Beer Industry Economic Contribution Study

Introduction

The Brewing Industry Contributes in Many Ways to the National Economy

The brewing industry is a dynamic part of our national economy. U.S. and international brewers, along with their wholesale and retail partners, directly or indirectly employ approximately 2.5 million Americans. These workers earn $60 billion in wages and benefits. Members of the brewing industry also pay $14 billion in direct federal, state and local taxes. Diverse interests in agriculture, transportation, packaging and advertising benefit from the strength of the brewing industry. This report clearly documents the beer industry's substantial contributions to our national economy. Perhaps most important, the report underscores the brewing industry's importance to the financial security of millions of employees and their families.

The Brewing Industry Has Deep Roots in Many Communities

Beyond numerical indicators of brewers' economic activity is another powerful story. Several large brewers have been in business well over a century. The brewing industry has a presence in every U.S. Congressional district. Family names are on most beer packages sold in the United States. Brewers are responsible corporate citizens who care deeply about abuse of their products. Members of the brewing industry have worked individually and collectively on dozens of successful education and awareness programs to reduce drunk driving, underage drinking, and all other forms of alcohol abuse.

The Brewing Industry Cares about the Environment

Brewers rely on pure water and agricultural products to produce fine quality beers, ales and other malt beverages. Long before activism on environmental issues was politically popular, brewers recognized that conscientious environmental stewardship is both an ethical obligation to future generations and good business. Brewers continue to take the lead in responding to other public policy challenges.

Beer Institute, established in 1986, is the national trade association for the brewing industry. The Institute is committed to development of sound public policy and to the values of civic duty and personal responsibility. We are proud to be the voice of an exciting and formidable industry, and we are grateful for your interest. We would like to thank Steve L. Barsby and Associates for this excellent study.

This study estimates the economic contributions made by the malt beverage industry to the U.S. economy in 1997. Funded by Beer Institute, Steve L. Barsby & Associates, Inc. conducted the research together with Beer Institute's Research Department. This work used standard econometric models developed and maintained by the U.S. Department of Commerce and applied to the beer industry by the University of Delaware Economics Department.

We can measure economic contributions in many ways. In this report, we have assessed economic contributions in terms of employment, wages earned, and federal, state and local taxes generated by the production, export, import, distribution and retail sales of malt beverages. Value added by brewers equals their sales (less federal excise taxes). Value added, at the wholesale and retail levels, is the difference between what firms pay for the beer and what they receive when the beer is sold (exclusive of excise taxes). In the absence of direct taxes on beer, the sum of all value added during production and distribution equals a product's retail price.

Industries are linked to each other when one industry buys from another to produce its own products. Each industry in turn makes purchases from a different mix of other industries, and so on. Employees in all industries extend the economic impact when they spend their earnings. Thus, economic activity started by the malt beverage industry generates output (and jobs) in hundreds of other industries, often in states far removed from the original economic activity.

Federal taxes include the industry-specific excise tax, business and personal income taxes, FICA, unemployment insurance, and the Special Occupational Tax paid by brewers, wholesalers and retailers. Brewers pay federal excise taxes.

State and local tax systems vary widely, with brewers, wholesalers and retailers each making substantial payments. Direct wholesale state and local taxes primarily consist of state excise taxes and gross receipt taxes, where applicable. Direct retail taxes include state and local sales taxes, license fees, and applicable gross receipt taxes. Brewers, wholesalers and retailers pay real estate and personal property taxes, business income taxes, and other business levies that vary in each state and municipality. All entities engaged in business activity generated by the beer industry pay similar taxes.

We measure the brewing industry's economic contributions to a state's economy in two ways. "Direct impact" refers to an actual accounting of beer industry activity only: brewing (including breweries, microbreweries, brewpubs, importers and contract brewers), wholesaling and retailing. "Full impact" accounts for the dynamic economic effects of the brewing industry as measured using the U.S. Department of Commerce econometric model. Steve L. Barsby & Associates ran the model seven times.

Brewing industry activity within a state can come from many sources. Among the many products routinely purchased by brewers are grain, hops, paperboard, bottles, cans, kegs, and lift trucks. The total economic contribution represents the industry's contributions to the state or national economy carefully using the U.S. Department of Commerce's economic model. Besides published and unpublished data from Beer Institute and the National Beer Wholesalers Association, information sources for this report include the 1996 Survey of Manufactures; 1997 Statistical Abstract of the United States; 1996 County Business Patterns, and the 1992 Census of Manufacturing, Wholesaling and Retailing. Additional information came from the Bureau of Alcohol, Tobacco and Firearms, the U.S. Departments of Commerce and Labor, and data published by individual states. Beer Institute also obtained current information from the Institute for Brewing Studies, Adams Business Media, and Beverage Marketing Corporation. Steve L. Barsby & Associates estimated portions of this data based upon ongoing industry research.

View the Economic Contribution of the Beer Industry by state.