There are over 4,100 small and independent breweries in the United States. A handful of small breweries have sold to globally huge brewing companies. The headlines these sales have taken don’t reflect fundamental evolution that is continuing to happen not only in the USA but worldwide.
In late August I spent three days driving on the back roads of central Maine visiting small breweries in Bangor, Orono, Skowhegan, Farmington, Hallowell, Lewiston – certainly not major metropolitan centers, but rather very proud small communities. Some of the breweries were tiny nano breweries, some were in farmhouses, others were small and in back of pubs and then there were production facilities that had 30-barrel brewhouses. Most were experiencing demand and healthy growth. What I encountered expressed the fundamental truths about small and independent brewers. My experience was consistent with what I’ve seen, heard, tasted and felt on my road travels the past few years through small town, Idaho, South Carolina, Montana, Utah, Virginia, Florida, Wyoming, Arizona, Oregon, New Mexico and elsewhere. There is an expression of fundamental truths that popular headlines aren’t capturing. From my onsite perspective, what small is and what small is doing is extraordinary and amazing. They have continued to embrace the genetic code that America’s small and independent breweries nurtured and developed in the 1980s.
The essence of being small and independent is alive and well. The challenge of being small and independent is very real and distinct. If you stop reading what mainstream is speculating and journey to the heart of small and independent American breweries you know this.
As I have stated in past commentaries, the economic forces of the largest brewing companies in the world comparatively overwhelm the resources of any one individual small and independent voting member of the Brewers Association. Without an organization that represents the interests of small and independent brewers their voice in the economic, technical, supply chain, distribution dynamic, retail dynamic would be totally dwarfed and overwhelmed. Without a defining voice the future success of small and independent American breweries would be in jeopardy.
In my April byteclay.commentary I wrote, “The Brewers Association represents the best interests of small and independent American brewers. No other organization does that. Size matters. Independence matters. Business models matter. For craft brewers it matters with incoming supply of materials. It matters in the world of retail, distribution, government affairs, rules and regulations. Independence matters – I observe this every single day of my career. Yet there are powerful forces out there that deny that it matters… Never ever underestimate the importance of defining yourself as a group of small and independent brewers, yourself as an individual company, your brand and your uniqueness. It matters a lot and don’t let anyone mislead you into thinking that it doesn’t matter!”
At the time as of this writing Anheuser-Busch InBev continues to progress in its endeavor to buy SABMiller. There are plenty of financial, political and business headlines expressing a wealth of speculation on what a mega-merger of this proportion will mean.
At the same time Anheuser-Busch InBev’s ongoing strategy to buy and own existing small and independent breweries (and still infer that they are small and independent) continues. Every time a small and independent brewing company is bought by a large global brewing corporation, the craft brewers’ definition becomes part of the conversation. That part of the conversation seems to get very emotional. The same scenario is played out time and again. The selling brewing company usually expresses all the following points in a span of a week:
- We’re still a craft brewer (at heart)
- The craft brewers definition is outdated
- The craft brewers definition is unimportant
- The craft brewers definition should be revised to still include us
What is not usually stated, but in my opinion is inferred by the purchased former brewery owners statements are these two contrary “talking” points:
- We still value the resources of the Brewers Association
- With the new resources we have since being purchased we will have much greater access to ingredients, technology, distribution, marketing, capacity, government affairs influence.
I’m bewildered, chalking up the rhetoric to transitions and a mix of emotions, remorse and joy($). During these periods of brewery transitions the Brewers Association has never ever taken a position on any sale of member or non-member breweries; every brewing company owner has the right and privilege to make business decisions that make sense to their situation. Though, if the sale reaches proportions large enough to potentially threaten the access to market of our small and independent members, the Brewers Association would be involved and concerned on behalf of its small and independent members.
Contrary to some brewery’s and media reports the Brewers Association does not “kick” breweries out nor do we send notices or notification calls. We answer questions and clarify when asked.
I take heart and advise that you too take to the road. Mind the view beyond the headlines and speculation. There is authenticity and heart in America’s 4,100+ small and independent breweries. Their stories don’t make headlines in the world of global takeovers, but their continued emergence and success will continue to change the landscape we call American Beer Culture.
Here’s a backgrounder on the terminology that Brewers Association uses to define and serve the craft brewing community.
The Brewers Association has two important defining frameworks.
The first is captured in the Brewers Association’s Bylaws that define what kind of brewing company may be a voting member. In summary a voting brewing company member:
- Must be company operating in total of an annual volume of six million barrels of beer or less
- Eligible brewing companies must hold a brewer’s notice issued by the Alcohol & Tobacco Tax & Trade Bureau
- Eligible brewing companies must not have a non-U.S. individual or organization holding an interest of 25% or greater of that brewing company
- Eligible brewing companies must not derive more than 50% of its sales from
- the manufacture or the sale of wine,
- the manufacture or the sale of distilled spirits, or from
- the distribution and resale of beer not produced by itself or an affiliate that holds an interest of 25% or greater of that brewer
- Eligible brewing companies must not be part of a “controlled group” of brewers (as understood under the provisions of 26 U.S.C. § 5051) if the combined production of that controlled group produces more than six million barrels of beer per year, and the threshold for finding a “controlled group” shall be an interest of 25% or greater, and not the 50% threshold established in 26 U.S.C. § 5051. All Professional Brewers that comprise a single controlled group of brewers shall be treated as a single brewer for membership purposes.
These guiding bylaws continue to capture the spirit small and independent American breweries and help define the Brewers Association’s priorities, programs and services.
The second important framework is the Brewers Association’s definition of what a “craft brewer” is. This definition is not a definition of craft beer. It is a framework that defines a cultural view of the spirit of what it means to be craft brewer. In spirit it defines the cultural view of what a small and independent American brewer(y) is. The craft brewers definition does not provide any guideline for Brewers Association governance.
The Brewers Association’s Craft Brewers Definition states:
An American craft brewer is small, independent and traditional.
- Small is defined as Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships.
- Independent is defined as a brewing company that is less than 25 percent owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer.
- Traditional is defined as brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.
An important nuance of the craft brewers definition is that it permits a foreign owned brewing company that operates in the USA to define their American operations as a craft brewer.
The craft brewers definition has become a far more emotional issue than the governance definitions outlined in the Brewers Association’s Bylaws. Why? Because it is a much more public and consumer facing statement.
Remember, take heart and take to the road.