skip to Main Content

Craft Beer is Big Business now

Craft-Beer-is-Big-Business

Part I of What is a Craft Brewery

A recent trip to Portland furnished a perfect opportunity to observe the tectonic collisions caused by the slow evolution of the craft brewing industry into a credible form of competition with “Big Barley”. The world’s largest brewers are considering the prospect of even more of their revenue river being diverted down a rapidly widening channel called Craft, and have decided that they want to ride that current too. So, wisely, they buy craft breweries.

OK, it’s not an unusually wise, nor a terribly new move. In all business sectors, large companies buy smaller ones; it’s happened in the world of beer many times including the crest of the ‘first wave’ of the craft revolution two decades ago. Small business operators will always face the fundamental choice of whether to stay small and scrape by for the love of it, or grow just large enough to risk eventual collapse and/or attract the attention of a giant. At least the latter provides an exit strategy and justification for risking one’s life’s savings. A handful of breweries you love today will ultimately decide to swim with the bigger fish and they should feel no shame or failure in that.
The macros won’t buy ’em all, and they don’t have to. They need only enough to present a portfolio of tap handles suitable to please owners of establishments ranging from Irish-themed pubs to baseball stadiums. The large segment of the public that perceives themselves to be selective about beer, but which doesn’t form the stubborn core of the evangelical ‘movement’, will happily select one of their brightly-coloured taps to sip from.

When is Craft Beer not craft beer? Apparently, when it’s brewed by a “non-Craft Brewer”.

Earlier this year, Barley Mowat wrote a piece about beer standards that poked a finger full of fun into the way organizations try to separate craft from non-craft breweries. Accompanying the article was a photo of Deschutes’ holding tanks with the caption, “Full of Inversion IPA, but you wouldn’t want it since it’s not ‘craft'”. BM rightly ridiculed the way that people try to delineate craft from macro beer, and pointed out that it can’t reliably be done by defining brewery size or beer ingredients.

The definition of craft beer been attempted by many. Certain groups like the Brewers Association (BA) and our own BC Craft Brewer’s Guild try to document such things as part of their perceived organizational role. The BA, which represents small brewers in the US, wisely avoids defining craft beer itself and sticks to drawing a line between craft and non-craft breweries based on quantity of output. The BA uses a numeric definition, which, as Barley Mowat notes, is a recipe for compromise and ongoing revision. I think this was viable to do during the first wave of the craft revolution, when these new businesses were known as ‘microbreweries’. That term clearly deals with size. ‘Craft’ deals with something more esoteric.

Separating brewers by size was viable back when newcomers were all called ‘microbreweries’. ‘Craft’ deals with something more esoteric.

Defining an actual beer product as ‘craft’ by ingredients, quality or style is a fool’s errand, for certain. Any given macro can make amazing quality ales and lagers when it wants to, and any given craft brewery makes poor quality brews from time to time.

Sometimes they do it deliberately for fun or profit. Philips Phoenix, Howe Sound Lager, VIB Islander and Russell BC Lions Lager might all be examples of macro-like products from non-macro sources.

Even the normally great beers made by these and other craft brewers can’t qualitatively be grouped together as one class of beverages distinct from all of those made by larger international brewers. Many small brewers would love to be able to make a Czech lager as well as Pilsner Urquell or a porter as well as Fuller’s. Is the “craft” of brewing a great beer the domain only of start-ups and small operators?

One day your favourite craft brewery might not be craft anymore.

Remember that all of the industrial brewers you might hate started as small businesses. Heineken was just a mid-sized Dutch brewery until grandson Alfred H. grew it to huge international proportions in the mid-20th century. All of the rest have some kind of similar breakthrough story, many in the late 19th century. With massive growth came compromises, which is the part you rightly despise.

A similar transformation may occur with breweries like Central City, Philips or Red Truck one day. You might swear that this will never happen, and that you’ll disown them if it does. But how do you know that you’ll stop loving their beer if it ever so slowly evolves into a slightly different product over time?

One of the best examples of the transition from craft toward macro is Samuel Adams. A few years ago, Boston Beer Co. was in danger of no longer measuring up as craft by the numeric definition of the BA, who originally set the bar for microbreweries at 2 million barrels per annum. They raised it to 6 million in 2010 to accommodate the growth of Sam Adams and keep them nominally in the craft ‘fold’. Recently though, new US legislation designed to favour ‘craft breweries’ has been proposed which happens to again use 2M bbl as a classification threshold. Once you pass this limit you would be taxed like a regional brewer, in the same class as Pabst, even if you’re making boundary-pushing extreme beers. Either way, Boston Beer will likely outgrow the BA’s 6M bbl threshold in a few years, and under this new legislation will then be taxed like giants AB InBev and MillerCoors.

As described in another story in this edition of What’s Brewing, my wife and I frequent the Oregon-based McMenamins group, a chain of about 55 brewpub and/or hotel properties. By these numeric definitions regarding output they are a craft brewery group. Yet they operate more brewing outlets (about two dozen) than some states have breweries. More importantly to some, their core beer lineup is very conservative and their seasonal beers tend to be less than stellar. They may not meet the qualitative expectations of the modern craft beer enthusiast. In spirit, Sam Adams is probably closer to a craft brewer than McMenamins.

Based on sales in 2011, the Boston Beer Company was tied with Yuengling for the largest American-owned beermaker. Samuel Adams and the Boston Beer Co. might one day outgrow mainstream rivals like Pabst and could represent the far future of macrobrewing. The fledgling craft breweries of not long ago may be the behemoths of tomorrow.


In Part II I’ll tell you how the difficulty separating craft from non-craft breweries made the mainstream news in Oregon, and why this clarified my view as to what really defines a Craft Brewery.

Jeremiah Thunderfoot
  Issue:

Jeremiah Thunderfoot

Jeremiah Thunderfoot writes about the business of beer for What's Brewing.


This reporter/contributor can be reached by the following means:


See all posts by this author

This Post Has One Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top