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US alcohol reform will boost competition

The US Treasury has highlighted concerns about the country’s alcohol market and suggested reforms that could boost competition and lower prices for consumers.

A report has suggested a series of reforms would boost the alcohol sector in the US and lower costs for consumers

The Treasury released a 64-page report last week examining the competitiveness of the wine, beer and spirits industry.

It said new mergers and acquisitions, different tax rates and lifting regulatory burdens to new entrants in the wine, beer and spirits would create a fairer market for new producers, and would make products cheaper for consumers.

There are more than 1,900 operating distilleries in the US, the report said. It noted how innovation in American wine, beer and spirits over the last few decades had boosted small and craft producers in local markets, but many markets are dominated by a few national brands.

It attributed this, ‘at least in some part’, to tax policies and some state and federal laws, for example ‘pay to play’ schemes in retail.

While the report acknowledged the ‘positive development of significant growth’ in the number of small and craft producers, it flagged multiple concerns.

Concerns included: complaints about exclusionary behaviour by large producers, distributors and retailers; state and federal laws, such as labelling preapproval requirements and bottle size restrictions, which impose a ‘disproportionate burden’ on small and medium-sized producers; and differing federal tax rates for beer, wine and spirits, which affect competition between each sector.

The report made a number of recommendations to improve the competitiveness of the alcohol category.

The report said the DOJ (Department of Justice) and the FTC (Federal Trade Commission), who both work on antitrust enforcement, should take a closer look at mergers, in consultation with the TTB (Alcohol and Tobacco Tax and Trade Bureau).

Furthermore, the report urged the TTB to change labelling rules to protect public health and to limit the impact of lobbying.

Earlier this month, 75 trade bodies, including the Scotch Whisky Association and the Distilled Spirits Council of the US, called on the US and UK governments to remove retaliatory tariffs to help the American whiskey sector recover.

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