The beverage alcohol industry is a highly regulated and heavily taxed business. What governments do can have a profound effect on our business. We believe that we can either be a participant in the public policy and regulatory processes or sit on the sidelines, where our voice would almost certainly not be heard. We believe that the most effective regulation is a result of input from many stakeholders, and our company and industry deserve seats at the table.
We engage with policymakers to protect and expand our commercial freedoms and interests as appropriate, and facilitate the adoption of public policies that address problems related to alcohol misuse and abuse. Our advocacy activities include representing our interests on taxes, international trade restrictions, advertising restrictions, labeling, and other issues.
Harmful alcohol use is complex. There is no effective one-size-fits-all approach. We believe that broad restrictions such as marketing bans or population-wide measures such as taxation or price controls are ineffective in addressing misuse and abuse. Moreover, these measures can be difficult to enforce and do not address harmful use itself since it forces the vast majority of those who drink in moderation to pay for the resulting harms of those who abuse alcohol. We do, however, support targeted, multi-stakeholder approaches that directly address those who abuse or misuse alcohol (e.g. strict enforcement of drunk driving laws, screening and early intervention for high risk drinking behaviors).
Globally, we work individually and with our trade associations in the regions where they operate to represent our policy interests. For instance, we engage with the World Health Organization, its Member States and stakeholders as part of our commitment to open dialogue and our interest in seeing effective and sound public policy adopted that reduces the harmful effects of alcohol misuse and abuse. We are prepared to do more.
In the U.S. we strive to engage government through advocacy and our Political Action Committee (PAC). PACs are organized for the purpose of raising funds to support (or not support) candidates for public office. We have a Political Action Committee policy and compliance guidelines on lobbying.
Recent proposals in the U.S. to increase our tax burden as a source of additional government revenue have been of considerable concern. Beverage alcohol is taxed separately and substantially through state and federal excise taxes (FET) above and beyond corporate taxes. The federal excise tax for spirits per ounce of pure alcohol is two to three times greater than it is for beer and wine, respectively. We believe "alcohol is alcohol" and seek taxation based on alcohol equivalency. Besides the disproportionate tax burden on spirits, any FET increase would have a negative economic effect on the hospitality industry and the millions of workers that it employs.
In addition to our concerns about tax equivalency, the U.S. congress is considering the repeal of LIFO (last-in-first-out), an accepted inventory accounting practice in the U.S. since 1939. LIFO is designed to minimize artificial inflation gains and accurately reflect replacement costs. We strongly oppose this repeal since LIFO is particularly important to companies like Brown-Forman, whose aging process requires that distilled spirits be retained in inventory for several years before being sold. LIFO repeal would also result in an unprecedented "recapture" or retroactive tax increase of any tax benefit received.
Much of our government lobbying occurs through our trade associations. We are members of:
- Distilled Spirits Companies of the U.S. (DISCUS)
- Business Industry Political Action Committee (BIPAC)
- European Forum for Responsible Drinking (EFRD)
- The EU Committee of the American Chamber of Commerce (AmCham EU)
- The Wine Institute
- The Distilled Spirits Industry Council of Australia (DSICA)
- European Spirits Organisation (CEPS)
- The Distilled Spirits Association of New Zealand (DSANZ)
We are transparent about our activities and welcome inquiries. With the publication of this report, we are proud to launch our new online Issues Forum: a major step to broaden the conversation about alcohol issues. The Issues Forum can be accessed at www.ourthinkingaboutdrinking.com. We hope that the establishment of the Issues Forum will lead to a continuing dialogue from which we can listen and learn, adapting our corporate actions and viewpoints so that they remain in alignment with social values and emerging research in the markets where we operate.