September 11-15, 2017

Brewers Association Draws Line in the Sand

If there’s one universal sign of success that cuts across any business segment, beverage or otherwise, it’s controversy. And that’s exactly what’s been dominating the beer blogosphere and social media realm for the past several weeks after the Brewers Association (BA) in mid-December, very publicly called out big brewers on what it calls their “crafty” attempts to play in small, independent, artisanal brewers’ sandbox. The BA, which represents the craft segment, criticized large brewers for trying to “blur the lines” between what the organization called those big companies’ “craft-like beers”—such as MillerCoors’ Blue Moon brand Anheuser-Busch InBev’s Shock Top—and ones made by craft brewers. 

“Witnessing both the tremendous success and growth of craft brewers and the fact that many beer lovers are turning away from mass-produced light lagers,” the December BA statement read, “the large brewers have been seeking entry into the craft beer marketplace. Many started producing their own craft-imitating beers, while some purchased (or are attempting to purchase) large or full stakes in small and independent breweries.” 

A recent high-profile example of a large brewery purchasing a craft was the 2011 acquisition of Chicago-base Goose Island by Anheuser-Busch InBev. 

The statement added that while the large multinational brewers’ focus on craft is “certainly a nod to the innovation of today’s small and independent brewers, it’s important to remember that if a large brewer has a controlling share of a smaller producing brewery, the brewer is, by definition, not craft…The large multinational brewers appear to be deliberately attempting to blur the lines between their crafty, craft-like beers and true craft beers from today’s small and independent brewers.”

The sentiment is nothing new for the Brewers Association. What is new is how it went on the offensive with such a polarizing statement.

“We’ve never put out a press statement in this manner,” Julia Herz, craft beer program director of the Brewers Association, tells Beverage World. “We do have position statements on the website on about nine different topics, but the press statement on this is unique.”

So, why now?

“The easy answer,” Herz says, “ is that, especially in the past few months, we have seen article after article after article [about the topic] and it became apparent to us that it was time for us to insert our voice into the conversation that was already organically getting so much attention. The reason I feel it was important to insert our voice into [the topic of] large brewers acting crafty is because our purpose is to promote and protect small and independent craft brewers, their craft beers and the community of brewing enthusiasts. That’s what we have in writing and that’s what guides us. And so with that, it was an appropriate time as both a beer lover and a staffer/spokesperson for us to insert our voice into that and somewhat course correct what we see going on with the large players starting to play in the small brewers’ space.” 

As expected, large brewers weren’t amused, asserting that small brewers have plenty of advantages in the market place over their larger counterparts and shouldn’t be attacking the macros. 

“Critics of today’s brewers miss the point that small brewers in this country are already enjoying a generous tax advantage over larger brewers and all importers, a policy designed to open pathways in the marketplace,” Joe McClain, president of the Beer Institute, said in a statement. The Beer Institute represents the large brewers the Brewers Association has taken to task, but it also counts among its membership a number of craft brewers that are also members of the BA.

“In fact,” McClain continued, “the small brewers in this country are experiencing explosive growth—their dollar sales were up 14 percent in the first half of 2012 and they represent the fastest-growing segment within the industry, having added 442 new breweries in 2012 alone. This indicates that the craft brewing sector is doing just fine producing high-end beer for high-end consumers, despite a sluggish economic recovery impacting hard-working, middle-class Americans.” 

McClain also pointed out that large brewers still make up the lion’s share of the beer industry’s $223 billion annual contribution to the U.S. economy, not to mention provide a significant number of jobs.

Regardless of whether a beer is produced by a major brewer or a craft, McClain asserted that it’s really up to consumers to choose what they want to drink. “And with the record number of brewers in today’s market place, consumers have more choice than ever before,” he added.

Herz counters, however, that in order for consumers to be able to make that choice, there needs to be transparency from the large brewers on what size entity is really producing their craft-like options. 

But it wasn’t only the macro brewers whose feathers were ruffled. In addition to the media statement, the Brewers Association published an infographic listing “domestic, non-craft brewers.” Among those identified was New Ulm, Minn.-based August Schell Brewing Co., which was none too pleased to be called out. August Schell doesn’t satisfy all of the association’s criteria—“small, independent and traditional”—to be designated a craft brewer. Specifically, it falls short on the organization’s definition of “traditional,” which requires a brewer to have an all-malt flagship or have at least 50 percent of its volume be all-malt. Additionally, if a brewer uses non-malt adjuncts in its recipes, those must be “to enhance, rather than lighten flavor.” August Schell, which has been operating since the mid-19th century didn’t make the cut on that last point. And Jace Marti, the brewery’s sixth-generation brew master, pulled no punches in voicing his displeasure on Facebook the day after the Brewers Association released the statement.

“As a 152-year-old brewery, and the second oldest family-owned brewery in America, stating that we are not ‘traditional’ is insulting,” Marti’s post said. “Their definition of what makes a traditional brewer, and thus a ‘craft brewer,’ comes down to the use of adjuncts. Big brewers often use adjuncts in excess amounts to cut down on brewing costs, and to lighten their beers—the opposite of what the craft beer movement is all about.”

Marti further noted that when the brewery’s namesake emigrated to the U.S. in 1860, his only option was to brew with what was available to him. The 2-row barley he wanted to use could not be shipped in large quantities from Europe at the time, so he had to make do with the locally grown, much higher protein 6-row barley. To brew a more stable golden lager and cut down on the protein content somewhat, he incorporated local corn into that recipe, something the brewery does to this day. 

“The question we have for the Brewers Association,” Marti said, “is why are we being punished for brewing with a locally grown ingredient, which started out of necessity, and has continued out of tradition?” 

But Herz says, that while August Schell is not included in the craft definition, the definition, for the most part, is “pretty dang inclusive. Ninety-seven percent, give or take, of the 2,100 breweries do fall under small, independent and traditional.”

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