Photo Credit: Paul Joseph [CC BY 2.0 (]

Jeff Cozzens started brewing beer with his father, best friend and brothers in a renovated 18th century grist mill back in 2013. As their New Hampshire-based brewery, Schilling Beer Co., gained popularity, Cozzens and his partners expanded to a larger facility in 2018 and set up distribution deals to sell beer across New England.

Out-of-state sales were running smoothly until late last year when the federal government shut down for 35 days. Without federal employees available to approve new beer labels, a requirement for selling beer across state lines, Cozzens’ beers began to stack up in cold storage, angering his accounts who had pre-paid for Schilling beers.

“Not only does it besmirch the overall product quality of small batch brewers,” Cozzens said, “but it starts to create a logistics nightmare when you want to be a law-abiding business and you can’t move that beer that you’ve allocated to your clients out-of-state because you can’t get a label approval.”

Breweries helped to create more than half of all new jobs in U.S. beverage manufacturing between 2006 and 2016. The number of brewery employees more than doubled during that period, rising to just over 58,000. The craft beer industry is thriving, with new breweries in every state and over a quarter of all counties, according to the U.S. Census Bureau. But recent policy decisions by the Trump administration have forced small brewers to slow down in 2019.

Trump’s tariffs on aluminum and steel imports, implemented one year ago, have led to price increases for beer cans and brewing equipment. This has forced some upstart breweries to delay equipment purchases and debt repayments. December’s government shutdown, the longest in U.S. history, has also slowed down small brewers who require frequent brewery permit and new beer label reviews by the Alcohol and Tobacco Tax and Trade Bureau.

“Because they’re still dealing with a backlog,” Cozzens said of the government agency, “the turnaround for new label approvals, even after the shutdown, has been noticeably slower.”

While recent policy decisions have created a new set of obstacles for craft brewers, some of the biggest challenges these businesses face can be tied back to the industry’s rapid growth.

The number of new breweries has continued to rise nationally, but overall beer consumption has declined. The total number of barrels being produced actually dropped in 2017 from the previous year, with early data indicating a further drop in 2018.   

“There are more and more entrants into the marketplace and the same amount of volume by our consumer base,” said Scott Schaier, board member at BREW NH, a beer advocacy organization representing New Hampshire brewers.

As competition has increased, beer flavor variety has become an important differentiator for new entrants into the market. But delayed approvals on new labels and permits following the recent government shutdown have made it harder for some craft breweries to introduce new beers.

Brewer Jamie Klopotoski said she plans to use local strawberries and blueberries from her home state of Massachusetts when she launches her single-barrel brewery, Agapé Brewing Community, later this year.

Klopotoski originally planned to open her brewery this May, but the government shutdown delayed Agapé’s permit approval by two months. “That has kind of set us back for everything else we had planned on our timeline,” she said.

“I’m paying for rent, utilities, equipment, ingredients, everything I need for a brewery, which is not cheap,” she said. “If I don’t open until July 1st, that gives me two more months of bills to pay without having any income from the brewery.”

To cover costs, Klopotoski has rented out some of her brewery’s office space to other businesses and is working two other jobs as a music instructor and store assistant. She has also delayed some key purchases for Agapé’s operations, including a new canning line. 

While many breweries have adjusted their 2019 plans to account for delayed permits and beer label approvals, others have been forced to adapt to higher costs after the Trump Administration’s 10 percent tariff on aluminum contributed to can price hikes of up to 18 percent.

Rob North, founder of Great North Aleworks in Manchester, New Hampshire, said higher aluminum can prices counteracted the positive effects of excise tax relief for small brewers passed by Congress in 2017. “One step forward, two steps back,” he said.

North does not plan to pass on additional costs to customers. “We’re going ahead with our plans for hiring and adding equipment, but it’s just going to take that much longer to pay all that debt down.”

Some brewers have avoided setbacks from aluminum tariffs because they use glass bottles or work with a can distributor like Ball Corporation, which received a tariff exemption last year.

Ross Richards, head brewer at Madison Brewing Company, said the aluminum tariff did not have a significant effect on his Vermont brewery, but the President’s steel tariff caused the price of new fermenters to go up significantly.

“We could increase our production and quality but cannot right now because the price has gone up too far to be in our budget,” Richards said. “It is frustrating to be in limbo and have to save up extra money that could be going to our staff and increasing employment opportunities.”