The Beer Institute is a trade organization founded in 1862 that represents the $350 billion U.S. brewing industry, which includes over 5,000 brewers and more than 2.2 million American jobs. Beer Institute president and CEO Jim McGreevy has a 20-year background in legal, policy and political work.
Being a CEO of a trade organization presents a unique set of challenges, as the organization must consider the needs and opinions of huge corporate brewers (think Anheuser-Busch, Miller, Coors, Heineken USA and Constellation brand), as well as much smaller, localized operations.
With April being Alcohol Awareness Month, McGreevy spoke with Chief Executive about some of the key initiatives Beer Institute members are undertaking to highlight responsible drinking, as well as some of the challenges of being a trade organization CEO, how the recent tariffs on imported aluminum are impacting his industry, as well as manufacturing trends in the beer world. Here’s what he had to say:
Q: What some of the bigger initiatives that Beer Institute members are going to be focusing on this month in terms of alcohol awareness?
A: Last year our major members provided more than a million Safe Rides throughout the country in order to keep our roads safe. So, we’re very focused on being a part of this sharing economy when it comes to the benefits for responsibility. Uber, Lyft, other kinds of ride share programs are very important for beer brewers to call out as helpers to folks when they’re trying to figure out how to be responsible while they’re out enjoying themselves.
Those are activities that go on really all the time by our major members, but oftentimes they are highlighted during Alcohol Awareness Month, where there will be events where you can get a free ride home or St. Patrick’s Day or New Year’s Eve in particular. Some of the larger beer brewers and beer importers in the country even buy out the subway system in a major metropolitan area on a New Year’s Eve or on a St. Patrick’s Day. So Safe Rides is a great example of some of the things that beer brewers do to make responsibility a major priority.
Lots of grants to colleges, more than 300 grants to colleges and universities last year promoting responsibility and discouraging underage drinking. When we think of responsibility, we think of stopping drunk driving, avoiding drunk driving, reducing it, but also discouraging underage drinkers. The law in this country is that 21 is the age of legal drinking age. And we as corporate stakeholders in this American life think that that’s a very important thing for people to comply with.
And then we do lots of things around educating parents in particular about the basic facts of alcohol and tips for starting conversations with their kids.
“the trick for us as trade association CEOs is to find a way to align all those different opinions to find common ground and then to execute on what the commonality is amongst the members.”
Q: What are some of the biggest opportunities and challenges you encounter as CEO of a trade organization?
A: Trade associations are largely voluntary member organizations. So a CEO can join or leave a trade association at any time on whether they think the organization is effective or not.
So the trick for us as trade association executives is to find the common ground amongst the members to move the issue or the initiative forward. Certainly, corporate CEOs and folks involved in setting the strategy for corporations have lots of different ideas about how to accomplish a task. The trick for us as trade association CEOs is to find a way to align all those different opinions to find common ground and then to execute on what the commonality is amongst the members. And that’s both a challenge and an opportunity.
We see, in Washington, D.C. in particular, the policy landscape is changing with the relatively new administration. You’ve got an election coming up which will be hard fought for control of the House of Representatives in particular. So it’s important for trade associations to be able to speak with one voice. My job as the CEO of a trade association is to make sure the members understand the landscape that we’re dealing with in the policy space in Washington, D.C., and then recommend suggested ways of putting ourselves forward in a unified way.
We’ve seen a lot of common ground with our members, particularly on the issue of excise tax. The excise tax has been around since 1862. Brewers have been paying it for literally hundreds of years, but that tax has only been reformed or reviewed about four times in the history of the tax. And we put a bill forward as the Beer Institute with other beer trade associations and other trade associations to have Congress take a look at reforming the tax. And we were successful in getting broad-based relief from the tax in the Tax Reform bill that passed at the end of last year.
So that’s a great example, I think, in our industry, of there were lots of different viewpoints as to what the excise tax should be for large brewers, for medium-sized brewers, for small brewers, for beer importers, and there were a lot of differing viewpoints as to what it should be. But we were able to find a way to get a dialog going that crated what we call the Craft Beverage Modernization and Tax Reform Act so that all of our members and all of the brewers around the country could advocate for one solution and that solution was largely accepted and put into law last December.
I think it’s a perfect example of what a trade association can be doing for its members to help them in the policy space.
Q: How is the Beer Institute and its members dealing with the recently-enacted tariffs on imported aluminum?
A: Well, unfortunately the tariff was implemented about three weeks ago, and we spent a year talking to the administration, talking to members of Congress, aligning within our own industry as to the potential effect of the tax. And we know for beer, the tariff will have very negative consequences. So now that the tariff’s in place, our job is to try to keep talking to the administration and members of Congress and other policy makers about the impact.
Essentially, it was a $347 million hit to the beer industry, which would endanger up to 20,000 jobs related to beer. And we are seeing already, three weeks into this tax, some of those concerns we had coming to pass. So it’s really up to us to continue to tell the administration what’s happening, what the effects of this tax are now that it’s been implemented.
Our viewpoint is that a tariff is a tax. We receive tax relief, we received relief from the excise tax, the federal excise tax in December, and then we were taxed in a different way in April. So I think it’s important for policy makers to understand the impact that their policies have on businesses—all businesses. And the impact of this tariff, we already see as detrimental to our business.
There are more breweries in the United States today than ever in its history—2.2 million Americans owe their livelihood in one way or another to the production, distribution and sale of beer. So, we’re speaking for a lot of people. And I think over the course of the next few months you’re going to see us continue to try to be out there publicly talking about the negative impact of the tax, talking to members of the administration and members of Congress about it.
The beverage alcohol business is a highly competitive business. We are fighting every day for consumers and for consumption occasions, not only between the brewers, but where beer is also competing with spirits and wine. And one of the things I think that’s most interesting about this tax is the impact that it will have on that competitive environment, 60% of the beer sold in the United States is sold in aluminum bottles and aluminum cans. But hard liquor and wine is sold largely in glass. So amongst the many negative impacts of this tariff is that it puts us potentially at a continual disadvantage to wine and spirits. The aluminum prices are rising. We see that every day. The cost to our members of production is rising, yet our competitors in hard liquor and wine are not suffering the same kinds of impacts when it comes to their container choices. So that’s just one example amongst many of the negative impacts that these tariffs are going to have on beer.
Q: What are some of the things, in terms of manufacturing, that are getting your members excited?
A: Well, I’ll tell you manufacturing is alive and well in the American beer industry. There are more than 5,000 breweries in this country, and those are 5,000 or more manufacturing facilities. I was just in a brewery yesterday that was just a beautiful state-of-the-art brewery, lots of sophisticated equipment and highly-trained people working there at one of the major breweries in this country. And then it goes down all the way to the small brew pub that’s producing 300 or 400 or 500 barrels of beer a year. They are manufacturing, too. So there has been a real renaissance in beer that is to the benefit of American manufacturing. In beer, we are largely American companies making beer in American facilities for American consumers.
So we’re heavily dependent on making sure that the policies are correct so that the companies, large and small, can build their business. But you’re seeing a lot of innovation in packaging. Beer is a fragile product, right? It’s got to get produced and distributed and delivered to the consumer in a way that is the freshest possible. Therefore, these manufacturers are upgrading their warehouses to make their workplace more sanitized. For example, this one company I just visited invested in a dairy brick repair. So there’s just a lot of sophisticated, continually new sophisticated ways of getting that done. But I think the story here for beer, for your readers, and for policy makers at all levels of government, is that there is a real renaissance for manufacturing in the beer industry and that’s a relatively new phenomenon.
In 1976, I believe there were 50 breweries left in this country. Today there are more than 5,000. So we are sort of the little engine that could in American manufacturing.