
Tax Policy Gave Us White Claw - borisjabes
http://nymag.com/intelligencer/2019/09/how-tax-policy-gave-us-white-claw.html
======
monocasa
I mean, there's more to it than that. A friend of mine is a prominent head
brewer in the Denver area, and a couple weekends ago we cranked the numbers
and figured out that the cans for hard seltzer are more expensive than the
contents (aka the actual drink) from a BoM perspective. A labeled can is
something like 14 cents, and the contents were something 10 cents. For a can
of beer, the contents are closer to 50 cents.

The margins are just stupid good. Apparently Upslope brewing here already
makes more profit on their seltzer than all of their beer.

~~~
gojomo
Any chance you're calculating BoM costs on the assumption a distilled/pure
alcohol is used as an ingredient?

As this articles highlights, these recent "hard seltzers" actually use a
brewing process, apparently for tax purposes.

~~~
ratacat
There are commercial scale providers of bulk alcohol that is taxably
considered beer. It's not quite as cheap as neutral grain spirits, but ours
definitely a lot cheaper then brewing it.

~~~
gojomo
But, does it meet the "doesn't taste like beer" requirements mentioned in the
article?

From the article, it doesn't sound like White Claw, et al, are skipping their
own brewing and buying from those "commercial scale providers".

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kingbirdy
> Because White Claw is brewed like beer, it’s taxed like beer, which is
> important because beer is taxed in the U.S. at a much lower rate than
> spirits. If you made a product similar to White Claw by mixing vodka with
> seltzer and putting it in a can, a six-pack would be subject to almost $2 in
> additional taxes when sold in New York City.

Important takeaway from the article. This also answers my own question as to
why drinks like Mike's Hard, Smirnoff Ice, etc are malt beverages. Hopefully
the sugar base instead of a grain base catches on for new drinks.

~~~
flanbiscuit
Does it being a sugar base make the alcohol closer to a rum?

~~~
stochastic_monk
Being made from sugar, it more completely ferments. Beer has residual short-
chain carbohydrates that leave calories and provide body.

It wouldn’t be much like rum unless it were brewed with dark sugar.

~~~
Mikeb85
> leave calories

Ethanol itself is most of the calories in any alcoholic drink.

~~~
monocasa
For people curious on the breakdown:

A 12 oz can of 5% abv is .6 fluid ounces of ethanol. That's 14 grams, or 98
calories.

A Budweiser has 145 calories, White Claw has 100, Old Chub Scottish ale has
264.

Basically I see the benefit over most craft beer, but over macros it's not
that big of a difference.

~~~
basch
That is a calorie if the alcohol is burned in a flame. An alcohol calorie isnt
a carb calorie.

[https://drinks.seriouseats.com/2013/10/cocktail-science-
do-a...](https://drinks.seriouseats.com/2013/10/cocktail-science-do-alcohol-
calories-count-digesting-spirits.html)

[https://www.quora.com/Do-calories-in-alcohol-really-exist-
If...](https://www.quora.com/Do-calories-in-alcohol-really-exist-If-you-drink-
only-vodka-no-food-will-you-get-fat)

I cant find an exact answer, but combining the ideas that: the metabolic
pathways for ethanol take precedence over the metabolism of other food
components, leading to fat conversion and storage of higher-kcal foods than
would be expected if the energy for metabolism was not diverted to the
alcohol; the extra energy needed to metabolize alcohol should become a net
drain on energy reserves; and alcohol is almost never fully metabolized, but
rather excreted as acetic acid - I think it is safe to assume that an ethanol
calorie actually provides the body very little energy AND if youre not eating
while you are drinking there isnt a way for the body to store the energy as
fat for later.

------
munk-a
> A problem with malternatives has been the need to find ways to mask the
> beer-like flavor that results from brewing. To that end, these drinks have
> added sugar and strong citrus flavors, which a lot of consumers like.

Nice! Our tax laws encourage companies to make less palatable goods that then
require more added sugar to compensate thus upping everyone's carbohydrate
intake without it actually tasting as good as those carbs would be in a cake
or some such. How wonderful! /s

~~~
nategri
Endlessly frustrates me how much of the food economy is focused on producing
cheap carbohydrates. This is perverse regulatory pressure.

~~~
core-questions
Cheap carbohydrates keep us fed and happy. What if I told you that not
everyone needs to look like a fitness model to live a reasonably content
existence?

~~~
simonsarris
_Do they keep us happy?_ Or would depression rates be better if we had fewer
cheap carbs and more quality calories?

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bsharitt
Not just taxes, but being "beer" allows it to be sold in grocery stores and
corner stores where a drink made from distilled spirits(even if watered down
to the 5% alcohol) would have to be sold in a liquor stores in many states.

~~~
SilasX
Is there a reason no one says, "hm, that don't make a lick of sense, let's
change that?"

~~~
CydeWeys
The laws are old, and likely date to a time since before it was possible to
make such genre-bending alcohol drinks.

If you were making laws from scratch now, it would likely make sense to define
categories strictly by ABV, not by brewing/distillation method.

~~~
massaman_yams
I was thinking along the same lines; but there's a potential problem in that
this provides an incentive to mislabel a beverage's ABV to get a lower tax
rate.

That's probably solvable-ish by fining companies found to have an ABV off by
more than 1% or so, but that's a lot more work to monitor, especially with the
number of different products on the market.

~~~
CydeWeys
You can't (well, shouldn't) mislabel your beverage's ABV. It's trivial to test
and thus determine that you're lying, and the result would be a hugely costly
recall of all product.

The accuracy requirements are very strict on this. It's already not a problem;
intentionally lying about ABV on the label would be a foolish thing to do that
would get you in lots of trouble.

~~~
fuzz4lyfe
Similar statements can be made about insider trading or constitutional
violations.

~~~
CydeWeys
Not really. Those are much harder to detect and prove, and remedies have to go
through the courts.

If improperly ABV-labeled alcohol is detected, it will be immediately recalled
from all shelves nationwide, no court involvement necessary.

~~~
massaman_yams
Labeled as 5% but actually containing 40%, sure. Labeled as 35% but containing
40%? No, because those are functionally identical for most consumers.

------
simonsarris
Amusingly tax policy also allegedly gave us brandy. When you're taxed by
volume (such as by the cask or barrel of wine) you may wish to dodge some
taxes by distilling your wine product into brandy ("burned wine") to
concentrate the volume, with the aim of re-constituting it with water for
consumption, later.

Then of course you find out the reconstitution tastes nothing like the
original wine, and you also may discover that leaving it in the wooden casks
makes a pleasant drink on its own...

~~~
tptacek
This is also a reason not to drink cask-strength whiskey straight: to wit,
you're not meant to; you buy cask-strength so you're paying for less water,
since you can provide that yourself.

~~~
klyrs
Unless you enjoy the strong flavor. I don't drink alcohol but I do drink
espresso: ristretto, no adulterants (except the occasional mandarin peel --
I'm not above a little variety). I dislike americanos almost as much as I hate
long pulls. The intensity is a significant component of my enjoyment (same
with blue cheese, hot sauce, etc.) and if I drank, I'm positive that I'd find
cask strength to be the best strength.

~~~
tptacek
An expert argument against drinking cask straight, one I'm not qualified to
evaluate but can repeat here, is that high-proof alcohol actually impedes your
ability to perceive the characteristics of the spirit itself. If you just like
the taste of very strong alcohol, dilute some Everclear down; don't waste
money on cask whiskey (for the most part, the only whiskeys sold at cask
strength are expensive, premium expressions).

I sometimes drink Four Roses cask-strength straight, because I'm lazy, but
also cask-strength Four Roses is not all that high-proof. But I wouldn't drink
Thomas Handy straight; it would be a waste.

------
nimbius
>As a gay man in New York with a well-stocked bar, I am used to my friends
coming to my apartment and asking for vodka sodas.

meh. As a gay man in a midwestern rust belt town with a used fridge that makes
exorcist noises, I am used to my friends assuming I drink vodka soda. I got a
six pack of "white claws" from a female friend and couldnt choke down more
than a few sips.

If youre going to drink a vodka soda, for god sake avoid this landfill fodder
and pour one yourself. vodka comes everything from cotton candy to bacon, so
theres really no excuse.

TL;DR: White Claw is the Keurig of mixed drinks.

~~~
equalunique
I don't understand why this comment should have been downvoted. I disagree
because I like White Claw, but downvoting someone due to drink preferences
seems rather hostile.

~~~
Dylan16807
Because the comment itself is hostile! There's no reason to be so snooty to
anyone that likes it. The horror of a _Keurig_!!!

~~~
logfromblammo
Midwestern humor isn't for everyone. It has a bit of a sour aftertaste.

Non-Midwesterners may mistake it for hostility, in the same way that non-New
Yorkers might mistake an offhanded cultural observation--or anything the New
Yorker says, really--for being a rude, arrogant prick.

(Edit: Not _you_. The author of the article is the New Yorker.)

(Edit 2: If you are a Midwesterner, then you're not a non-Midwesterner, by
definition.)

(Edit 3: Let's not even go into how someone with a used Exorcist fridge is
_snooty_ for dumping on Keurigs. That's some Midwestern humor right there.)

~~~
Dylan16807
> (Edit 2: If you are a Midwesterner, then you're not a non-Midwesterner, by
> definition.)

Yeah, I know.

I'm the one that called it hostile.

You said that it wasn't hostile, it's humor that non-midwesteners mistake for
hostility.

You said that _in reply to my post_.

By any reasonable interpretation, that post is calling me a non-midwesterner.

So I'm letting you know that that's wrong, and I'm not somehow unqualified to
call the post hostile.

------
rjeli
Japan is reversed - beer is taxed much more than spirits, so gas stations
carry $2 highball tall boys. Plus, public drinking is legal..

~~~
topmonk
Japan was the only place I've been where one could buy a 4 liter jug of
whiskey. At a convenience store.

~~~
nocsi
You can buy hard liquor at convenience stores in WA state

------
throwaway13337
Finland has a huge culture for drinking Lonkero or Long Drink - very similar
to this and for the same reason.

Fermented beverages there are taxed like beer so these long drinks are made as
such.

These are on tap in all the bars. It seems to have less of a stigma there than
drinking malt beverages in the states.

[https://en.m.wikipedia.org/wiki/Lonkero](https://en.m.wikipedia.org/wiki/Lonkero)

~~~
Tuna-Fish
In Finland, the difference between fermented and distilled products was not
taxes, but that until very recently it was illegal for anyone but Alko (the
local alcohol monopoly) to sell anything that was distilled.

The law was changed like a year ago and now only the alcohol content matters,
anything with less than 5.5% vol can be sold in stores. Fermented beverages
used to enjoy strong sales, but it seems like tastes are rapidly shifting
towards distilled ones. IMO they generally taste better.

~~~
GordonS
Sounds similar to Norway _, where only there is a max alcohol % (5%, IIRC) can
be sold in supermarkets, and anything stronger is only available through the
state monopoly, Vinmonopolet.

In Western countries outwith the Nordics, this may sound awful, but I've come
to appreciate it. Vinmonopolet stores sell a curated stock of high quality
alcohol drinks, and their staff are invariably both passionate and highly
knowledgeable. In short, the ethos is "quality over quantity" \- and I like
it.

_ For some context, I live in the UK, but work for the Norwegian division of a
megacorp, and have travelled to Norway frequently for decades.

~~~
cat199
in the us, we also have 'good liquor stores' and 'regular ones', the market is
lucrative enough to support such things without a mandated government
monopoly. same should go for UK as well I presume..

~~~
GordonS
I would have thought so too. And yet, most of the "decent" alcohol stores
(e.g. Oddbins) died a death several years ago.

Depending on where you live, you might find niche shops if you look hard
enough, but they are _far_ from ubiquitous. It seems the market has decided,
and they want the cheapest swill they can buy.

------
NegativeLatency
In addition to the taxes mentioned in the article, It's also important to note
that in many states in the US distilled beverages are only permitted to be
sold in certain licensed stores. (Oregon for example has liquor stores, and
you can't buy distilled things at a regular grocery store)

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alexhutcheson
This is also why the European version of Four Loko contained vodka, while the
American version used malt liquor.

~~~
grawprog
I was confused by another commenter's post saying Smirnoff's ice and Mike's
hard were made with malt liquor, both are made with vodka here. But, booze can
only be sold in licensed stores here so there's not much incentive to make
them different and I imagine mixing vodka with carbonated sugar water is
cheaper than using malt liquor.

------
ezoe
In Japan, the tax for beer is insanely high. "Free beer" doesn't happen in
Japan because beer is expensive. It makes most major beer companies R&D beer-
taste products which is by definition of the tax law, not a beer. On the other
hand, the canned vodka soda so cheap.

------
Agathos
"It doesn’t contain vodka or any other distilled spirits. Instead it is made
through fermentation, like beer, but starting from a base of sugar instead of
cereal grains like barley."

This is a roundabout way of saying it's undistilled vodka. All spirits are
fermented before distillation (or else what is there to distill?), and some
vodkas already start with pure sugar instead of grains, potatoes, or fruit.

~~~
jdminhbg
> This is a roundabout way of saying it's undistilled vodka.

Not really. Since you can make vodka from the same cereal grains that beer is
made from, you could also describe beer as undistilled vodka, but that
wouldn't make a ton of sense. Its major similarity to vodka is its neutral
taste, not its base ingredients.

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hirundo
* waves magic wand *

* poof! - Constitutional amendments are passed in every state requiring sales tax to apply to all items at an equal rate. Politicians suddenly have less power to punish or privilege individual sectors and industries, and so there is less reason to lobby and corrupt them. Sin taxes go away, so constituents are nudged and nannied and pandered to less. Much labor to track and charge differential taxes is disappeared. *

* wakes up *

Damn.

~~~
CydeWeys
Why should sales tax be the same for all items? Why should we, e.g., pay the
same tax on groceries as on cigarettes?

~~~
duxup
I'm not answering for hirundo as I suspect our views are different.

But generally speaking it has been recognized that broad based sales taxes
across all products is more stable when it comes to various economic downturns
and etc. Same goes for just say property taxes that cover X, but not Y
property.

Some sin taxes that get tagged to be used for "good things" often have bad
results if usage drops and the "good things" that we previously wanted to fun
suddenly have no (or a dramatic drop) in funding.

I'm not saying anyone shouldn't / can't do such things but there are reasons
to avoid tax policies where things are taxes dramatically differently. How
much "dramatically" is obviously up for endless debate.

That doesn't mean "tax should be the same for all items" but keeping close to
that concept is not a bad idea.

~~~
pmiller2
That’s more of an argument for not using sin taxes to fund anything other than
public health measures to combat the effects of consuming the thing that’s
being taxed.

~~~
duxup
It is but it demonstrates why you want a more even tax base just to help ride
out any changes in economics or usage.

Also even direct sin taxes tied to things might be hard. If we all stop
smoking, there still be cancer related to smoking...

Gas tax to fund roads, and increased fuel efficiency is another example.

------
tptacek
Barro means that it gave us White Claw in the sense that we don't instead have
canned vodka tonics (in effect: alcoholic seltzer), because vodka is
distilled, and White Claw's cane-sugar-brewed alcohol is a tax workaround.

We have the product category itself --- alcoholic seltzer --- on its own
merits, according to Barro. There's no escaping it.

------
BasicObject
Slightly related: I tried to buy an expensive used camera from one of my
favorite online retailers from New York and discovered that used electronics
were now being taxed. They lost a big sale yesterday.

~~~
falcongod082
Nah, you're already a part of their spreadsheet, they don't need everyone as a
customer, the profits still roll in.

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vinceguidry
I've been mixing a shot of whiskey, bitters, and club soda with a splash to a
few glugs of ginger ale/beer, still playing with the mix. Would be nice to
start seeing better ready-to-drink options.

~~~
kart23
For real. I was in UK for a week, the mixed drinks over there are amazing. Had
something called wkd, which is apparently regarded as a pretty trashy drink,
but it tasted like fizzy gatorade, couldn't even tell it had alcohol in it.

~~~
reaperducer
_couldn 't even tell it had alcohol in it_

So.... what's the point? Why not just drink Gatorade with seltzer, and save
yourself some money?

~~~
EpicEng
Is this an honest question? I can't believe that it is...

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ykevinator
What is bom? Also where is the bargain basement competitor? That's gotta be
coming right? Seems like this is super easy and cheap to make.

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padseeker
There are some interesting tidbits (tax laws between beer vs distilled
spirits), the reason everyone I know drinks it is it's a low carb alcoholic
beverage. You can bring it ready made to a party, which is easier than mixing
a drink of seltzer and vodka at your friends house.

~~~
reaperducer
_which is easier than mixing a drink of seltzer and vodka at your friends
house_

When I was a very young child (six or seven), it was my job at my parent's
parties to mix the gin and tonics. If mixing seltzer and vodka at a party is
too hard, it's time to stop drinking.

------
walrus01
see also, bumwine:

[http://www.bumwine.com/](http://www.bumwine.com/)

------
exabrial
My opinion is taxes are theft in the vast majority of cases.

------
tempsy
Personally I've just started drinking (very occasionally) low calorie beer. My
favorite is Corona Premier. 90 calories + 2.6g carbs (4% ABV) vs 100 calories
+ 2g for a White Claw (5% ABV).

Less alcohol, more refreshing, tastes pretty much like regular Corona, and
something about drinking Mexican beer always reminds me of sitting on a beach.

~~~
oftenwrong
>something about drinking Mexican beer always reminds me of sitting on a beach

That "something" is affective conditioning from years of exposure to
advertising, and exposure to the world that the advertising created.

~~~
rootw0rm
unless you've actually drank lots of Mexican beer on a beach. San Diego native
here.

