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Today Alcopops, Tomorrow Beer

Join Together, another one of those pesky neo-prohibitionist groups, is still crowing about the California Board of Equalization‘s wrong-headed decision last week to tax FMB’s (flavored malt beverages, a.k.a alcopops) using the same schedule as spirits. This will mean, beginning in mid-2008, makers of FMBS will be required to pay about 25% more in taxes. Neo-Prohibitionists groups who pushed this issue believe that making alcopops more expensive will somehow reduce underage consumption.

As I’ve said before, it’s quite easy to see why the BOE would vote in favor of higher taxes, especially during a statewide budget crunch, but even at that it was a narrow 3-2 decision. Insiders present at the meeting tell me that the BOE hinted at al present that in ruling they way they did, they were giving all concerned parties a chance to take the issue to the legislature where the BOE made clear they believe it should be decided. I’ve heard an unconfirmed story already that the anti-alcohol Marin Institute has talked to the state speaker, fully expecting his support, only to be shut down in no uncertain terms. It’s no surprise we’ve haven’t heard that side of the story from them.

Knowing that makes it much harder to swallow Join Together characterizing the ruling as “groundbreaking.” Their headline, Alcopops are Liquor, Not Beer, Calif. Tax Board Rules, is misleading at best and an out and out lie at worst. The BOE did no such thing. They only ruled that alcopops should be “taxed” as spirits, not that they “are” spirits. A small point, perhaps, but I think illustrative of how willing these groups are to torture the truth and bend it to their will.

Speaking of lying, here another pernicious one:

Michael Scippa, advocacy director for the Marin Institute, told Join Together that up to 90 percent of the alcohol contained in alcopops is derived from distilled spirits, and that California law states that a beverage with any amount of detectable alcohol from such sources is considered a distilled product, not a beer product.

“Up until now, alcopop manufacturers have gotten away with a cynical manipulation of California’s alcoholic beverage laws, mischaracterizing their products – which derive most of their alcoholic content from distilled spirits – as though they were beer to permit them to be sold cheaply and broadly throughout the state,” said Scott Dickey, an attorney with the San Francisco-based Public Law Group, which provided free legal services to the campaign to change the alcopops classification. “The BOE’s decision is a big step forward in holding alcopop manufacturers accountable for this deception.”

That’s not true, they are malt beverages with flavoring added. Distilled spirits are not added and it is not where their “alcoholic content” is derived from. They are most closely related to beer, which is precisely why they they are called flavored malt beverages and why they have been taxed like beer. Their alcohol content is likewise about the same as the average beer. They are fermented like beer and then chemical flavoring compounds are added, which give FMBs their distinctive sweet, fruity essence. Unlike attorney Scott Dickey’s assertions, which in fact are mischaracterizations, FMBs are exactly what their name suggests, no one has deceived anyone.

When Diageo first presented Smirnoff Ice to me in my capacity as the beer buyer for Beverages & more, they were quite candid about their reasons for launching the new product. Since they were prohibited from advertising their brand in certain media and likewise not permitted to sell their brand in certain stores, at least in California, such as convenience stores, gas stations, etc. By making an alcoholic product that was not spirit-based, they could now do so and it would further allow them to promote, market and advertise the core brand of Smirnoff to a wider audience. I think the fantastic success of Smirnoff Ice, and their countless imitators, surprised Diageo as much as it delighted them. But it was created precisely NOT to be a spirit, and if they had used distilled spirits in its manufacture, that would have defeated its original purpose.

Unlike the assertion of Marin Institute executive director Bruce Lee Livingston, whose grasp on reality seems to be slipping, that “[f]or generations, Big Alcohol has evaded proper taxation on these products,” they have been taxed at the exact rate they should have been for what the product actually is. And as I pointed out previously, Smirnoff Ice was introduced in 2001 and a generation is about thirty years. Clearly math is not his strong suit.

Now I’m no fan of FMBs. I don’t like them. I don’t like the way they often subvert young people’s conversion to craft beer. From a purely business point of view, I understand why the parent companies have used them to build their brand awareness while creating new profits at the same time. But I have been hearing a disturbing number of people inside the brewing industry willing to throw them under the bus, short-shortsightedly failing to recognize that the attack on FMBs is not an end unto itself, but merely the first battle in a much longer war. Don’t believe me? Just wait, do nothing, and see what happens.

I have it on good authority that the next salvo from the Marin Institute will be to ask the legislature/BOE to reclassify all malt beverages over 6% abv as distilled spirits! That means any strong beer like Belgian tripels, dubbels, bocks and doppelbocks, barleywines and even some IPAs will all be considered distilled spirits for taxation. I’m sure they’ll be spinning it as an attack on malt liquor, but some of our most cherished styles of beers will fall under such a definition, making them either more expensive or economically unfeasible for the breweries to continue making them.

Distillation, of course, is a specific process for separating, in the case of liquids, different components with different boiling points. There are a few kinds of distilling, such as freeze distilling, pot distilling and reflux distilling, and each of them does roughly the same thing or yields similar results. Liquids distilled are separate and distinct from either beer or wine, of course, as the process deviates wildly at one point and the resulting spirits are generally much, much stronger than either. Types of distilled products include absinthe, bourbon, brandy, calvados, cognac, gin, ouzo, rum, schnapps, scotch, tequila, vodka, whisky (and whiskey) to name just a few of the more common examples. Other non-alcoholic or lethal products which are distilled are gasoline, kerosene and paraffin.

So trying to call strong beers distilled spirits is not really in keeping with reality. Spirits — and wine for that matter — is generally much more alcoholic than beer, so trying to paint even a 10% strong beer with the same broad brush as whisky is akin to trying to fit a square peg in a round hole. It just doesn’t work. But it really has nothing to do with reality — or concepts of fairness — but instead is the drawing of the next battle line in a war whose goal is another national prohibition. We have to be vigilant of these groups and what they’re trying to accomplish. It’s our very complacency and disorganized apathy that they’re counting on to succeed. You can color me as reactionary as you like, but no harm can come from committing ourselves now to defeating the well-organized campaign for another prohibition. If we succeed, life continues as before. But if we lose, we’ll have no beer to cry into. Don’t let that happen.


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