will effect breweries ability to release new SKUs in the near term.

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