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Government shutdown causing 'whiplash effect' on breweries and distilleries

The government shutdown has caused the Alcohol and Tobacco Tax and Trade Bureau, or TTB, to close.
Credit: Thinkstock

LOUISVILLE, Ky. — Distilleries and breweries love to craft new twists on their drinks. Both are growing industries in Louisville and Kentucky, but also heavily regulated. When they want to add a new formula or expand products, they have to turn to the federal government. Although, with the government shutdown nearing three weeks, that process has been on hold. 

The government shutdown has caused the Alcohol and Tobacco Tax and Trade Bureau, or TTB, to close. That agency approves all formulas and labels for every product in the liquor industry, including bourbon and beer. All formulas and labels that have been submitted are now awaiting approval, delaying the process.

"The one thing you can't buy is time. Once you lose it, it's gone. It's gone forever,” Joe Heron said. 

Heron is the founder of local brandy distillery Copper & King’s. He said the combined formula and label approval process could take anywhere from two to four months or more to complete. The shutdown is now making that lengthy process, even longer. 

"As it stands before, the TTB were quite overloaded,” Heron said. "Even if the shutdown ended this week, there's going to be this jam of products that haven't been looked at for nearly three weeks."

Heron said he believes the impact will be felt widely across the liquor industry. He said it’ll have a dramatic “whiplash effect” on the selling process. 

“It's the whiplash that nobody is taking into account,” Heron said. "You stop the process and you're slamming into the car and that's what's happening to this approval process."

Although, Heron believes the halt will have a trickle-down effect on all parts of the alcohol business.  

“It means you're unable to sell a product, which means the government is unable to collect taxes on the products sold, we don't make any money, so it all layers in behind,” Heron said. "People are going to be negatively impacted from not being able to sell the product, pay people that work for the distillery, pay the salespeople, the retailers don't have the opportunities to put good products out, and then there's no tax."

Many large brand companies have an “umbrella” during times like the shutdown, so Heron believes they don’t hurt from it as much as smaller breweries and distilleries. He said his distillery is constantly launching new products to stay “relevant” and “exciting,” to keep customers interested in the brand.

"The distillery needs the cash flow from the innovation to tell its story to get people engaged with it because you're not Jack Daniels. You're Copper & King’s,” Heron said. 

Right now, Copper & King’s has one formula and one label submitted to the TTB for approval. One of those include a product Heron has been hoping to launch in April 2019, but now fears may not make it through the approval process in time. 

"It's our fifth anniversary brandy so yeah it's a big one for us,” Heron said. “I'm terrified, I don’t think I'm going to do it. I really don't."

Many people might not notice, but there may be less new products on the shelves or served at local breweries and distilleries this spring and summer, due to the shutdown. 

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