BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 779|
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THIRD READING
Bill No: AB 779
Author: Bocanegra (D), et al.
Amended: 6/11/13 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/25/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, De León,
Galgiani, Hernandez, Lieu, Padilla
NO VOTE RECORDED: Correa
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 72-0, 5/24/13 - See last page for vote
SUBJECT : Alcoholic beverages
SOURCE : Author
DIGEST : This bill adds a new provision to the Alcoholic
Beverage Control Act (ABC Act) that grants beer manufacturers
producing more than 60,000 barrels of beer per year the
privilege of also manufacturing "cider or perry" at their
licensed premises and to sell the product to any licensee
authorized to sell wine.
ANALYSIS :
Existing law:
1.Establishes the Department of Alcoholic Beverage Control (ABC)
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and grants it exclusive authority to administer the provisions
of the ABC Act in accordance with laws enacted by the
Legislature. This involves licensing individuals and
businesses associated with the manufacture, importation and
sale of alcoholic beverages in this state and the collection
of license fees or occupation taxes for this purpose.
2.Authorizes a licensed beer manufacturer, at the licensed
premises of production, to sell to consumers for consumption
off the premises beer that is produced and bottled by, or
produced and packaged for, that manufacturer.
3.Grants licensed beer manufacturers the privilege of (a)
selling beer to any person holding a license authorizing the
sale of beer; (b) selling beer to consumers for consumption on
the manufacturer's licensed premises or on premises owned by
the manufacturer which are contiguous to the licensed premises
and which are operated by and for the manufacturer; and, (c)
selling beer and wine, regardless of source, to consumers for
consumption at a bona fide public eating place on the
manufacturer's licensed premises or at a bona fide public
eating place on premises owned by the manufacturer which are
contiguous to the licensed premises and which are operated by
and for the manufacturer.
4.Provides that licensed beer manufacturers and holders of
out-of-state beer manufacturer's certificates may be issued
and may hold retail package off-sale beer and wine licenses.
Stipulates that alcoholic beverages produced or sold at or
from the off-sale premises which are not produced and bottled
by, or produced and packaged for, the beer manufacturer must
be purchased by the beer manufacturer only from a licensed
wholesaler.
5.Separates the alcoholic beverage industry into three component
parts, or tiers, of manufacturer (including breweries,
wineries and distilleries), wholesaler, and retailer (both
on-sale and off-sale). This is known as the "tied-house" law.
6.Defines an "on-sale" license as authorizing the sale of all
types of alcoholic beverages: namely, beer, wine and distilled
spirits, for consumption on the premises (such as at a
restaurant or bar). An "off-sale" license authorizes the sale
of all types of alcoholic beverages for consumption off the
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premises in original, sealed containers.
This bill adds a new provision to the ABC Act that grants beer
manufacturers producing more than 60,000 barrels of beer per
year the privilege of also manufacturing "cider or perry" at
their licensed premises and to sell the product to any licensee
authorized to sell wine. Specifically, this bill:
1.Authorizes a licensed beer manufacturer that produces more
than 60,000 barrels of beer a year to manufacture cider or
perry, as defined, at the licensed premises of production and
to sell cider or perry to any licensee authorized to sell
wine.
2.Specifies that "cider" and "perry" have the meanings provided
in Section 4.21(e)(5) of Title 27 of the Code of Federal
Regulations. [Cider and perry are fruit wines derived wholly
(except for sugar, water, or added alcohol) from apples or
pears.]
3.Makes minor technical and code maintenance changes to existing
provisions of law.
Background
Cider . Cider is a fermented alcoholic beverage made from fruit
juice, most commonly and traditionally apple juice. Cider
varies in alcohol content from 2% ABV (alcohol by volume) to
8.5% or more in traditional English ciders. In some regions,
such as Germany and the United States, cider may be called
"apple wine." Cider is often stronger than beer, and is
frequently over 6% alcohol by volume - common eating apples
are generally unsuitable for cider making, being low in tannins;
specific apple cultivars bred especially for cider making are
preferred.
In California, hard ciders are considered wine because they're
fermented from fruit and thus can only be manufactured by a
holder of a Type 02 ABC license (Winegrower). Existing law
explicitly limits an alcoholic beverage manufacturer to only one
licensed type of beverage per manufacturing site.
Industry studies show that volume sales of cider in the U.S.
grew by 20% in 2011. This growth was largely attributed to the
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popularity of craft beer in the U.S. and consumers' desire to
try new flavors and tastes. Familiarity with the wide variety
and tastes of craft beers has allowed consumers to venture into
giving other alcoholic beverages a go. Some craft breweries
have also begun to add a cider offering to complement their
craft beer portfolio. Cider volume sales are projected to grow
well over 10% during the next 3-4 years. More sales have also
resulted in greater product offerings by manufacturers. For
example, in 2011, the Boston Beer Company, maker of Samuel
Adams, entered the cider market with its Angry Orchard brand.
In February 2012, MillerCoors' Tenth and Blake craft-imported
unit purchased Crispin Cider Company of Minneapolis and the
brand volume more than doubled. In May 2012, Anheuser-Busch
InBev (A-B) also made a play with Michelob Ultra Light Cider, a
low-calorie entrant, which accounted for 350,000 cases. This
year, A-B expanded its presence with the launch of Stella Artois
Cidre. Constellation has also entered the market through its
Crown Imports division, which began importing Carlsberg-owned
Somersby Apple Cider into the U.S. last year. Mike's Hard
Lemonade Co, in April launched Smashed Apple Cider. The U.S.
market's top cider brand by sales, Woodchuck, produced by the
Vermont Hard Cider Co., grew 25% last year.
Perry . Perry or pear cider is an alcoholic drink, made from
pressed pears, especially grown for this purpose. Traditional
perry making is broadly similar to traditional cider making, in
that the fruit is picked, crushed, and pressed to extract the
juice, which is then fermented using the wild yeasts found on
the fruit's skin. The principal differences between perry and
cider are that pears must be left for a critical period to
mature after picking, and the pomace must be left to stand after
initial crushing to lose tannins, a process analogous to wine
maceration. After initial fermentation, the drink undergoes a
secondary malolactic fermentation while maturing.
Perry pears often have higher levels of sugar than cider apples,
including unfermentable sugars such as sorbitol, which can give
the finished drink a residual sweetness. They also have
different tannin content to cider apples, with a predominance of
astringent over bitter flavors.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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SUPPORT : (Verified 8/9/13)
Anheuser-Busch InBev
California Chamber of Commerce
California Manufacturers & Technology Association
ARGUMENTS IN SUPPORT : According to the author's office, cider
is the nation's fastest-growing beverage category yet it makes
up only a very small portion (less than 1%) of total U.S.
alcoholic beverage sales and thus has the potential for greater
growth.
The author's office references the fact that existing ABC law
establishes a number of licensure categories for alcoholic
beverage manufacturers. For example, breweries must possess a
Type 01(Beer Manufacturer) license for the production of beer
while wine producers must possess a Type 02 license. In some
cases, a beer manufacturer may have the capacity, technology and
workforce to produce more than one type of alcoholic beverage
(e.g., beer and cider) yet the law limits that licensed
manufacturer to only one type of alcoholic beverage per licensed
manufacturing site.
The author's office states that this bill is intended to
simplify the licensure process for alcoholic beverage
manufacturers who can produce more than one beverage type by
allowing the holder of a Type 01 license to produce not only
beer but also cider and perry. The author's office believes
that the growth of the cider market in California will occur at
bars and restaurants in light of the fact that they have more
open taps for various craft beers and also because they've shown
a willingness to expand their alcoholic beverage offerings.
ASSEMBLY FLOOR : 72-0, 5/24/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bradford, Brown, Buchanan,
Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Salas, Stone, Ting, Wagner,
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Weber, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Bonta, Grove, Holden, Skinner, Waldron, Wilk,
Vacancy, Vacancy
MW:nl 8/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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