09 Sep 2011 @ 3:31 PM 
 

On Tax Breaks for Invasive Breweries

 

A brief editorial piece on the website “AshVegas” caught my eye this morning, asking Should Asheville officials offer tax breaks for a [New Belgium] brewery?

I find myself roiling with thoughts and light rage, and so I’m doing what I always do in these situations: write.

Let’s set the stage to begin: New Belgium is working on opening an East Coast plant to cut down on shipping costs on their quest for country-wide domination distribution. There are lots of rumors about Asheville being on their short list of cities to open the plant in and, of course, New Belgium has neither confirmed nor denied these reports (to my meager knowledge).

I have really conflicting feelings about New Belgium. On one hand, they are some of the early pioneers in the craft industry and the industry as a whole has a lot to thank them for. They are leaders in brewing science and innovation. They produce high quality beer and are responsible for a whole LOT of craft beer lovers finding their way to industry in general. They are known as an excellent place to work and they have a strong commitment to being environmentally friendly and generally pretty awesome.

They also have some of the most invasive marketing and distribution tactics I’ve seen in craft. When New Belgium pushes into markets (as they recently did in North Carolina) with multi-million dollar marketing campaigns and sponsorship deals, small, local breweries cannot possibly hope to compete with them. Who sponsors the “local beer, local band” night around the corner from me? New Belgium. Who sells beer at the “Best of the Indy” parties? New Belgium. Who has been at every freakin’ local event before almost every local craft brewery? New Belgium. Why? Because in a morally dubious pay-to-play environment, they have the cash to pay – and pay a LOT – where small local breweries do not.

Is New Belgium the only brewery who does this? No. Good heavens, no. But in North Carolina, they were nowhere one day and everywhere the next, forcefully filling the niche I would have expected a lot of local breweries to fill. While most of that is their distribution partner, New Belgium also doesn’t seem to be in any sort of rush to stop those practices, either.

So, now maybe they’ll actually be a local brewery and that makes me a little sad and a little angry. They feel like a threat to our growing and thriving local beer industry, primarily because they have the ability and the apparent lack of scruples to muscle small business out of the way where they need to.

But that’s not what I really want to talk about. What I want to talk about is the ludicrous idea of offering them tax breaks to move in. The fact that it’s New Belgium makes no difference. My position would be the same for any large brewery moving in; however, the fact that it’s New Belgium in this case does feel a little like insult upon injury.

Tax breaks designed to entice big business is the kind of topic that drives me nuts regardless of industry, but in this specific case – and in MY industry – it seems even more ridiculous than usual. The idea, of course, is that Asheville would give tax breaks to New Belgium to entice them to open a brewery in the area, thereby creating jobs (and tax revenue).

Asheville, look around. You already have 9 breweries in you including the largest craft brewery in the state. Are you giving them tax breaks? Can you imagine how many jobs you could create by easing the tax burden on the businesses that are already there, already a part of your community, and already employing your local population? Instead of throwing money at a business coming in from another state (where most of that money will go), giving a large company with deep pockets even deeper pockets and an advantageous position over your local businesses, why not reward your local businesses for the excellent job that they’ve already done for you?

The local breweries in Asheville, along with its craft-beer-loving populace, have already brought country-wide attention and recognition to the area. Asheville has earned the moniker “Beer City USA” not because of its tax breaks, but because of its (stay with me here, this might get complex) beer. Why on earth would you, as a city council, make it easier to bring a small-business-crushing competitor to town? Sure, you might create jobs in the short term, but in the long run how is that one brewery opening going to effect the already existing breweries in your city and the already existing jobs? How many jobs could you create by reducing the tax burden on the businesses that already exist and thrive in your city, helping them open up new distribution channels, and grow enough to be able to stand up to the largest of breweries?

Tax breaks for incoming industries only make sense when you’re enticing an industry that doesn’t already exist into an area that economically depressed. Neither of these conditions seem true in Asheville.

Here’s the thing: If New Belgium is going to open a brewery in North Carolina, they’ll do it whether or not there’s a tax incentive thrown at them. They’re coming, and the best thing that we can possibly do is fortify our local industry so that we can welcome them as an equal level competitor, an enrichment of the local market. Giving them tax breaks that our local businesses do not enjoy is just inviting a fox into the hen house.

Tags Tags: , ,
Categories: brewery, distribution, industry, NC Beer, news, op-ed, taxation
Posted By: erik
Last Edit: 09 Sep 2011 @ 03 44 PM

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Responses to this post » (7 Total)

 
  1. Greg says:

    Great post as always. Raises a good issue that is thought-provoking.

    While the logic you use about rewarding local businesses is sound, the fact is that tax breaks are generally used to lure large businesses in from outside of town. It’s a “silver bullet” strategy that says the loss of revenue is offset by a large chunk of jobs that can be had in one fell swoop.

    Generally, I am against these strategies. The economics I’ve seen show that they do not usually pay off, and mostly result in a larger businesses holding a town hostage for the same tax breaks later, only to leave for a sweeter offer. Now, in New Belgium’s case, the details matter. How many jobs are they bringing to town? Is it the type of business a town like Asheville really needs to “buy” with breaks? Your facts suggest it might not be, but NBB’s reputation as a corporate citizen is good enough that the conversation may be worth having. In this economy, no town can have too many sustainable, growing companies with local presences.

    I suppose what I might suggest, as well, is that those 9 breweries are not without sway themselves. Either NBB is as great as they claim to be and a conversation with NBB management may alleviate some competitive concerns, or they are not, and if that’s the case, a group of local businesses – particularly places as popular as breweries in Asheville – can appeal to the public and civic leaders to have NBB look for a town where they are not disrupting a vibrant local business culture.

  2. erik says:

    I should probably note that I have actually very few facts and a lot of opinion, but I don’t feel like I could possibly be too far off base.

    My feeling about tax breaks for enticement are exactly what you mentioned – that they mostly result in businesses shopping for deals instead of actually attempting to benefit a community.

    In this specific case, I can’t help but feel like it’s actually fairly negative to entice an outside business to come into a community where the same industry is already thriving.

  3. barbecuesteve says:

    I can’t help but feel like it’s actually fairly negative to entice an outside business to come into a community where the same industry is already thriving.

    This. If all the taxes go into a big pool for all the expenses, you are saying to the nine existing breweries “and you’re going to pick up the tax load on New Belgium’s plant, lowering New Belgium’s cost there too, in addition to the lowered shipping cost that they get by making the move.”

    It’s a big giant middle finger aimed at your own small businessmen.

  4. mitchell_pgh says:

    barbecuesteve,

    Playing devil’s advocate… say Asheville doesn’t give NBB the tax breaks. If I were NBB, I would simply go to the next available/logical location where they would give such tax breaks (in this economy, there are many). Say, Knoxville, TN, or Greenville, SC.

    In that scenario, NBB still reduces their shipping costs, they still get the tax breaks, they continue to be on the doorstep of Asheville, and Asheville does not get the bump in jobs/tax revenue.

    Unless there is a clear correlation between NBB’s brewery negatively impacting the existing breweries, it’s a hard sell.

    Also, what if the NBB brewery helped the local breweries by increased exposure?

    • Greg says:

      Mitchell, that’s certainly the argument in favor of it, just like the argument in favor of casinos (you pay for the societal costs of gambling no matter what, so you may as well reap some rewards too). NBB will hit the NC market hard, no matter where their plant is, so why not be the place where they do that?

      One might wonder what would happen if Asheville were to offer the same breaks to ALL breweries, really making an aggressive push to create a major east coast craft beer economy. How much would that really cost the city, I wonder?

    • erik says:

      To me, it’s really less about NBB in specific (though I do tend to harp on them) than it is about giving tax breaks to a giant competitor and NOT giving the same tax breaks to the existing market. That’s insult upon injury.

      They’re coming into the market and coming in hard, no matter what. To me, I think you want to reward you local businesses rather than give up your economic incentives to the big boys because.. hey.. if they go somewhere else it’ll be worse. That’s pretty much blackmail.

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