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05.2008

Massachusetts Beverage Business

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Article By: Andy Crouch

What a difference a decade makes.
For craft brewers, the not-so-distant past signified a time when many would-be entrepreneurs wondered about whether their new businesses would survive.  America’s initial flirtations with the colorful new characters on the beer scene quickly soured and things looked dire.  Fast forward ten years and craft beers have become one of the top stories in the beverage alcohol business and earned a continuing place on your store shelves and tap handles.

Taking over a position previously held only by raging import brands, this country’s 14O6 craft brewers again delivered double digit growth in 2OO7, leading all other segments in the beer category.  Initial reports show that sales by independent craft brewers rose by 12 percent by volume and 16 percent in dollars for 2OO7.  In the most impressive part of the growth, craft beer constituted a 5.9 percent share of total retail sales, accounting for $5.74 billion, up from $4.95 billion in 2OO6.  Craft brewers’ efforts comprised 3.8 percent of total American beer production.

“Since 2OO4, dollar sales by craft brewers have increased 58 percent,” said Paul Gatza, Director of the Brewers Association.  “The strength of this correlates with the American trend of buying local products and a preference for more flavorful foods and beers.”

Over the past three years, the association, based in Boulder, Colorado, has significantly increased its efforts to promote and preserve the craft brewers’ achievements. The association has stepped up its legislative efforts in Washington, DC and various state capitals, and expanded the thriving Great American Beer Festival,

The association has also been a strong proponent of expanding the world view of the craft brewers’ marketplace. Where breweries once focused on selling beer to local pubs, through the efforts of the Brewers Association and its members, a handful of craft breweries now export beers to more than a dozen countries around the world. As a result of participating in the Brewers Association’s Export Development Program, American craft breweries are also experiencing success in beer competitions around the world. Craft breweries recently won a combined 3O medals from the Stockholm Beer and Whisky Festival and the European Beer Star Competition. Of the 18 breweries participating in the Stockholm event, eight breweries won medals.

Local brewer, Harpoon Brewery, scored three gold medals at the events. Harpoon’s flagship IPA won a gold at the Stockholm event in the Ale 4.8% to 5.9% category and a gold in the English-style India Pale Ale at the Beer Star competition, held as part of the BRAU Beviale event in Nuremberg, Germany. Harpoon also collected a gold medal in the Maerzen category at the Beer Star event for its Octoberfest, besting several local German breweries. As part of the Brewers Associations’ efforts to increase the international recognition of American craft breweries and promote the image of craft beer as a world class brand, the group used funds from its export program to ship beer samples to the events.

The democratic process.
One of the strengths of the association is the participation of its individual brewery members. Representation on the association’s board of directors and its various, active committees includes members from the largest craft breweries, such as Boston Beer, to its smallest members. Following member elections last fall, the Association announced the election of a new board of directors, including Rich Doyle, of Harpoon Brewery as Board Chairperson, Nick Matt of Matt Brewing Company as Vice Chairperson and Mark Edelson of Iron Hill Brewery and Restaurant as Secretary/Treasurer. Doyle was especially pleased at the opportunity to again help direct the association’s efforts. “I am glad to have the opportunity to serve once again on the Board of Directors,” Doyle said. “This is an exciting time for small brewers in the United States and the Brewers Association plays a central role in supporting their growth. I am honored to have been chosen by the Board to serve as Chairman and look forward to the coming year.” Doyle will also served as the keynote speaker for the association’s 25th annual Craft Brewers Conference, to be held this April in San Diego.

Relations between members and the association itself have not always been so harmonious. In 2OO7, the association took some hits for its redefinition of the term ‘craft brewer’. The new definition solidified the transition from microbrewer a decade earlier. The association’s governing board decreed that an “American craft brewer is small, independent and traditional”. While few breweries complained about the small and traditional parts, a growing controversy centered on the group’s definition of ‘independent’ which requires that less than 25-percent of the brewery be owned or controlled by a beverage alcohol company that is not itself a craft brewer. With this decision, breweries such as Brewery Ommegang and Mendocino Brewing (owned by foreign breweries), Leinenkugel’s (owned by Miller), and Widmer, Redhook, Goose Island and Old Dominion (partly owned by Anheuser-Busch) no longer qualified as craft brewers. The decision still rankles some members of the craft brewing community, including many from the excluded breweries, and remains one of the political landmines in running the association.

Setting the style.
The Brewers Association also bears responsibility for debating and defining the ever-changing list of beer styles. In late February, the association announced the 2OO8 Beer Style Guidelines. In recent years, the eleven categories were added to the guidelines this year, reflecting the industry’s direct focus on helping develop craft beer. Of the new categories being introduced into the guidelines, five new additions were added just for barrel-aged beers.

The guide is a continual work in progress for a group of the BA’s founders, foremost among them is President Charlie Papazian, father of the modern homebrewing movement. Since 1979, the association has distributed a list of beer style descriptions as a reference for brewers and beer judges. The association’s list draws heavily upon historical research and the classic beers world-class brewers. The development process is arduous and requires consideration of many factors. A style may also be omitted from the list if current commercial examples do not exist. The beer style guidelines attempt to bring order to an otherwise chaotic scheme of eclectic brewing methods and styles.

Growing from a few dozen styles in the beginning, the list now contains a staggering assortment of more than 125 entries. The 2OO8 edition was no exception to the work of past authors, with the addition of 11 new categories, including Fresh Hop Ale, American-Belgo Styles Ales, Leipzig-Style Göse, Belgian-Style Blonde Ale, Australasian-Style Pale Ale, Barrel Aged Beers, and a catchall Out of Category – Traditionally Brewed Beers.

“These guidelines help to illustrate the growth of craft brewers in the United States and also offer insight and a foundation for helping appreciate the hundreds of beer types brewed for the beer lover,” said Brewers Association President, Charlie Papazian.

Charlie Papazian, The Beer Writer.
The association’s founder and president, Charlie Papazian is also branching out to help promote craft beer. Papazian is well-known to many beer lovers as the author of several books, including the classic Complete Joy of Homebrewing. He also writes magazine and newspaper articles for a variety of publications, including a bi-monthly column in draft magazine. Papazian recently took on the job of editing the popular 365 Bottles of Beer for the Year Page-A-Day Calendar for 2OO9. The ubiquitous calendar, which can be found on the desk of every beer lover and half the fathers in America, has long been written by writer Bob Klein.

Promoting craft beer in the future.
The association is undertaking a number of new efforts to promote craft beer in the coming years. On April 7, the association joined with brewers, beer importers, distributors, and beer lovers in a celebration of the 75th anniversary of the repeal of Prohibition. They also assisted in coordinating the production of specially brewed commemorative beers, brewery tours and events at many of America’s 14OO plus breweries. According to the association, “historians note that Prohibition officially ended on December 5, 1933, with the ratification of the 21st Amendment. But earlier that year, newly-elected President Franklin D. Roosevelt took steps to fulfill his campaign promise to end the national ban on alcohol. He spurred Congress to modify the Volstead Act to allow the sale of 3.2 percent beer in advance of Prohibition’s ratification. Thus on April 7, 1933, Roosevelt himself received newly legalized beer at the White House to toast what was the beginning of the end for Prohibition. In the 24-hours that followed, more than 1.5 million gallons of beer flowed as Americans celebrated.”

The association is teaming up with the Beer Institute to promote the contributions craft brewers make to the economy as a whole. “As we celebrate this significant day in the history of beer, we also recognize the incredible contributions beer has made to our nation and the economy over the last 75 years,” said Jeff Becker, President of the Beer Institute. “Today, our industry contributes nearly $19O billion annually to the US economy and provides more than 1.7 million jobs to our nation’s workforce.” The groups are also working with other members of the three tier system. As part of its efforts towards raising craft beer’s reputation among legislators, the Brewers Association will hold a major new beer event in Washington, DC on May 16 and 17, in culmination of its American Craft Beer Week, which takes place from May 12 to 18, 2OO8, and is designated as a time for all legal-drinking-age Americans to explore and celebrate the flavorful beverages produced by, of course, small, traditional and independent brewers. As part of its mission of highlighting the pairing of beer and food, the association has selected four dozen craft brewers to showcase the pleasures of fine food enjoyed with beer at ‘SAVOR: An American Craft Beer & Food Experience’.

To be held at the Andrew W. Mellon auditorium, the association is promoting the event as a “must attend for craft beer aficionados and foodies alike”. As envisioned, the event will certainly serve as a marked departure from the average beer festival. The organizers have planned a reception-style sampling and pairing of more than 35 sweet and savory appetizers and 96 craft beers from 48 breweries.

The event also gives attendees the opportunity to attend educational events, where brewers and chefs will offers further beer and food pairings. Scheduled speakers include Sam Calagione of Dogfish Head Craft Brewery, Jim Koch of Boston Beer, Garrett Oliver, brewmaster of The Brooklyn Brewery, and a group of non-beer industry “cross drinkers”. Attendance at the event will be limited to 7OO consumers per session and at a ticket price of $85, which includes a variety of small dishes and appetizers paired with craft beers, it remains to be seen whether the event can achieve its lofty goals.

Julia Herz, a spokesperson for the association said in a press release announcing the event, “What better place to showcase the American Craft Beer Revolution than in our nation’s capital. This event is guaranteed to make a believer out of anyone who attends.”

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