Israeli Beer Lovers Foaming Over Rising Brew Tax

Proposed levy threatens dozens of microbreweries just as local industry is getting off the ground.

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With the beer-less days of Passover just past and the sweltering get-me-a-cold-drink summer months up ahead, it seemed a perfect time for Israeli beer lovers to gather. And so they did − coming together at a beer festival in Jaffa recently to celebrate the art of the homeland brew, compare hops and yeast notes, talk barley − and also complain about that buzzkill of a subject: taxes.

“Now, here is a surprising fact,” begins Shachar Hertz, 37, owner of “Beer and Beyond,” a company dedicated to promoting beer consumption in Israel that co-sponsored the event, together with a local bartending school. “Israel is, after Finland, the biggest per capita consumer of...” But, alas, no, he shakes his head, looking around the underground parking lot-turned-beer-cellar and festival venue. “Beer,” despite Hertz’s best efforts, is not the next word to roll of his tongue. It’s “vodka” − thanks in no small part to the Russian immigration of the past decades, and with some help from Tel Aviv bartenders who have turned late night vodka chasers into the must-have giveaway item of any self respecting bar.

Wine in Israel was once upon a time as ‏(un‏)appreciated as beer, has seen its fortunes steadily rise since the late 1980s, with hundreds of boutique wineries springing up around the country and a growing, increasingly sophisticated following. But beer has not been as lucky in this holy land.

The local beer industry has been dominated, since independence, by two big commercial companies churning out mass produced, some-might-say lackluster, lagers such as Goldstar and Maccabee. The very concept of a local microbrewery, which hand-crafts smaller quantities of beer ‏(usually less than 5,000 liters a year‏) using premium ingredients, classic brewing techniques and no small amount of love − was, until a few years ago, nonexistent.

“It is a cultural thing. Israelis historically just never connected to beer, let alone quality beer,” shrugs Hertz, who had his “OMG beer!” epiphany moment in New York, when he moved there a decade ago to work for the Defense Ministry. It was not long before he gave up his flirtations with gin and tonics and rum and cokes, and got serious with beer − enrolling in the University of California at Davis’ online brewing extension course, and soon after returning home to Israel to spread the word.

“The Czech Republic, Germany and Ireland. Those are serious beer drinking countries. And the U.S. and Australia not far behind,” says Hertz. “On the other end of the spectrum, you have a whole bunch of Muslim countries where there is very little consumption. And then, lagging even behind them − you have us.”

To give a sense of the gap: Israelis consume an average of 14 liters of beer per person each year, says Hertz − compared with the whopping 160 liters that each Czech imbibes. There has been some progress, Hertz continues brightly, especially when it comes to the boutique beer scene. Leading the change, back in 2006, was a New Jersey transplant named David Cohen, who opened the country’s first microbrewery − Tel Aviv’s Dancing Camel, featuring such seasonal beers as a Rosh Hashana pomegranate brew, and a wheat and etrog concoction for Sukkot.

In 2009, in another first, Jem’s Beer Factory, Israel’s first kosher microbrewery, was opened by Jeremy Welfeld, another new immigrant from the U.S., who, armed with brewing technology degrees from both the University of California and Chicago’s Siebel Institute of Technology, set up shop in Petach Tikva.

The number of microbreweries that have popped up since is estimated to be over 20 − and there are a growing number of pubs, restaurants and even supermarkets carrying the home brews. More discerning beer drinkers, meanwhile, are showing up en masse at boutique beer festivals such as this one, and also seem willing to fork out the extra shekels for the good stuff. “But to a point,” as Hertz stresses.

A new law, set to be passed in Knesset Wednesday, which would significantly raise the purchase tax on beer − from NIS 2.18 to NIS 4.19 per liter − is causing panic in the nascent industry. While such a tax would hurt Israeli beer makers across the board, and large companies Coca-Cola and Tempo are joining forces with the smaller brewers to fight the measure − the biggest losers will clearly be the boutique outfits. Their beers are more expensive, the operations they run much tighter, and they barely manage to squeak out a profit to begin with.

“I don’t know if our revolution can continue with the new high prices,” says Hertz.

One of the increasingly popular boutique beer breweries on the scene is “Shapiro,” which was started by three of the six Jerusalem-based Shapiro siblings. The Riverdale, New York born Shapiro kids, whose parents moved the family to Israel when they were tots, started tinkering around with beer in their backyard after their army service, in the days, says Itzik Shapiro, 31, when everything from the extracts to the brewing kits had to be imported. They read any brewing book they could get their hands on, enlisted their neighbor, a biology professor at Hebrew University, to help with the formulas, argued with their religious mother about their need to keep brewing through Passover, and produced just about enough for themselves and their friends, recalls Shapiro.

“Beer making is in our blood,” says Shapiro, noting with pride that his mom’s side of the family hails from Milwaukee, a state famous for two things, he says: Harley Davidsons and beer. In the last few years, thanks in part to a attention grabbing online marketing campaign, the Shapiro label has gone where most microbreweries here still only dream − commercial.

Production moved from their backyard to a factory in Beit Shemesh where over 70,000 liters a year are produced: from the very hoppy Pale Ale, to the sweet Oatmeal Stout to the classic, German-like Wheat concoction. Shapiro is, by all accounts, a great success − but to put it in perspective, the big, mass produced beers in Israel roll out of the production line by the tens of millions.

“Goldstar and the like can contain the tax better,” says Shapiro. “We are a small operation, and our business plan is really going to be put to the test.” Supermarket prices for boutique beers, now hovering between 15-20 will rise 1-2 NIS, and in pubs and restaurants, where boutique beers easily cost 30-35 NIS already, the price is expected to rise by about 4-5 NIS.

“If I have to raise my price above a certain amount, I am sure no one will buy. Even imported beers will be cheaper,” says up and coming beer maker Bryan Maadan, 50, a transplant from Vancouver, Canada, who has been living in Har Chaluz for 20 years.

Maadan, a computer programmer by profession, has celiac disease and cannot consume gluten. He started his beer tinkering, mainly, he says, as a hobby so he could have a drink with his son Uriah.

“I took out the barley and substituted in buckwheat, which is gluten free,” explains Maadan, leaning over the bar at the festival, as Uriah, alongside him, pours out tasters. “Then I added in honey and molasses to make up for losing the sugar content.” Maadan played with adding, and then taking out, quinoa, reconsidered the honey ‏(it went‏), adjusted the malt content, and finally came up with a formula which he now sells commercially.

Next up, he says, is getting an official “Kosher for Passover” certificate which could catapult him into the Jewish holiday major leagues. But even before that, he says, he might have to reassess his whole operation. “This tax is a disaster,” he complains. “It will cause me to look at production outside the country.”

“There is so much creativity, enthusiasm and effort in the Israeli beer scene,” concludes Naama Halevi, a chemist at the Weizmann Institute and an avowed boutique beer fan with her own beer blog. Halevi, who, along with thousands of others signed a petition Tuesday protesting the proposed new taxation, insists the battle has not yet been lost.

“It’s so uncool to try and trip up this great industry, just as it is coming into its own,” she charges. “We cannot allow it.”  

Ale to the chief: A brewer displaying his wares at a beer festival in Jaffa.Credit: Tomer Appelbaum

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