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Can The New Tax Law Help Craft Breweries Continue Their Momentum?

Bright tanks inside Marz Community Brewing's Chicago operations

A provision in the GOP tax bill could be a boon for a U.S. craft beer industry beginning to see signs of a slowdown after a 10-year boom period. The "Craft Beverage Modernization and Tax Reform" provision provides tax relief for brewers of all sizes, but will especially benefit smaller breweries, MarketWatch reports.

For breweries that produce fewer than 2 million barrels annually, the provision cuts the federal excise tax in half for the first 60,000 barrels, to $3.50/barrel. Breweries can use the savings to reinvest in their operations, increase production and for distribution efforts to get their product on shelves in liquor stores and supermarkets.

The provision comes as craft brewing growth slows. Brewers Association Chief Economist Bart Watson reported 5% growth for craft breweries in 2017. But the industry saw 16% growth in 2016, and a record 165 craft breweries closed last year. There were 6,266 craft breweries in operation in the U.S. last year, and another 2,500 are in planning.

Watson said, despite the slower growth, the craft beer industry remains strong. Craft beer accounts for 12.7% of the U.S. beer industry, up from 12.1% in 2016 and 8% in 2013.