The federal government shutdown stopped breweries, wineries and distilleries around the country and in Central Oregon from shipping new products.
Even with President Donald Trump’s announcement on Friday that the government would reopen for three weeks during negotiations over funding border security, local businesses face a long wait as the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau works through a backlog.
“It won’t be business as usual for some time,” said Bart Watson, chief economist at the Brewers Association based in Colorado.
At Deschutes Brewery, six beer labels and a cider permit are frozen at the Treasury’s tax and trade bureau, which is the approving agency for all alcoholic products. Bendistillery in Tumalo, Maragas Winery in Culver and at least one other brewery will have products delayed.
“There’s about 8 percent of our business for this year at risk because of the government shutdown,” Deschutes Brewery CEO Michael LaLonde said earlier this week. “That’s a big number.
“It’s having a huge impact on the business and potentially the economy of Oregon itself.”
At a time when competition is keen and tariffs are high, the ability to launch new products is seen as critical for brewers. The government shutdown was the longest in U.S. history and forced companies to make decisions to hold onto products or delay manufacturing.
At wineries and distilleries, products are being stored and warehoused because they can’t ship without labels or be approved for shipment.
There are more than 7,000 local and independently owned breweries nationwide feeling the squeeze. Anyone selling across state lines is affected, Watson said.
All alcoholic beverages in bottles or cans sold in stores need permits and label approval from the tax and trade bureau.
The labels provide information about alcohol content, surgeon general’s warnings and ingredients.
Companies that sell their beer, wine or distilled spirits on draft in-state don’t need federal approval.
Bendistillery has been unable to bottle private label products, CEO Alan Dietrich said. Recently a Portland company wanted to hire Bendistillery to bottle miniature-size alcoholic beverages. The deal didn’t happen because the shutdown affected the label approval process.
“It’s definitely affecting our business and our bottom line,” Dietrich said. “The two things we just can’t do right now are new products and our international shipments. We can’t sell our service if companies can’t get the product licensed.”
At Maragas Winery, eight of the nine wines the company makes are waiting for label approval, said Doug Maragas, winemaker and owner.
“We have no label on the wines and they’re in storage,” Maragas said. “We can’t sell the wine until there’s an approved label on it.”
The shutdown is affecting the launch of Deschutes Brewery’s new beers, including Lil’ Squeezy, Hop Henge, Brut IPA, Hand Up IPA, The Ages and Black Mirror, LaLonde said. About 80 percent of the brewery’s business is out of state, LaLonde said. The brewery intended to launch 12 new beers this year, but six of them are now three months behind schedule.
A big part of Deschutes’ annual revenue plan is based on selling new beers, LaLonde said. The end of 2018 was rocky for the 10th largest craft brewer. It laid off 10 percent of its workforce and announced it would delay plans to expand operations to the East Coast.
“It’s important that the government reopens as fast as possible,” LaLonde said. “When you get down to it, the craft beer movement is all about innovation,” LaLonde said. “Our ability to continue to innovate is being impacted by this government shutdown. And all breweries will feel the pain.”
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