We are nearly four decades into the movement that transformed American beer. It was begun by enthusiasts who were bored with pale lagers, or keen to recreate at home the variety of beer styles they’d encountered abroad. By the end of the 1970s, a few entrepreneurs were trying their hand at brewing these styles commercially.
But what was it, exactly, that they were brewing, and what to call these new companies?
The first writers called these “microbreweries,” and their products, “microbrews.” All About Beer Magazine called the companies “independent breweries” in 1980, and “boutique” breweries in 1983. (Full disclosure: I was co-owner and editor of All About Beer). The first term refers to the size of the company, the second to its ownership; “boutique” suggests something both small and sophisticated.
In the mid-eighties, Seattle writer Vince Cottone used the term “craft” in the now-familiar context for the first time: “Perhaps a better definition of the breweries who make traditional, handmade beer in small batches primarily for local sale and local consumption would be ‘craft breweries’ instead of the currently popular term ‘microbreweries.’” This was the first definition that alluded to the aesthetics of the beer, and the term gradually gained acceptance.
What to call these ragtag companies didn’t matter until they started to gather fans. As craft breweries grew in number and popularity, national brewing companies first mocked them, then tried to muscle them off the shelves, then started to brew their own versions of the craft styles. More recently, national and international players have simply bought craft companies outright, and the cachet that goes with them.
As the term “craft” acquired marketing value, it became important who could legitimately wear that badge.
Truth In Labeling
The Brewers Association in Boulder, Colorado, is the trade association for small brewers, and so has a stake in defining eligibility for membership.
“Craft beer is different things to different people,” says Julie Herz, the BA’s Craft Beer Program Director. “Since 2006, we’ve had a definition in place for the small and independent craft brewer. And I say that designation—which frankly represents 99% of the 5,200+ breweries that qualify as small and independent—has become a very relevant one.”
Who is included in the BA craft beer definition? Large companies such as Boston Beer or Sierra Nevada that nonetheless remain independent and traditional. Who is excluded? Huge brewing concerns such as Anheuser-Busch InBev or Coors that brew beers in accepted craft styles. Who else is excluded? Every one of the once-craft breweries that have been purchased by AB-InBev, Heineken, Constellation or other corporations.
Herz describes the attempts by the largest beer companies to call themselves craft brewers as a “land grab.” She says, “Anyone can claim to be a craft brewer, but our definition is very specific, even though it’s very inclusive. The larger importers and multi-conglomerates are not going to be considered craft brewers by our definition.”
The value of the qualities implied by “craft” is clear in Nielsen data cited by Herz. In a 2016 survey of 1000+ beer lovers, 63% said that there is some level of importance to knowing that a beer comes from a small, independent producer when ordering at a bar or restaurant.
The trade association tasked with promoting craft brewers can be expected to have iron-clad requirements for membership and support. But among brewers themselves, and among consumers, there is a range of opinions about who is a craft brewer, the value of the label “craft,” and whether it matters.
Jeff Browning, head brewer at Brewport Brewing Company in Bridgeport, CT, embraces the term “craft,” but defines it almost entirely in terms of quality.
“I’ve been in this business since the mid-nineties, so I’ve watched it grow from less than 1% of the beer-drinking population, back when the term was ‘micro,’” he says. “That term doesn’t fit anymore, because craft beer is more about the structure of the product and not what size system you’re brewing on. ‘Craft beer’ is a descriptor for more avant-garde styles or what used to be considered boutique flavors, not national brand lagers.”
He bridles at the idea that an organization can define what is and is not a craft brewery.
“Take Devils Backbone, for instance [purchased by AB InBev last year],” he says. “What makes Devils Backbone a great brewery is Jason Oliver, their brewer. Jason Oliver is still Jason Oliver, even if his paychecks come through an AB InBev corridor. The same thing with Blue Point Brewery in Long Island [purchased by AB InBev in 2014]. I’ve known those guys since they opened their doors.”
“I think there are some people that believe they have a right to tell the rest of the world it’s not a craft beer because it comes in the package of a billion-dollar organization,” he continues. “But I think the large part of people who are looking for what could be called artisanal ales and lagers recognize that great beer is great beer. They’re more interested in the variety they can get—we can get Golden Road [purchased by AB InBev in 2015] in Connecticut now, and we can get Goose Island [purchased by AB InBev in 2011] barrel-aged stuff that you wouldn’t ever have been able to get.”
Is It All About the Liquid?Not far to the east, Brent Ryan holds a different opinion of the need to protect the label “craft.” As a founder of Newport Storm Brewery and Newport Distilling Company and—perhaps more importantly to this issue—the president of the Rhode Island Brewers Guild, Ryan has quizzed both members and consumers about what craft means to them.
“Not only does it mean quality; it means some connection to a community, and authenticity. When somebody says something is craft, that implies that this is not a mass-produced thing, it’s not being sold by a publicly traded company, or some private equity firm. It’s real people in a building somewhere, making this stuff on something that is less than completely automated. That’s a vision that consumers have, and it’s the same vision that a lot of small producers have.”
To the large producers who would insist that, “If the beer tastes the same, why isn’t it craft? It should be just about the liquid,” Ryan responds that the consumer is buying more than a commodity. “They’re buying it not just because it’s something they like, but because their money goes towards something they believe in.”
Small companies have watched with some alarm as former colleagues have sold to the largest brewing concerns. With the marketing and distribution muscle of an AB InBev or a MillerCoors, these acquired brands can reach new audiences, something that many consumers welcome. On the other hand, retailers may be tempted to rely on a one-stop shop, buying an entire portfolio of beers and styles from a single source and squeezing out competitors.
Sales figures for The High End, the new craft and imports division at AB InBev, give credence to the fears of independent brands. The group of former craft breweries (excluding newly purchased Karbach and Wicked Weed) grew by 32% in 2016. This growth is not merely a consequence of the transition from independence to AB InBev ownership: Goose Island, acquired in 2011, grew by 28%, whereas Breckenridge, acquired in 2015, grew by only 6%. The standout is Golden Road, which was tarred by some with the suggestion that it was built purely for acquisition: its growth last year was 97%.
By contrast, growth in the craft sector, as reported by the BA, has dropped to single digits for only the second time in a decade, at 8% for the first half of 2016. (It is worth noting that The High End figures are based on IRI multi-outlet and convenience data, and BA figures are reported by member breweries. The latter include taproom and specialty store data, where much craft beer is sold; the IRI figure for craft is 6.3%.)
What Do Consumers Want?
Given these different perspectives, what approach can retailers take that gives customers the wide choice they seem to want, and the authentic, local angle they also seem to want?
The first point is that craft beers—or beers brewed in the craft vein—are still the fastest-growing brands at a time when mainstream beers remain stalled. In 2003, Kim Jordan, founder of New Belgium and then-president of the Brewers Association, optimistically told an audience of craft brewers to aspire to 10% of market share, an impossible-sounding gain of seven points over that year’s actual volume. By 2015, craft brewers’ share was 13%.
Can craft ever own a quarter of the market? That, of course, depends on the definition of craft. “Yes, we can get there in a pragmatic sense, but in a statistical sense, maybe we don’t get there,” Ryan says, “because by the time a lot of these guys get to a half million or a million barrels, they go the Lagunitas route or the Elysian route and they sell to a big guy. As far as what was once considered craft beer getting to 25%? Absolutely.”
Herz, Browning and Ryan all agree that passing off the craft-ish beers brewed by the biggest companies as true craft beers risks alienating customers.
“Blue Moon is the beer where most people draw the line,” according to Browning. “You couldn’t get a more nationally produced, mutually acceptable flavor than Blue Moon until Budweiser came out with Shock Top, which is even less of a Belgian white ale.” He sees a role for these brands, but mainly as an alternative for consumers who are adjusting to stronger flavors or fuller-bodied beer.
Herz recommends that retailers make an effort to stock a diversified selection, accepting that consumer tastes vary. “Stores that order from whichever distributor provides them a large portfolio of brands from a single beverage alcohol company are not going to be as much of a beer destination as beer providers that prioritize an even mix of beers from the local breweries, beers from regional breweries, beers from national breweries and imported brands.”
With the confusion over who’s legitimate craft and who’s not, shelving all the small, independent craft brewers together, and labeling them as such, could be effective.
Ryan advocates transparency. “In the long run, the most educated consumers that are interested in craft are going to figure it out. If you want to be perceived by those high-end craft customers as knowing what you’re doing, you have to keep an eye on what’s independent and what’s not, because they’re going to know.” And as the maxim tells us, the customers is always right. bd
Julie Johnson was for many years the co-owner and editor of All About Beer Magazine. She has been writing about craft beer for over twenty years. She lives in North Carolina, where she was instrumental in the Pop the Cap campaign that modernized the state’s beer laws.