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Beer Industry Legal & Political Factors

The American beer industry serves a social and economic function by employing millions of employees directly and indirectly, contributing heavily to the economy through tax contributions and discharging various corporate social responsibility initiatives. However, since its establishment in the mid seventeenth century, the beer industry has been subject to various political machinations and legal regulations, such as the legislative amendments that effected the thirteen-year prohibition in producing and distributing beer in 1920. Today, the beer industry continues to be subject to constantly changing alcohol consumption and taxation policies, political lobbying for divergent market classification and anti-trust issues.

Alcohol Policies

Irresponsible consumption of alcohol can have detrimental effects on society, so there are numerous social policies that exist to regulate the alcohol industry in general and the beer industry in particular. Beer is unlike other consumer goods because it cannot be freely advertised, sold or consumed. The beer industry players have to adhere to advertising norms that generally prescribe the content and hours when beer advertisements can air to minimize instances of underage drinking. America also has a three-tier alcohol control system that distinctly separates industry players into manufacturers, wholesalers and retailers, and the former are not allowed to sell directly to the public. There are also regulations on the days and time when alcohol can be sold, which affects the beer industry. For example, most states limit Sunday sales of alcohol for consumption off-premises.


The beer industry is a significant tax contributor because of its revenue-generating capacity in the market. The tax code classifies brewers according to their size, defining those that produce up to two million barrels per year as small brewers and any amount above that as a large brewer, although taxes are paid on every barrel they produce. There have been initiatives to expand the classification of small brewers to a ceiling of six million barrels per year and calls for the reduction of excise tax per barrel, pitting large brewers against small brewers.

Political Lobbying

Since there are various policy and legislative concerns relating to the beer industry, political lobbying is an integral part of the industry business. In 1920, political pressure groups that were against the consumption of alcohol managed to lobby for and pass the 18th Amendment to the Constitution and the Volstead Act, which prohibited the production and distribution of beverages with more than one-and-a-half percent alcohol. Although the prohibition was repealed 13 years later through the 21st Amendment, the situation is not much better today, and beer industry players still have to engage in intense lobbying to get Congress to pass favorable legislation. For example, small brewers expend time and considerable financial resources lobbying for the passage of legislation to qualify them for the excise tax discounts that are available to big brewers.

Anti-Trust Issues

The proliferation of craft beer that is not mass-produced has intensified competition in the beer industry and brought about market shifts that Congress and regulatory agencies have to constantly monitor in order to prevent the creation of monopolistic enterprises. Big brewers such as Anheuser-Busch and MillerCoors largely dominate the American beer industry, while craft beers are just beginning to take hold. However, declining sales numbers have led the large brewers to acquire smaller brands which raises anti-trust concerns in the political debate, according to The New York Times.