A measure in Congress would help kombucha manufacturers by eliminating excise taxes on their products that contain more than 0.5% alcohol.
The bill, introduced by U.S. Sen. Ron Wyden, D-Oregon, raises the limit on alcohol by volume for kombucha to 1.25% and makes the product exempt from excise taxes imposed on alcoholic beverages like beer.
“I’m working to make sure kombucha is treated fairly because Humm Kombucha in Bend and other Oregon manufacturers have told me these outdated regulations are hamstringing their efforts to create more jobs and lift their industry to even greater heights,” Wyden wrote in an email. “Common sense and science agree that kombucha differs from alcohol, and should be handled accordingly.”
The bill was introduced in late March, and, while it has not had a hearing, it will most likely be included in other measures this session, said Hank Stern, Wyden’s state press secretary.
Kombucha is predicted to become a $5.45 billion industry globally by 2025, according to a 2018 report by Grand View Research Inc., in San Francisco.
In the United States, kombucha was a $1.2 billion industry in 2018, and more than tripled from five years ago, according to recent Beverage Marketing Corp. data.
“The growth rate for kombucha has been strong in recent years, but from a very small base compared to other (beverage) categories,” said Gary Hemphill, Beverage Marketing Corp. managing director of research. “Kombucha has health and wellness attributes that appeal to today’s consumers.”
Kombucha is a fermented product, created when sugar and yeast are combined. When kombucha is not kept cold, it continues to ferment, raising the alcohol level above 0.5% and making it subject to the excise tax, said Amelia Winslow, director of project management at Kombucha Brewers International, a nonprofit trade association.
“Commercial kombucha producers work hard to control their processes to achieve compliance,” Winslow said. “However, if there are gaps in the cold chain during distribution, authentic kombucha, which is a living food, can go slightly above this 0.5%.”
It doesn’t make sense to tax kombucha for exceeding that threshold, Winslow said.
“People buy our product in the produce section and think of it as similar to kefir, yogurt or sauerkraut,” she said.
A person would have to drink five to 10 bottles of kombucha to equal the alcohol content of one beer, Wyden said in a prepared statement.
The bill’s title is “Keeping our Manufacturers from Being Unfairly Taxed while Championing Health Act,” or KOMBUCHA.
The Alcohol and Tobacco Tax and Trade Bureau has jurisdiction over kombucha, but the bill keeps kombucha from being treated like an alcoholic product.
The bill is co-sponsored by Sens. Thom Tillis, R-North Carolina, Maria Cantwell, D-Washington, and Jeff Merkley, D-Oregon.
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