07.05.18

SCHUMER: OUTDATED FED REGS ARE TAKING A BITE OUT OF NY APPLE CIDER INDUSTRY, THREATENING ROCHESTER FINGER LAKES CRAFT HARD CIDERIES TO THE CORE; DESPITE SCHUMER-BACKED CIDER ACT THAT LOWERED CIDER TAX ON PAR WITH BEER, OUTDATED FED REGS NOW BLOCKING NY CIDERIES, LIKE ROOTSTOCK CIDERWORKS, FROM PACKAGING ALL CIDERS IN 12 OZ CANS LIKE BEER; PLUS NEW PROPOSED REG COULD FORCE LABELING OF CIDERS AS ‘SPARKLING’ OR ‘CARBONATED’ THAT WILL CHEAPEN NY’S HARD CIDER INDUSTRY; SCHUMER URGES FEDS TO IMMEDIA

Schumer To Feds: Take Your Buzz Words Off of New York’s Hard Cider 

Today, at DeFisher Fruit Farm’s Rootstock Ciderworks in Williamson, Wayne County, NY, U.S. Senator Charles E. Schumer called on the Alcohol and Tobacco Tax and Trade Bureau (TTB) Administrator John J. Manfreda to immediately address cider canning and labeling regulations that are driving up cider production costs and threatening to undermine New York cideries’ efforts to accurately market cider to consumers. Specifically, while TTB regulations allow cideries like Wayne County’s Rootstock Ciderworks to package its ciders that are under 6.9% ABV (alcohol by volume) in 12-ounce cans on par with beer, these same regulations are still prohibiting ciders between 6.9%-8.5% ABV to be packaged in 12 oz cans. Instead, outdated TTB packaging regulations still treat cider above 6.9% like wine, forcing cideries to spend extra money for special wine-approved bottles or containers. Schumer, who sponsored the CIDER Act that modernized the tax law so that all cider up to 8.5% is treated the same for federal excise tax purposes, said the TTB must use its authority to similarly update its packaging regulations to allow all cider up to 8.5% ABV to use 12 oz cans. Secondly, Schumer called on the TTB to reverse a provision in a proposed rule which would mandate the use of the terms ‘sparkling’ or ‘carbonated’ for most of New York’s hard ciders products. Schumer said requiring cideries to label their cider as “carbonated” is confusing for consumers and more importantly it runs counter to New York Cider’s desire to compete with beer, rather than champagnes and sparkling wines. This puts the burgeoning industry and new cideries at a significant disadvantage as they seek to broaden their appeal to consumers, and new labeling requirements would impose additional unnecessary costs on these small businesses.

 “Cideries throughout Wayne County, Rochester, and the Finger Lakes pour local products and jobs into our economy, which is why we must make sure their exciting growth is not choked off by bureaucratic nonsense that makes no sense and hurts New York’s hard cider industry. In order for these local cideries, like Rootstock Ciderworks, to grow and create more good-paying local jobs, we need the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) to back off their requirement that imposes unnecessary costs on cideries by blocking them from using inexpensive 12-ounce cans for all their ciders. On top of that, now the Feds want to take another bite out of the apple cider industry and force cideries to use the terms ‘sparkling’ or ‘carbonated’ for most of New York’s hard ciders products. Simply put, the Feds need to take these outdated regulations and ‘can them!,” said Senator Schumer.

Schumer has long fought for New York’s cider industry. Schumer was responsible for the passage of the CIDER Act, bipartisan legislation he first introduced in 2013. Schumer’s bill, the CIDER Act, updated the definition for hard apple and pear cider in the Internal Revenue Code (IRC) by increasing their allowed alcohol by volume from 7 percent to 8.5 percent and increasing their allowed carbonation levels, encompassing significantly more hard cider products and allowing them to be labeled and taxed like hard cider and in line with beer, rather than higher-taxed wine or champagne.

“These regulations do nothing but misidentify local cider products, confuse potential customers, and makes it harder for smaller companies to compete with their competitors. That is why I am calling on the Alcohol and Tobacco Tax and Trade Bureau to immediately reverse course; they should understand that I am watching this issue very closely to make sure Rootstock Ciderworks and other cideries in the Rochester Finger Lakes region and beyond can grow, explore new product lines, and operate without nonsensical costly mandates,” added Schumer.

Schumer highlighted that prior to the CIDER Acts reforms, the then outdated definition of hard apple and pear cider only allowed for up to 7 percent alcohol by volume before cider was taxed as wine, and only a certain level of carbonation before it is subject to the champagne tax. New York’s cider producers are small craft cider operators, and because they rely on natural products, there is very little predictability and control over the precise alcohol content of their product. The CIDER Act solved this issue by increasing the level of alcohol content from 7 percent to 8.5 percent, to ensure that those craft artisanal batches with higher alcohol content are still subject to the hard cider tax on par with beer, rather than the higher wine rate. Second, the CIDER Act removed carbonation limits to ensure the products aren’t subject to the higher tax levels on champagne.

For Rootstock Ciderworks, the CIDER Act allowed the company to hire new employees and grow since its start in 2013. It now sells its ciders across Upstate New York in leading restaurants and retailers including Wegmans Food Markets. Unfortunately, Rootstock Ciderwork’s business is now being hampered by a cider canning regulation that is driving up cider production costs and by recently proposed labeling regulation that is threatening to undermine New York cideries’ efforts to accurately market cider to consumers. While TTB regulations allow cideries like Rootstock to package its ciders that are under 6.9% ABV (alcohol by volume) in 12 ounce cans – on par with beer - these same regulations now prohibit ciders between 6.9%-8.5% ABV from being packaged in 12 oz cans.  Instead outdated TTB packaging regulations still treat cider above 6.9% as if it is wine, forcing cideries to spend extra money for special wine-approved bottles or containers. Schumer said that while the CIDER Act modernized the tax law so that all cider up to 8.5% is treated like beer and not wine for federal excise tax purposes, the TTB has not updated its corresponding packaging regulations to treat cider like beer and not wine. For Rootstock Ciderworks, which cans cider, this is a major impediment to their business since the company not only invested in canning equipment, but invested their marketing and advertising around a uniform 12 ounce can design.  Moreover, Rootstock Ciderworks just produced a new type of cider that came in at 7% ABV and the TTB, citing these outdated regulations, will not allow Rootstock to package it in their standard 12 oz cans. Instead, cideries like Rootstock are faced with the costly extra expense of buying and using special “wine-approved” bottles or packaging for this cider. This also undermines their marketing and makes it more difficult to convince retailers to accommodate differently sized and shaped products on their store shelves. 

Additionally, TTB is now proposing a new regulation that would treat hard cider like sparkling wine or champagne, requiring cideries to use words like ‘sparkling’ or ‘carbonated’ for hard ciders on their labels. Even though hard cider now has its own separate definition, apart from carbonated wines, this proposed regulation the use of these terms for a certain level of hard cider carbonation would not clarify any distinction for consumers or regulators and could cause confusion or degrade the image of hard cider products. Schumer said this proposed regulation would create confusion for the consumer and damage New York hard cider’s image as a premium beverage.

In 2013, Schumer first argued modernization of federal cider regulations would allow the over 650 apple growers and 20 existing hard apple cider producers at the time to expand their business. According to the New York Cider Association, New York State now has 90 cideries, which is more than any other state, and a 300 percent increase over the last 5 years.  In 2017, hard cider contributed more than $100M to the state including output and labor.  As these numbers continue to increase each year, Schumer said it is important now more than ever for New York State growers and producers to able to add this increasingly popular craft beverage to their product lines. New York is the second largest apple producer nationwide, and Wayne County is New York’s largest apple-producing county. Apple farms across New York harvest a total of 29.5 million bushels annually from over 650 farms and 41,000 acres across the state. The Finger Lakes region alone accounts for over 250 apple farms and over 28,000 acres of apple orchards. In recent years, thanks to the growing popularity of hard cider, many apple producers have turned to producing this craft beverage as a method to keep apple orchards profitable, generate new economic development opportunities, and attract a new visitor demographic to their farms.  

Schumer was joined by Rootstock Ciderworks employees and owner David DeFisher, New York State Apple Association Executive Director Cynthia Haskins, Wayne County Farm Bureau Field Representative Amanda Krenning,

Rootstock Ciderworks owner David DeFisher said, “We appreciate Senator Schumer’s support to fix outdated bureaucratic regulations that are unnecessarily standing in the way of growing New York cideries.  While the CIDER Act enabled cideries to grow by modifying the definition of "cider" so that it could contain up to 8.5% ABV, the TTB continues to hold that for canning purposes, anything over 6.9% must be classified as a wine and, therefore, may not be packaged in standard 12 ounce cans.  This effectively prevents cider producers from putting cider over 6.9% ABV in a 12 oz can and selling it in interstate commerce as is done with beer.  It is costing cideries more, confusing our customers, and limits our ability to use new higher fermenting varieties of New York apples to make ciders”. 

Schumer announced his push at Rootstock Ciderworks, a New York farm cidery started by the DeFisher family on their 500-acre fruit farm in Wayne County.  The owners, David DeFisher and his family, have grown apples, pears, peaches, cherries, and more on this farm for four generations.  In 2013, Schumer toured DeFisher Farms and announced his push to help DeFisher secure its TTB approvals in order to open the Rootstock Ciderworks cidery so that it could being production. 

Schumer’s letter to Administrator Manfreda appears below:

 John J. Manfreda

Administrator

Alcohol and Tobacco Tax and Trade Bureau

Dear Administrator Manfreda:

My constituents have informed me of their concerns with a current Alcohol and Tobacco Tax and Trade Bureau (TTB) that inhibits them from qualifying for the reduced tax rate, as a result of the passage of the CIDER Act.

I was the author of the CIDER Act of 2015 and helped pass this needed legislation as part of the PATH Act of 2015. The CIDER Act eliminated unnecessary burdens on cider producers by clarifying the alcohol and CO2 limits in hard cider, clarifying the definition of hard cider, and simplifying and cutting taxes for cider makers. Specifically, the legislation increased the allowed Alcohol by Volume (ABV) in cider from 7% to 8.5%. The Act was intended to bring the federal regulation of cider more in line with that of beer.

However, due to TTB’s regulations, ciders that rise above the 7% ABV are classified as “wine” and cannot be sold in 12 fl. oz. bottles, like cider or beers of a similar ABV. I would urge TTB to align the allowed ABV under the tax code with standard of fill regulations to and any other pertinent regulations pursuant to the Federal Alcohol Administration Act (FAA) labeling and advertising for interstate commerce to allow cider producers to sell their products in 12 fl. Oz bottles. This would help small cider producers access the tax benefits provided in the Cider Act.

Additionally, I reiterate my concerns on behalf of the New York Cider Association on a proposed rule which would mandate the use of the terms ‘sparkling’ or ‘carbonated’ for their hard ciders products. It is my understanding that the use of these terms for a certain level of hard cider carbonation would not clarify any distinction for consumers or regulators and could cause confusion or degrade the image of hard cider products. I urge the Alcohol and Tobacco Tax and Trade Bureau (TTB) to withdraw the proposal mandating that hard cider producers use the terms ‘sparkling’ or ‘carbonated’ in their labeling.  The CIDER Act clarified the definition for hard cider in the internal revenue code, separating it from carbonated wines, and eliminated the old carbonation limits. Cideries across New York have expressed their concern that this labeling would create confusion and undermine their brand and I urge the Alcohol and Tobacco Tax and Trade Bureau (TTB) to withdraw the proposal mandating that hard cider producers use the terms ‘sparkling’ or ‘carbonated’ in their labeling.

Thank you for your attention to these two matters.

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