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Treasury Report targeted at Competition in the Beverage Industry

By: Zach Mattingly, CPA, Manager and Derek Gray, CPA, Director

In early February, the U.S. Treasury Department released a 63-page report titled, Competition in the Markets for Beer, Wine, and Spirits, targeted at changes in the market for beer, wine, and spirits. The recommendations outlined in the report are part of a larger effort aimed to increase competitiveness in the overall market.

The goal is to increase competition, which will lead to consumer savings, which are estimated in the hundreds of millions of dollars per year. Per the Treasury, the recommendations below would make the market fairer for new brewers and cheaper for consumers.

Some of the key recommendations in the report are:

  • A higher level of scrutiny placed on mergers and acquisitions. As an example, the Treasury cites acquisitions made by the two largest brewers, which now control about 65% of the revenue in the beer market.
  • Implementing different excise tax rates for producers to allow new entrants to grow their business.
  • Lowering regulatory hurdles that have prevented new entrants to the alcohol industry in the past.

While many of the regulations are set at the state level, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) are encouraging states to take a deeper look at the regulations that may inhibit small producers from not only entering but also succeeding in the market.

We’ll continue to keep you informed on any major law changes or developments on Treasury’s recommendations. If you have any questions, please reach out to Derek Gray or any member of Blue’s Beverage Group.

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