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Minnesota Budget Battle Hits Beer

Stocks in this article: TAP BUD

MINNEAPOLIS ( TheStreet) -- Minnesota's government shutdown is tapping into beer sales and signaling last call for some bars' beer-buying abilities, but is it really a crisis?

MolsonCoors' (TAP) MillerCoors division would say yes. The state's budget battle resulted in a July 1 government shutdown, a complete breakdown in negotiations between Republicans and Democrats and a mess for MillerCoors, since a delay in the renewal of its brand label registration may force the beer giant to pull its 39 brands from the state until its sales and distribution agreements or even the budget standoff are sorted out.

Minnesota's government shutdown is tapping into beer sales and signaling last call for some bars' beer-buying abilities. Political troubles in other states have also been trouble for beer makers.

That's assuming they'll have a place to sell it. About 300 bars, restaurants and stores are watching their beer supplies dwindle after the government shutdown scuttled their opportunity to renew a $20 "buyer's card" that allows them to replenish their beer and other alcohol supplies. Once July ends, that list of nearly dry bars will be up to 425. That's little more than 4% of the 10,000 establishments in the Minnesota Licensed Beverage Association selling beer and liquor throughout the state, but it's enough to get the MLBA's attention.

Bars and taverns are already in trouble across America. The National Restaurant Association notes that bar numbers declined by 282 last year and by 910 locations in the past two years. Softening bar sales reduced bars from 25% of all beer sales just a few years ago to 20% last year, according to the Beer Institute.

To prevent its bars from joining those ranks, the MLBA has been petitioning the skeletal post-shutdown government to fund the part-time clerical staff necessary to process buyer's card renewals. In the middle of beer sales' summer peak, when the Treasury Department's Alcohol and Tobacco Tax and Trade Department says beer production ratchets up to an annual high of more than 18 million barrels per month and topped out at more than 18.5 million barrels last June, some establishments just can't wait that long.

"If your buyer's card expires without renewal you cannot purchase from a wholesaler," MLBA Executive Director Frank Ball said in a statement to the group's members. "If a wholesaler is willing to sell to you illegally, you should not be tempted."

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