Policies Must Continue to Differentiate Beer from Liquor
Craig Purser and Jim McGreevy
April 13, 2022
Just after midnight on April 7, 1933, a beer truck emblazoned with a huge sign reading “President Roosevelt, the first real beer is yours!” arrived at the White House with a celebratory drink delivery for President Franklin D. Roosevelt. A few weeks earlier, he had signed legislation allowing beer to be sold legally in the United States after 13 years of Prohibition. Beer was finally back!
We remembered the historic passage of the Cullen-Harrison Act, and that first beer truck’s journey to the White House last week as we celebrated National Beer Day and raised a glass to America’s favorite beverage alcohol.
This landmark legislation allowed for beer and wine with 3.2% alcohol by volume (ABV) – not liquor – to be produced, distributed and sold to consumers. It wasn’t until the ratification of the 21st Amendment seven months later that all forms of alcohol could be produced, distributed and sold in the U.S.
This differentiation between beer and liquor goes back centuries. Because of the widespread societal and health impacts of mass-produced, inexpensive gin, London instituted a gin-tax in the 1750s. And in the United States, the Whiskey Tax of 1791 and the federal excise taxes in the 1860s also recognized a fundamental difference between the beverages.
Even as Prohibition was being implemented, some policymakers who voted in favor assumed that only liquor was being banned, not beer and wine. Today, the Federal Alcohol Administration Act not only treats liquor and beer differently, but it also contains different regulations for brewers and liquor manufacturers. The U.S. tax code has consistently taxed liquor at a higher rate than beer or wine. This is not by accident, and efforts to treat beer and liquor the same are inconsistent with current law and public health and policy principles regarding alcohol.
The regulatory distinctions make sense when you consider the significant differences between beer and liquor. The average ABV of liquor is more than 36%, while the average ABV of beer is less than 5%. Grain alcohol and light beer are indeed very different.
Yet, the liquor industry is attempting to unwind decades of precedent by asking for significant tax breaks in statehouses across the country, even after excise taxes were reduced by Congress and made permanent just two years ago.
With the advent of canned cocktails, the liquor industry is trying to make you believe there is no difference between beer, wine and liquor. But a cocktail served at a bar and a cocktail served in a can are the same product – the packaging should not change the tax rate. Beer has been the preferred drink of moderation throughout our history, and these products remain different to this day. Efforts to remove these critical distinctions threaten essential state and federal tax revenue and one of America’s most vibrant industries.
Today, there are more than 13,300 permitted breweries in the U.S., driving significant trade and economic activity. The U.S. beer industry supports more than two million good-paying local jobs and contributes more than $330 billion to our economy. Brewers and beer distributors directly employ nearly 210,000 Americans, and each job in the brewing industry generates another 30 jobs in other industries including farming, transportation and hospitality, which is much more than the liquor industry.
So, let’s raise a glass to the longstanding traditions that have served us well, and in the words of President Roosevelt, “I think this would be a good time for a beer.”
Craig Purser is the President and CEO of the National Beer Wholesalers Association. Jim McGreevy is the President and CEO of the Beer Institute.