KZG’s Eric Orlando Provides Testimony on How the Federal Government Shutdown Impacted New Jersey’s Craft Beer Industry
In response to reports concerning how the federal government shutdown impacted craft breweries in New Jersey, the Assembly Oversight, Reform and Federal Relations Committee invited KZG’s Eric Orlando to provide testimony on January 28th.
Eric, who also serves as the Executive Director of the Brewers Guild of New Jersey, highlighted to the Committee three categories where the Guild’s members, which produce over 50% of the craft beer brewed in the state, and employ hundreds of New Jersey residents, had been negatively impacted by the federal government’s shutdown.
Eric first explained how the closure of the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) and furlough of federal workers had a chilling effect on the state’s craft beverage industry, preventing new packaged beers from coming to market, as well as preventing the operation of new facilities and equipment not yet approved by the TTB. Specifically, he described how the shutdown impacted the processing of “Certification of Label Approval” (COLA), which allows beers to be legally sold throughout the country. With Guild members having several pending COLA applications before the TTP, their beer laid in waiting not to be sold until COLAs were received, which as Eric described, effected brewery revenue, job retention and new hiring, future production schedules, ingredient purchases, marketing campaigns, and much more.
Secondly, Eric pointed out that delays in the processing of business loans granted by the federal Small Business Administration (SBA) caused issues for breweries who find these funds essential. He explained how breweries, whether they are in the financing stage to open a new facility, or need funds to undergo expansion, were forced to take on riskier terms of debt, enter the unpredictable crowdfunding market, or put things like their homes or children’s education up as collateral to complete important projects.
Lastly, Eric spoke to the Committee about how the shutdown impacted craft breweries’ customer base. New Jersey breweries operate in towns with differing levels of furloughed federal workers who reside locally and patronize their businesses regularly. While furloughed employees were not receiving paychecks, their discretionary spending decreased, thus shrinking breweries’ sales.
For further coverage of Eric’s testimony, please click here to read NJBIZ’s article, “Beer Pros Talk with Lawmakers about Shutdown’s Effect on Craft Beer.”
