Messing with the OLCC's Chunk of Cheese

As a  youngster, my dad constantly reminded me that any job worth doing was worth doing right. He was an old school pain in the ass that way. His thinking typically came into play when we were working on a project where shortcuts would cheapen or ruin the completed task.

I was reminded of that ancient thinking as I looked at some OLCC numbers the other day. The task at hand was a look at which breweries showed the greatest year over year sales increase for 2015. An industry contact provided me with a comparative spreadsheet, so my job was pretty simple.

As I've mentioned before when referencing OLCC beer reports, they provide a woefully insufficient peek at what's happening in the industry. These reports, which track taxable barrels on a monthly basis, are like a chunk of Swiss cheese...full of holes.

The reports track barrels produced and sold in Oregon. Beer produced here and exported out-of-state isn't tracked. Beer produced outside Oregon and brought in also isn't tracked, although taxes are paid on those barrels by distributors.

In fact, distributors pay the bulk of barrel taxes in the state. "It's a lot easier for the state to collect taxes from 20 or 30 distributors than it is for them to track more than 200 breweries," an industry source says. "Breweries pay the taxes on beer they sell in their pubs or self-distribute. Otherwise, it's generally the distributor paying."

One of the interesting things that jumps out in the December 2015 report (these reports are always a few months behind) is that the Craft Brew Alliance (Widmer, Kona, Redhook) sold only 72 barrels in Oregon during the month. That's a 32,000 barrel decrease from 2014. What?

I figured this must be related to the renovation of brewing facilities here in Portland. Not exactly, apparently. A Widmer source says they now transfer their beer to offsite storage before it goes to distributors. But the OLCC only tracks beer that does directly from brewery to distributor. Beer that goes from offsite storage to distributors isn't tracked. 

Does anyone think that beer isn't taxed? Please. There's no way the state isn't collecting tax on that beer. The fact that it doesn't show up in OLCC reports is mesmerizing. Perhaps it's just an accounting glitch that will eventually be resolved. Perhaps the missing beer will show up in 2016 reports. For now, it's just another hole in that chunk of cheese. 

Then there's the case of 10 Barrel. At the end of 2014, 10 Barrel was fifth on the list of Oregon breweries by taxable barrels. Fast forward to December 2015 and 10 Barrel isn't even on the report. Nope. Backtracking, you discover the brewery dropped off OLCC reports in October. What?

It's easy to speculate. Did 10 Barrel drop from the reports due to the ownership change? If so, why aren't those barrels counted as Anheuser-Busch barrels? That beer is brewed and a lot of it is sold in Oregon, after all. Someone is paying the barrel taxes. Where are the numbers?

I should mention that yesterday's call to the OLCC requesting clarification of the 10 Barrel issue has not been returned. Not only do they publish incomplete, insufficient reports, they evidently can't be bothered give timely answers to legitimate questions about why some things are missing. 

Come on, folks. You've got a job to do. How about doing it right?