Melkon Khosrovian

Thanks all for sharing your thoughts (and passion). To clear up the air a bit, this proposing is not at all about dividing our young group or excluding anyone (except maybe Diageo). As Ralph has pointed out, many of us spent the better part of two years trying to define our membership and built a consensus around size as the most fair and objective way to describe craft/artisan/little-guy spiritsmakers -- which includes everyone from farm-to-bottle distillers to those who buy neutral spirits and add value to it by infusing, blending, redistilling, etc. In general, those who have DSPs and sell less than 65,000 PGs annually would qualify as "certified micro." This consensus has enabled us to begin lobbying for a lower FET. (More on that front soon.) And it could enable us to promote our category. With that in mind, branding our handiwork with a "certified micro spirit" sticker is all about promoting and protecting our mutual interests. The danger of NOT undertaking this effort (or something similar) is that our movement and our businesses grow more slowly, that we open ourselves completely to encroachment by big producers and that we fail to capture the interest and imagination of our audiences fully. "Certified Micro" addresses all of these issues simply and cost effectively. To those who see great value in local, organic, small-batch, farm-to-bottle, mash-to-bottle, wort-to-bottle, NO GNS, et al -- I hear you. (We're in the same camp on many of these fronts and about to adopt mash-to-bottle processing, too.) But I see greater value for us all to champion one micro brand strategy that unifies us all and focus on touting the rest of our characteristics on our labels, neck and hang tags as parts of our story. Melkon

Robert, Are you working with Bill/ADI on your initiative or creating a new certifying entity? Melkon

Thanks all for your quick responses. Here are a few comments to your points: - Why "micro" vs craft or artisan? That's what many of us agreed to as an objective, definable term for our community of spiritsmakers as part of our ongoing discussion about establishing a small producers' (e.g., micro) federal excise tax (FET) tier. We're still sticking with the term in that discussion because it's an easily definable and verifiable term and I thought it would make sense to stay consistent across all public communications -- whether for policy or marketing -- about us. - Why 60,000 PGs vs 20,000 or 30,000 (or 5,000)? Again, this figure dates back to our discussion about creating a lower FET tier. At the time the majority of participants in that discussion felt that 60,000 PGs (or was it 65,000?) would fairly well define small producers (e.g., micro) from startup to fairly well established status and let us build our businesses to critical mass more quickly with some combination of better pricing or better sales & marketing than we could otherwise afford. The 60,000 PG figure is similar in economic value to the volume that micro brewers and small wineries can reach before losing their beneficial FET treatment. For these reasons -- and because it's in all of our interest to establish a lower FET for us asap vs re-hash this discussion -- I'd suggest we put this aspect of our discussion to rest. Everyone who runs a smaller operation that is intended to stay small can help establish even smaller designations for their spirits size -- e.g., certified nano or pico spirit -- once we've established the micro category. - Why not wait for the TTB to establish a micro spirits category? The TTB has not established a micro brewer category and it's not likely to help create an official micro spirits category for labeling purposes. This is more the purview of marketing and a trade organization like ADI. - Will ADI charge for these stickers or the right to use the designation on our labels? My feeling is that any qualifying spirits maker who wants to use the designation of "certified micro spirit" should pay something reasonable for it. The monies will provide ADI with enough resources to ensure that: 1. the designation is clear and consistent (by defining and monitoring its use), 2. the designation is valid and credible (by certifying and monitoring its users) and 3. the designation is valuable to our audiences (by promoting it in cost-effective ways). Please continue to add your comments...

With the recent Moon Mountain discussion here and the growing interest by large producers to create brands that look & feel like they're crafted by small producers, I recently spoke with Bill Owens about simple, cost-effective ways we could help consumers and the trade identify the genuine article. The idea I mentioned involved branding bottles of spirits produced by qualified micro spirits makers -- e.g., those who sell less than 60,000 PGs per year -- with a sticker that would clearly identify them as "certified micro spirits." This approach, where ADI would issue certification of each producer's "micro" status, would offer us a number of advantages: - easy marketability to consumers and trade buyers for our brands and the category and - a more defensible barrier to entry against big producers than trying to claim terms like "craft", "artisan" or "small batch" for micro spirits producers' exclusive use (though that would be great, too). There would be some costs, as well, for instance: - obtaining certification as a micro spirits producer from ADI - buying and placing the stickers on our bottles - changing our label art (for simpler production down the road) I invite all to comment on this approach to promoting and protecting our turf (as well as my attempt to create the stick art). The next ADI meeting is a few months away and, if we get consensus that this is a worthwhile idea, I'd like us to have a more formal discussion there about implementing it. Melkon

Chuck, You can easily see where any bottle of any spirit is produced by checking label approvals on TTB's public COLA registry: https://www.ttbonline.gov/colasonline/publicSearchColasBasic.do Follow the above link, type in "moon mountain" in the name section and you'll see that it's produced at: LAWRENCEBURG DISTILLERS INDIANA, LLC 7 RIDGE AVE LAWRENCEBURG IN 47025 MOON MOUNTAIN DISTILLING CO (Used on label) Don't know why they'd make it there, other than that the plant might have organic certification and theirs doesn't. As for use of the term "craft," I'm far from encouraging ADI to try to claim the word for its members, many of whom aren't craft producers. But we could own a very important aspect of what anchors terms like craft, artisan, etc -- and that is size. We can all attempt to create market awareness of "micro" as a category of spirits. There's no vagueness here -- it's proof gallons. Some of these proof gallons may be great, some not so great -- but it'll all be coming from a "little guy," which carries some weight among the target audience that Diageo is going after with Moon Mountain. Melkon

Let's try to nail this down as an agenda item in Portland, with a plan to launch a marketing campaign at point-of-sale and through the media, if we can achieve consensus. I'll reach out to Bill Owens to see if we can get this into the mix for the conference. Melkon

This is very crafty stuff, but I'm a little surprised by everyone's strong reaction. We've seen this move before from the industrial producers -- masquerading their wares as "small batch," "boutique," "organic," etc. -- without much to show for...yet. Just look at where Moon Mountain is "crafted"...at a tiny little operation that makes a 28 million proof gallons a year! (If we want to burst Moon Mountain's "Crafted. Not Made." balloon, we should carry a printout of this picture. What are the chances that anything is "crafted" in this place.) What can we do to create more awareness and appreciation for real hand-crafted spirits? - First and most importantly, make killer spirits that can stand on their own or, better yet, win the "Pepsi challenge" against the stuff that comes out of these mega plants. Without this ability to deliver better quality to the glass, it's going to be a long haul for the movement. Some talented artisan producers will naturally rise to the occasion -- as many have -- but the movement will not get the same recognition as the craft brewers (to Joe's point) if customers can't appreciate how much better our handiwork tastes, not just sounds. - Second, have ADI officially endorse the definition of Micro Spirits Producer that Ralph and others on this forum have drafted and issue a logo to all producers who meet the criteria to use on their packaging. This would act as an objective indicator of brands that actually are craft/artisan/micro. - Third, have ADI petition DISCUS and the TTB to help keep the category pure, so that anyone who claims to make artisan products must meet ADI's definition and apply for the logo for their package and marketing material. Melkon

Looking for a new or used pot still that's ~500L and comes with or without a side-mounted column. If you've got additional distillation equipment, even better. Contact me directly at melkon@greenbar.biz with details.

We're located in Los Angeles.

Anyone need 55-gallon stainless steel drums in excellent condition? Have 15 open-head and 10 tight-head drums. We used them for small batches, R&D, mixing etc. $500 each. Shipping is extra. Melkon

Wes -- you need an SCC code (14 digits) for cases. You can create these for individual product cases or mixed cases, but that's how distributors and retailers track items in and out of their warehouses. You can generate checksum digits at this site (http://www.upccode.net/upc_check.html) and actual UPC and SCC barcodes at this site (http://barcode.tec-it.com/barcode-generator.aspx). Control state codes are different and vary a little from state to state. Best to check with the ABCs of each one for their parameters. Cheers, Melkon

We're exiting the conventional spirits business to focus on organics only, so we'd like to find a home for 2,200 gallons of infused vodka in 7 exotic flavors. All vodka is 70-proof and made from a base of wheat and potato spirits. What could you do with these infused spirits? - Re-distill in a column to recover alcohol, - Re-distill + further rectify for a seasonal products or - Simply package for a great-value finished goods. All material is ready to ship in 55 gal drums, with a minimum order quantity of one drum. We're serious about selling -- figure out what it's worth to you and make us an offer. Samples available for consideration. Here's what we have on hand: - Grapefruit Honey: 725 gallons available. Rated 5 stars by Spirits Journal. - Pear Lavender: 375 gallons available. Light and floral. Best option for alcohol recovery. - Three Tea: 315 gallons available. Complex. Rectify to produce a fashionable 'sweet tea' flavored vodka. - Black Truffle: 260 gallons available. Pungent and rich. Not suitable for alcohol recovery. - Chocolate Orange: 250 gallons available. Ideal candidate for seasonal product. - Celery Peppercorn: 180 gallons available. Green and spicy. - Candied Ginger: 150 gallons available. Fruity and sweet ginger spice. Great blending component, easily sweetened to a liqueur or bar syrup. Drop me an email or call at 213.949.3569. Cheers, Melkon Khosrovian

Needs new hoses...which can hold the vacuum better. The motor works like a champ.

We're upgrading from our beloved EnolMaster 4-head vacuum filler. Needs a little TLC but a work horse. $1,000. Shipping is extra.

Hi. We've outgrown a few production items. Please click on the links below for a visual. Six 1,100 liter Variable Capacity Stainless Steel Tanks - $2,200 each Six 55-gallon Open Head Stainless Steel drums - $475 each Four 55-gallon Tight Head Stainless Steel drums - $450 each Three 100-liter Stainless Steel Fustinox - $125 each Ten Drum Dolly/Casters - $20 each Shipping is not included.

This might be a tough sell. Today, nearly 30 years after beer received its reduced excise rate, craft beer (most of which pays the higher rate) accounts for <4% of the market. Micro-distillers accounts for <2%. BUT, our manufacturing is U.S. based vs. imports, which creates substantial direct benefits to the U.S. economy through employment, capital purchases, leases, etc. and even more indirect benefits up and down the value chain with goods and service suppliers to manufacturers.

Thanks for your help, Ryan. Target House committee is Ways & Means. Here are some numbers that Bill Owens shared with me this morning that could get the analysis started: - Small DSPs in U.S.: 151 operating + 25 in licensing phase = ~175 small producers (95% <10 years old) - Average capital invested in facility and startup operations: $500,000 - Average number of employees: 3 - Average facility size: 3,000 sq ft - Total sales for small producers: <500,000 9L cs - Total sales for top 5 producers: >300,000 9L cs Let me know what else you may need to produce a coherent picture of the situation. Don't need anything extra fancy, but enough to demonstrate that the handcrafted segment has: - Added to excise revenue by helping expand the marketplace with new offerings - Created new manufacturing businesses with high multipliers - The potential to expand the spirits category even further with hundreds of U.S. based businesses that could contribute 1-2% of total sales and generate hundreds of millions in economic value to the country through manufacturing jobs and tens of millions in new excise revenue to the federal government

Guys -- great feedback and agree 100%. Can anyone help with analysis that lays this out?

Great points! Without a reduced tier, many of the small producers won't survive this economic downturn and new producers will not enter to help grow the handcrafted segment. In other words, current additional excise tax income from new small producers will diminish and not much new income will materialize because segment growth will stall. Who can help pull together this analysis, preferably under the ADI moniker? Without this analysis, it'll be very tempting for members of Congress to see it as a black & white issue of a reduction in current excise income. Even with this analysis, they still may see it as a reduction but we need to give them some context to see things differently.

Had a very good meeting Thurs. with Frank Coleman and three of his associates from DISCUS, as well as key decision makers from Anchor Steam, St. George/Hangar One, Charbay and Essential Spirits. Along with some state issues that DISCUS wants to discuss with makers in various states, we talked fairly extensively about our reduced tax proposal. Turned out that DISCUS reps also had taxes on their mind -- the proposed increases that various House members are working on now. They would like our help to block any increases. We told them that we would be willing to help but would like their help in turn to get a reduced tier for small producers. They seemed very open to this arrangement -- as every $1 increase would cost their members $260 mil -- and asked us for a formal proposal. The most aggressive form of that proposal was the one we have all contributed to creating on this forum. I've attached a copy of what I shared with DISCUS members at the meeting. The California group is going to meet again on Thurs. to finalize a proposal to send to DISCUS. Fritz Maytag, who went through this process on the beer side and spoke eloquently about the need for reduced rates particularly for the newer operations, will be critical for helping us think through a tenable proposal and championing it with DISCUS. The one sticky issue that we all need to keep in mind is where we would propose Congress find the money to pay for our tax cut. Apparently, this type of fiscal conservatism will become a big issue -- pay-as-you-cut -- by the time our proposal reaches members' desks. Thankfully, we're only looking for a relatively small amount of money -- $7 mil or $0.03 of the current excise tax rate -- to create a 20% tier. Next Steps: - Download and carefully read the attached proposal -- this is the strong base for small producers - Get to know your House of Representatives members -- especially if they're on the Ways & Means Committee - Find out who in your circle knows anyone in the U.S. Congress -- reps, aides, secretaries, anyone (aides are key -- like with distributors, they do all the actual work) - Send a small check ($50-250) to your House of Representatives members -- especially if they're on the Ways & Means Committee Will update the forum with new developments as they take place. Please add your own updates re above Next Steps as you take them. DISCUS may help us get this tax reduction passed, but it's 95% up to us! Melkon Khosrovian spiritsmaker melkon@modernspiritsgroup.com 213.949.3569 Modern Spirits LLC Reduced_FET.pdf

Dear fellow spirits makers, I have some very exciting news to share with you. Our efforts to create a lower federal excise tier are drawing some high-level attention from lobbyists, big craft spirits producers (Titos, Hangar One and Anchor), small beer makers and now DISCUS. The upshot of conversations I've had over the last few weeks with principals or representatives of all of the above is that we'll have a difficult time passing our proposed legislation on our own. While much of this could turn out to be little more than betting on the status quo (generally good odds) or not so subtle attempts to "manage" our efforts, I think that there's a grain of truth to the notion that we'll need some help to get meaningful legislation passed next year. Which leads me to a meeting that will take place this Thurs. at Anchor Steam between the heads of a handful of influential small spirits producers (Anchor, Hangar One, Charbay), the head of DISCUS, me and possibly a very high level member of the House of Representatives. This meeting could accelerate our efforts and give it political muscle...for a price which may be worth paying. The topic of our meeting is how we and DISCUS can work together to achieve our respective goals. As many of you may already know, there's movement afoot in Congress to raise federal excise taxes across all categories of liquor (beer, wine and spirits) and tobacco by some $5 bil. Depending on how the horsetrading ends, it could mean as much as a 20% hike in federal excise taxes for spirits -- from $13.50 to $16.20 per proof gallon or another $0.54 per bottle at FOB. That could add $1+ to retail cost without any additional raw material cost increases we may want to pass on next year. Not a pretty sight, especially as consumers increasingly look for bargains -- something few of us make! DISCUS is working all angles to build support against this tax hike. Given the shape of the federal budget come 2009, this may be tough to achieve. But they'd like our support in their effort. In return, I'll push for their help to create a lower federal tax tier for small spirits producers. I think meeting and trying to work out an understanding that would protect our mutual and individual interests is worthwhile for the following reasons: - We'll find out how much support or opposition we can count on from DISCUS - We'll find out if we have any substantive issues in common (guessing there are lots -- e.g., easing of Sunday purchase laws, off-site tastings, direct sales to trade and possibly consumers, tasting rooms, etc) - Then, once we've established common interests, we'll find out what types of deals are possible - Finally, DISCUS could help us tell our story to members of Congress quickly, which could mean getting a bill passed next year Regardless of the outcome of this meeting, we'll need to march forward with our grassroots efforts to pass our proposed legislation. This is important on every level I can think of! Over the next week, I'll pull together the various threads of our proposal and run a new financial analysis, put it into a pdf document and share it on the board for each of us to send to our federal reps. Should have this up soon. In the mean time, feel free to email or call me with input for Thurs. meeting. Cheers, Melkon Khosrovian co-founder + spiritsmaker Modern Spirits LLC melkon@modernspiritsgroup.com 213.949.3569 m

I'm posting the note below on behalf of Tito's...it's from a Sept. 10 email conversation I had with Bert. "I think you should use the beer law and change barrels to cases and beer to spirits. It would then be the first 60,000 cases for companies who make less than 2,000,000 cases. I could get behind that. Also, the whole reason to do this would be for jobs in America. Inbev has bought budweiser. Diagio and Pernot Ricard are British and French and they are the largest spirit producers in the world. We are losing jobs and there is no greater way to add value to American agricultural products than to turn them into distilled spirits. Please feel free to post my comments in the forum." Bert "Tito" Beverage

Just made it to 62 producers who've signed on through this board or I've spoken with by phone (in parentheses). Current Producers 1. Modern Spirits LLC 168 W Pomona Ave, Monrovia, CA 2. Colorado Gold LLC, Cedaredge, CO 3. Tuthilltown Spirits, Gardiner, NY 4. Dry Fly Distilling, Spokane, WA 5. Ellensburg Distillery LLC Ellensburg, WA 6. Dynamic Alambic Artisan Distillers LLC Mattawa, WA 7. Great Lakes Distillery LLC, Milwaukee, WI 8. Drum Circle Distilling, Sarasota, FL 9. Grand Traverse Distillery, Traverse City, MI 10. Mystic Mountain Distillery, Larkspur, CO 11. Pacific Distillery LLC, Woodinville, WA 12. Delaware Phoenix Distillery, Walton, NY 13. Heartland Distillers, Fishers, IN 14. Fat Dog Spirits, Tampa, FL 15. Harvest Spirits LLC, Valatie, NY 16. Cascade Peak Spirits, Ashland, OR 17. New Holland Brewing Co. and Artisan Spirits, Holland, MI 18. Newport Distilling Company, Newport, RI 19. 45th Parallel Spirits LLC. New Richmond, WI 20. Gnostalgic Spirits, Ltd., Portland, OR 21. Blackwater Distilling Inc., Annapolis, MD 22. Cold Smoke Distillery Inc., Bozeman, MT 23. The Solas Distillery, Omaha, NE 24. Parched Group LLC, Richmond, VA 25. AEppelTreow Winery, Burlington, WI 26. Leopold Bros. Small Batch Distillers, Denver, CO 27. The American Distilling Institute 28. The Brewers of Indiana Guild 29. Sweetgrass Farm Winery & Distillery, Union, ME 30. Downslope Distilling Inc., Littleton, CO 31. North Shore Distillery LLC, Lake Bluff, IL 32. Finger Lakes Distilling LLC, Burdett, NY 33. St. George Spirits Inc., Alameda, CA (34. Philadelphia Distilling, Philadenlphia, PA) (35. Distillery 209, San Francisco, CA) (36. Peak Spirits, Hotchkiss, CO) (37. Maine Distilleries, Freeport, ME) (38. Clear Creek Distillery, Portland, OR) 39. Ryan & Wood Inc, Gloucester, MA 40. Artisan Spirits, Portland, OR 41. Bendistillery, Bend, OR 42. Brandy Peak Distillery, Brookings, Oregon 43. Dolmen Distillery, McMinnville, Oregon 44. Highball Distillery, Portland, OR 45. House Spirits, Portland, Oregon 46. Indio Spirits, Tigard, Oregon 47. Integrity Spirits, Portland, Oregon 48. Northwest Distillery Inc, Warren, OR 49. McMenamins Edgefield Distillery, Troutdale, OR 50. New Deal Distillery, Portland, OR 51. Ransom Distillery, McMinnville, OR 52. Rogue Spirits, Portland, Oregon 53. Sub Rosa Spirits, Portland, Oregon 54. Integrity Spirits, Portland, OR 55. Wolf Bros Distillers, Rochester, NY (56. Titos Handmade Vodka, Austin, TX) 57. Essential Spirits Alambic Distilleries, Mountain View, CA Producers In Licensing Process 1. Sherman in KY 2. Paul in CA 3. Penobscot Bay Distillery, Winterport, ME 4. Las Vegas Distillery LLC, Las Vegas, NV 5. River Town Distillers LLC, Snohomish, WA

Just made it to 60 producers who've signed on through this board or I've spoken with by phone (in parentheses). Current Producers 1. Modern Spirits LLC 168 W Pomona Ave, Monrovia, CA 2. Colorado Gold LLC, Cedaredge, CO 3. Tuthilltown Spirits, Gardiner, NY 4. Dry Fly Distilling, Spokane, WA 5. Ellensburg Distillery LLC Ellensburg, WA 6. Dynamic Alambic Artisan Distillers LLC Mattawa, WA 7. Great Lakes Distillery LLC, Milwaukee, WI 8. Drum Circle Distilling, Sarasota, FL 9. Grand Traverse Distillery, Traverse City, MI 10. Mystic Mountain Distillery, Larkspur, CO 11. Pacific Distillery LLC, Woodinville, WA 12. Delaware Phoenix Distillery, Walton, NY 13. Heartland Distillers, Fishers, IN 14. Fat Dog Spirits, Tampa, FL 15. Harvest Spirits LLC, Valatie, NY 16. Cascade Peak Spirits, Ashland, OR 17. New Holland Brewing Co. and Artisan Spirits, Holland, MI 18. Newport Distilling Company, Newport, RI 19. 45th Parallel Spirits LLC. New Richmond, WI 20. Gnostalgic Spirits, Ltd., Portland, OR 21. Blackwater Distilling Inc., Annapolis, MD 22. Cold Smoke Distillery Inc., Bozeman, MT 23. The Solas Distillery, Omaha, NE 24. Parched Group LLC, Richmond, VA 25. AEppelTreow Winery, Burlington, WI 26. Leopold Bros. Small Batch Distillers, Denver, CO 27. The American Distilling Institute 28. The Brewers of Indiana Guild 29. Sweetgrass Farm Winery & Distillery, Union, ME 30. Downslope Distilling Inc., Littleton, CO 31. North Shore Distillery LLC, Lake Bluff, IL 32. Finger Lakes Distilling LLC, Burdett, NY 33. St. George Spirits Inc., Alameda, CA (34. Philadelphia Distilling, Philadenlphia, PA) (35. Distillery 209, San Francisco, CA) (36. Peak Spirits, Hotchkiss, CO) (37. Maine Distilleries, Freeport, ME) (38. Clear Creek Distillery, Portland, OR) 39. Ryan & Wood Inc, Gloucester, MA 40. Artisan Spirits, Portland, OR 41. Bendistillery, Bend, OR 42. Brandy Peak Distillery, Brookings, Oregon 43. Dolmen Distillery, McMinnville, Oregon 44. Highball Distillery, Portland, OR 45. House Spirits, Portland, Oregon 46. Indio Spirits, Tigard, Oregon 47. Integrity Spirits, Portland, Oregon 48. Northwest Distillery Inc, Warren, OR 49. McMenamins Edgefield Distillery, Troutdale, OR 50. New Deal Distillery, Portland, OR 51. Ransom Distillery, McMinnville, OR 52. Rogue Spirits, Portland, Oregon 53. Sub Rosa Spirits, Portland, Oregon 54. Integrity Spirits, Portland, OR 55. Wolf Bros Distillers, Rochester, NY Producers In Licensing Process 1. Sherman in KY 2. Paul in CA 3. Penobscot Bay Distillery, Winterport, ME 4. Las Vegas Distillery LLC, Las Vegas, NV 5. River Town Distillers LLC, Snohomish, WA

As we get ready to take our proposal to elected officials, thought you'd like to see what proposals to increase alcohol excise taxes look like. This one was circulated in early 2007 by the Center for Science in the Public Interest. (Here's a link to the pdf.) ATTENTION: TAX AND HEALTH LAs January 23, 2007 RAISE ALCOHOLIC-BEVERAGE TAXES, DON’T LOWER THEM IN THE 110TH CONGRESS Dear Member of Congress: As organizations concerned with public health and safety, alcohol and other drug abuse prevention and treatment, fiscal responsibility, and the well being of young people and families, we strongly urge the 110th Congress to seriously consider a long over-due alcohol tax increase to achieve budgetary goals and help pay for the prevention and treatment of alcohol-related problems. We correspondingly urge you to refrain from co-sponsoring alcoholic-beverage industry-backed legislation to reduce alcohol excise taxes, and to reject alcoholic-beverage industry appeals to include such cuts in any new tax proposals under consideration in the 110th Congress. Congress has many reasons to INCREASE (not lower) federal excise taxes on alcoholic beverages: An increase in federal alcohol excise taxes is long overdue. In the last 50 years, effective tax rates on alcoholic beverages have fallen dramatically with inflation. As prices rise, the relative importance of the taxes shrinks, unless Congress raises them. For example, had the beer tax merely kept up with inflation, it would be more than three times today’s rate of $18 per barrel; the liquor tax would be more than five times its current rate of $13.50 per proof gallon. In fact, beer and wine taxes have been raised only once in the past 55 years, liquor taxes only twice. As a result, tax revenues that accounted for 12 percent of the sales of alcohol in 1980 now amount to only 7 percent of total sales. The result is a de facto subsidy on drinking and extra profits for alcohol manufacturers at the expense of taxpayers. An increase in federal alcohol excise taxes is justified. Current alcohol-tax revenues (some $8.9 billion at federal level) don’t come close to offsetting the staggering public health and safety costs of alcohol consumption – estimated at $184 billion per year, including $62 billion per year for the costs of underage drinking alone. Recognizing that cheap alcohol puts it in easier reach of kids, the National Academy of Sciences recommended alcohol tax increases, especially on beer. That call was echoed last spring in a petition to Congress from 60 of America's leading economists, notably including 4 Nobel Prize winners, who agreed that an alcohol tax increase is overdue and well-justified. An increase in federal alcohol excise taxes is popular, compared with cutting critical social programs. Most Americans would barely notice a tax change, because they either don’t drink (35%) or drink sparingly (55%). A tax increase would affect primarily the minority (20%) of drinkers who consume some 85% of all the alcohol. In a national survey, nearly 82 percent of adults favored an increase of five cents per drink in the tax on beer, wine, or liquor to pay for programs to prevent minors from drinking and to increase the availability of alcohol treatment programs. In surveys on alcohol excise taxes conducted in several states, results have consistently shown that between 76 and 80 percent of respondents believe that increasing alcohol taxes is “good” or “acceptable,” or that they support an increase in alcohol excise taxes. An increase in federal alcohol excise taxes is fair. A tax increase on alcoholic beverages will not unduly burden low-income people, who drink at lower rates than those with higher incomes. For example, according to Adams Beer Report, 33.7% of consumers with incomes greater than $75,000 drink regular beer, compared to an average of only 25.7% of consumers with incomes less than $40,000. Only 22% of consumers with incomes less than $20,000 drink regular beer. Beer drinkers are over-represented among those in higher income categories. Sixty percent of beer consumers have incomes above $40,000, compared to only 53.4% of the entire adult population at that income level. Even with the last increase in 1991 (under the Revenue Reconciliation Act of 1990), the relative price of beer has fallen by more than 25 percent relative to the Consumer Price Index, and the price of liquor has fallen almost 50 percent over the past five decades. Meanwhile, alcohol sales have flourished. Beer sales have grown steadily over the past 15 years, from $44.6 billion in 1989 to nearly $82.4 billion in 2004. In the same period, spirits sales soared more than $20 billion and wine sales grew by $11.4 billion. A 2005 report of the Congressional Budget Office estimated that modestly increasing and reforming alcohol taxes could generate almost $27 billion in new revenue over five years. Please support a seriously overdue and well-justified increase in the federal excise tax on alcoholic beverages, and resist alcohol-industry appeals to lower them. Such an increase is historically over-due, justified, popular, fair – and the right thing to do. If we can be of any assistance to you on this important issue, please contact Kimberly Miller of the Center for Science in the Public Interest at (202) 777-8338. Thank you for your consideration. Sincerely, Alcohol & Addictions Resource Center, NCADD (South Bend, IN) Alcohol/Drug Council of North Carolina Alpha Project Casa Raphael (Vista, CA) American College Health Association American College of Preventative Medicine American Public Health Association Center Point, Inc. (San Rafael, CA) Center for Science in the Public Interest Chautauqua Alcoholism & Substance Abuse Council, Inc. (Jamestown, NY) Consumer Federation of America Council on Addictions of New York State, NCADD (Cooperstown, NY) Council on Alcoholism and Drug Abuse of Sullivan County, Inc. (Monticello, NY) C.U.R.A. Incorporated (Fremont, CA) DePaul Addiction Services, NCADD Affiliate (Rochester, NY) Employee & Family Resources – NCADD (Des Moines, IA) Erie County Drug and Alcohol Coalition (Pennsylvania) Ethics & Religious Liberty Commission, Southern Baptist Convention Faces & Voices of Recovery Focus on Community, NCADD (Racine, WI) Gateway Foundation, Corrections Management Office (Houston, TX) General Board of Church and Society of the United Methodist Church Help/Project Samaritan (Bronx, NY) Holding Associates (New York, NY) INSPIREHealth.org (Scottsdale, AZ) Legal Action Center Maine Association of Substance Abuse Programs (Augusta, Maine) Marin Institute Mountain Council on Alcohol and Drug Dependence (Asheville, NC) NAADAC, The Association for Addiction Professionals National Association of Pediatric Nurse Practitioners (NAPNAP) National Council on Alcoholism and Drug Dependence – Juneau, AK National Council on Alcoholism and Drug Dependence – Phoenix, AZ National Council on Alcoholism and Drug Dependence – San Diego, CA National Council on Alcoholism and Drug Dependence, National Office National Council on Alcoholism and Drug Dependence - Robbinsville, NJ New York Therapeutic Communities (New York NY) Oasis Behavioral Health Services, L.L.C. (Barboursville, WV) NOVA Inc., (Phoenix, AZ) Samaritan Village,Inc. (Briarville, NY) Security On Campus, Inc. Smokefree Pennsylvania (Pittsburgh, PA) Society for Adolescent Medicine State Associations of Addiction Services (SAAS) Swain Recovery Center (Black Mountain, NC) The Alcoholism & Drug Abuse Council (Goshen, NY) The National Center on Addiction and Substance Abuse at Columbia University The New Mexico Alcohol Issues Consortium Wisconsin Prevention Network Youth Leadership Institute