August 22. 2013 9:33PM

What's brewing in the Granite State

NH brew business looks for help with regulations

Union Leader Correspondent

PORTSMOUTH — Sen. Kelly Ayotte, R-NH, sampled some local brews on Thursday while learning how she can help support New Hampshire’s craft brewing industry at the federal level.

Ayotte toured Smuttynose Brewery on Heritage Avenue with owners Peter Eggleston and Joanne Francis to learn more about operations, local marketing efforts, and federal regulatory and tax challenges that Smuttynose and other craft brewers would like to see changed.

Eggleston said Ayotte beat him to the issues he planned to talk about, asking about Tax and Trade Bureau hold-ups in label and flavor approval, as well as a bill being supported by the national Brewers’ Association that would reduce the federal excise tax for small breweries while introducing two intermediate rates for medium breweries. Right now, the tax is $7 per barrel up to 60,000 barrels at which point the tax jumps to $18 per barrel.

Ayotte said she heard similar concerns from representatives of Red Hook Brewery on Wednesday.

Eggelston said the craft brewing industry is dramatically different today with more than 3,000 craft brewers nationwide. This increase in breweries coupled with staffing cuts at TTB have resulted in a backlog.

Manger of Brewery Operations David Yarrington said every time they use an ingredient in addition to the four basic ingredients for beer, they need approval from the TTB and it can now take upwards of 45 days to get that approval. Yarrington said it used to be that he could brew a batch and receive the approval before it was ready to package, now he has beer sitting in tanks waiting for approval that they cannot sell without it.

Eggleston said delays are also occurring for label approval, and said vague regulations can also make receiving approval challenging.

He said they can submit a label one year for a product and gain approval, and then go back the next year with a minor change to have it rejected for something that was previously approved.

Ayotte said the lack of clarity issue is something her office can pursue trying to fix and said she would also follow-up on the federal excise tax issue, but fell short of saying she would co-sponsor the Senate version of the bill. Sen. Jeanne Shaheen, D-NH, has signed on to be a co-sponsor and New Hampshire’s representatives, Reps. Carol Shea-Porter and Annie Kuster are co-sponsoring the House version of the bill.

Eggleston said any money saved on the excise tax is money he would put back into the business.

Eggleston said he was impressed that Ayotte had done her homework and seemed to understand the main points he hoped to discuss.

He also spoke with her about how things are going locally for the company, which continues to grow and plans to move operations to Hampton next year.

Eggleston said despite growth for the business, they are still challenged in getting New Hampshire residents to drink New Hampshire beer. In neighboring states, as much as 10 percent of beer brewed in state is purchased in state. In New Hampshire, only about 1.3 percent of New Hampshire brewed beer is sold in state.

He said he has not yet figured out why this is, but if New Hampshire had the same market share as Massachusetts and Vermont see, they would sell four times as much beer.

Overall, sales in New Hampshire for Smuttynose are up 18 percent this year, he said.