Obamacare regulations could be brewing up trouble for small breweries wanting to grow.
Beginning next year, restaurant chains with more than 20 locations nationwide will be subject to new rules requiring calorie information on all menus. Restaurants will have to measure menu items made in-house, but when it comes to products such as beer — which are manufactured elsewhere and distributed to chains — the data must be shipped with the product.
Brewers are facing the prospect of spending potentially thousands to determine calorie counts for every variety of beer produced. Unless they spend the money to provide the information, breweries may never get their products into chain restaurants, like Buffalo Wild Wings and Applebee’s.
As is often the case with regulations, smaller breweries stand to lose the most.
“A regional craft brewer or a major brewery can spread the cost over a much larger volume of sales and it’s not so unreasonable for them,” said Paul Gatza, a former brewer who now heads the Boulder, Colorado, based Brewers’ Association, an industry group.
“Smaller guys that are just trying to sell a keg or two here or there, they have a decision to make on whether it is worth the additional cost to try to get their beers into chain restaurants,” Gatza told Watchdog.
The Food and Drug Administration is in the process of finalizing menu labeling rules that were part of the Affordable Care Act. Intended to make Americans more aware of their dietary choices, the rules are subject to controversy on several fronts, and the FDA announced in September that implementation of the new rules would be pushed back one full year, until December 2016, as the feds try to work out the kinks.
The new regulations also will apply to grocery and convenience stores, bowling alleys, movie theaters and sports venues — severely curtailing where some beers are sold.
The menu labeling requirement is hitting businesses across the entire food service industry. By the Obama administration’s official estimate, the new requirement will cost businesses as much as $1.5 billion.
On a per-business level, the Cato Institute estimates the labeling mandate costs between $49,000 and $77,000, according to HHS. Since the average food service employee costs his or her employer about $22,000 annually, those fancy calorie-labeled menus have set every food service business in America back by two to three employees — while not doing a thing to increase productivity or profit.
The Beer Institute, another trade group, has submitted comments to the FDA asking for several changes making compliance easier for craft breweries. They want the freedom to submit calorie “ranges” for different styles of beer — for example, a menu would list all IPAs as having roughly the same range of calories — thus eliminating the need for each and every brewery to test each and every product.
Aside from the calorie counting required on menus, the ACA requires chain restaurants to keep more detailed nutritional information on file and available by request. That includes information on carbs, sugars, fats and vitamins.
“Many food establishments are already taking steps to prepare for the regulations by analyzing or verifying nutrition information for their various offerings,” Jim McGreevy, CEO of The Beer Institute, says in a message to the organization’s members posted online in September — after the FDA’s publication of the most recent guidance for the new rules. “Thus these establishments will be looking to the beer industry to provide the full nutrition profile of their products.”
It could be an expensive process.
According to Brewbound, a beer industry publication, testing for calories and other nutritional information required by the Affordable Care Act could cost breweries as much as $1,000 per item.
It doesn’t make sense for brewers to test every variety of beer they make, spending many thousands of dollars before they have even made it onto a chain restaurant’s menu, argues Michelle Minton, a fellow with the Competitive Enterprise Institute.
“Restaurants interested in carrying a craft beer may not want to wait for testing to be done and will move on to beers that already have nutritional information,” Minton said. “That means many craft brewers will miss out on an important opportunity to grow their business.”