Craft breweries not pouring out expansion opportunities over tariffs

Global Business

Craft breweries not pouring out expansion opportunities over tariffs

Left Hand Brewing in Longmont, Colorado recently turned 25 years old. At a time of increased competition in the beer industry and from wine and spirits, business at one of America’s top craft beer brewers is good. Left Hand is also expanding its horizons in China, the world’s largest beer market.

CGTN’s Hendrik Sybrandy reports from the state of Colorado.

“I love China. The people are great, the food’s spectacular. The beer scene is really starting to come into its own. It’s one of the largest stout markets in the world,” said Chris Lennert, Left Hand Brewing Chief Operating Officer.

Earlier this year, Chris Lennert’s company began shipping beer to China. He says it represents a big part of Left Hand’s export future. Then because of China’s tariff on imported alcoholic beverages, the price of his product shot up.

“Customers are waiting for orders. They can’t get the orders. When they get the order it’s more expensive. It’s not a great thing for us,” Lennert said.

Lennert says trade tensions between the U.S. and China have directly affected his business.

Like the background hum of the crowds at Denver’s Great American Beer Festival, tariffs are now part of the backdrop for craft beer brewers. Not hugely concerning at this point, but they can’t be ignored either.

Kevin Hopkins helps run Mother Earth Brewing, which exports beer to 13 countries. China is one of its newest markets. The tariff has not hit this brewery just yet.

“At this time it’s still not a major impact to us. We’re able to roll with those punches. I don’t think from an industry standpoint we’re going to see a major, major shift,” Hopkins said.

But there’s confusion and uncertainty among beer makers when it comes to the trade issue. Epic Brewing has exported to China in the past and wouldn’t mind doing so again.

“If we start to have active discussions to exporting into China, that tariff’s going to be huge. In fact, if it happens, it makes us not even competitive and not an interesting supply partner for China,” said Dave Cole, Epic Brewing Co-founder.

U.S. tariffs on imported steel and aluminum have already hurt brewers who package their own beers. Labor and freight costs have also gone up. Tariffs could boost beer prices in export markets even further.

“Well, we’ll know in a year, because the consumer will tell us whether or not they’re still going to purchase the product,” Hopkins said.

“Unfortunately, it’s kind of taken us out by the knees. I’m hoping this is a short-term thing,” Lennert said.

Lennert says he still hopes China could make up five to 10 percent of Left Hand’s business in the next few years. Brewers all say it’s a thirsty population.

This beer style is more popular than ever in the U.S., but expanding American craft beer’s presence in China, as that market is taking off, may now be a bit more challenging.

CGTN’s Sean Callebs spoke with author Stephen Beaumont on the state of the global beer industry.