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09.2010

Massachusetts Beverage Business

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Article By: Andy Crouch

As the beer industry settles into its prime time sales part of the calendar year, beer buyers from pubs to package stores remain focused on keeping the right balance of products on hand to meet a difficult-to-predict demand from consumers. Sales of bigger brands, including volume leaders Budweiser and Bud Light, continue to slide in 2O1O, while many craft brands have navigated the dicey economy in solid fashion. And while meeting demand remains on the mind of all brewers, a host of other issues, ranging from political to practical, continue to complicate the business of selling beer.
 
THE CONTINUING DEBATE OVER WHAT IS CRAFT
The craft beer industry has long struggled with definition, having evolved from nano breweries to micros to crafts and now back to nano again. During this process, sides have been drawn and long-time better beer pioneers have increasingly found themselves on opposite sides of the issue. As the Boston Beer Company approaches (or has already surpassed according to some sources) the two million barrel mark that many industry analysts and the Brewers Association uses to differentiate small brewers from large brewers, the discussion has once again been resurrected and found new relevance.

For quick review, the Brewers Association defines a craft brewer as “a small, independent and traditional” brewery that produces less than two million barrels, and less than twenty-five percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. The association further defines traditional as a brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least fifty-percent of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.


Seeing that its success would eventually lead to its exclusion from the craft beer fraternity, the Boston Beer Company has for several years now been promoting a new definition of craft brewer. The company suggests that “an American Craft Brewer is defined as being Small, Independent and Traditional. We follow the Brewers Association’s definition of a Craft Brewer but include a Craft Brewer who grows beyond two million barrels and continues to brew Craft Beer.” In redefining “small”, the brewery suggests that a qualifying brewery can have an annual production of beer that exceeds two million barrels if it was founded as a craft brewer and continues to satisfy the other craft brewer defining criteria.

The two million barrel conundrum continues to cause friction but its primacy is based in federal regulations. Under current federal law, a brewery that produces less than two million barrels of beer per year only pays seven dollars per barrel on the first 6O,OOO barrels produced each year. Once production exceeds 6O,OOO barrels, however, the small brewer transitions to the same eighteen dollars per barrel excise tax rate that the largest brewers pay. The Brewers Association and supporting groups have long been pushing Capitol Hill to create more favorable tax status for smaller brewers. Legislation now pending in the US House of Representatives would create a graduated beer excise tax rate of $3.5O for the first 6O,OOO barrels, resulting in a reduction in near sixteen million dollars of paid taxes for smaller brewers. The brewers would then pay a reduced sixteen dollar per barrel tax rate on beer production above 6O,OOO barrels up to two million barrels, resulting in an additional $26.2 million per year of tax savings. The legislation would also redefine a small brewer as one whose annual production remains under six million barrels. This bill presently has almost one hundred co-sponsors in the House. Companion bills have been filed in the senate.

Craft brewers have also tried increasing their lobbying activity on Capitol Hill through the formation of the House Small Brewers Caucus. Founded in 2OO7 by Members of Congress seeking a better understanding of the needs and interests of small brewers, the group is presently chaired by Representatives Peter DeFazio (D-Oregon) and Dennis Rehberg (R-Montana). The Brewers Association regularly coordinates with members to lobby Congress on a variety of regulatory and tax issues and holds occasional tasting sessions that are eagerly attended by Hill staffers.
 
POLITICS CLOSER TO HOME
Small brewers in the Commonwealth also have their own legislative interests at hand. A bill pending before the Massachusetts General Court would tighten franchise laws to make it difficult for brewers of any size to change wholesalers. The original franchise laws protected wholesalers – who had spent many years if not decades helping to build brands – from large brewers suddenly leaving them for better offers. In an era where numerous, independent and small family wholesalers existed, and with fewer big breweries to represent, the system made some sense. With the establishment of the smaller brewer market, where the brands a wholesaler may represent can number into the hundreds, it can be easy for some breweries to get lost in the shuffle. If a small brewery feels neglected or underserved by a particular wholesaler, the process for ending the relationship can be complicated.

The legislative bill would give beer wholesalers – whose numbers have shrunk due to continuing consolidation in the industry – greater protection from the loss of brands due to a changeover in ownership. If terms of release or transfer cannot be agreed upon following the sale of a wholesaler, a process of arbitration may follow.

Reaction from craft brewers has been swift, with editorials popping up in newspapers throughout Massachusetts. Small brewers, including representatives from the Massachusetts Brewers Guild, have been pushing for a small brewer exception to the legislation. In a joint statement, Dan Kenary of Harpoon and Martin Roper of the Boston Beer Company commented, “This bill could help wholesalers from being unfairly pushed around by the mega-brewers, but it is damaging to small brewers, from whom such protection is not needed.” John Stasiowski, President of the Beer Distributors of Massachusetts, told the patriot ledger that his association needs additional time to review the language suggested by the craft brewers.
 
SALE OF A PIONEER
One reason that small brewers have such concern over the status of their wholesaler agreements and termination rights is the complications that can arise with transfer of ownership. The craft beer movement has been moving forward, in some quarters, for more than thirty years, with many pioneers nearing the age of retirement. The industry recently reeled with news that perhaps its oldest pioneer, the Anchor Brewing Company, had been sold to a new set of owners.

Purchased by the Griggin Group, an investment and consulting company focused on beverage alcohol brands, Anchor is transitioning from the leadership of the iconic Fritz Maytag to a time that is less well-defined.
The new owners worked quickly to assuage any concerns that long time fans and customers might have. “Anchor Brewing Company has a long history in San Francisco and The Griffin Group is ushering in an exciting era while maintaining our proud, time-honored history,” said Fritz Maytag in a news release. “Since 1896, Anchor Brewing Company has been an icon of San Francisco’s history and culture,” added Griffin’s Founding Partner, Keith Greggor, “I am honored to bring Anchor Brewing Company into our family of craft beers and artisanal spirits through establishing Anchor Brewers & Distillers, LLC.” Maytag will remain as Chairman Emeritus of Anchor Brewers & Distillers.

Anchor Brewing has long been a bit of an anomaly in the world of craft beer. From its fabulous copper brewhouse to its iconic, antiquated label artwork, Anchor has long served more as a historical placeholder than a real competitor in the American beer marketplace. Available in hotel and airport bars across the country but with no greater presence deeper into markets, the brewery’s brands battled freshness issues and a lack of support from the brewery. With a bottle dating system charitably described as old-fashioned – it often appeared as if hieroglyphics would be easier to decipher – the brewery remained content to focus on its core markets and glide, to some extent, on its reputation – all despite maintaining a near-national presence. It will be interesting to watch how the new owners treat the historic brand and what line extensions are to come.


A HANDFUL OF AUTUMN BEERS TO CONSIDER
The seasonal appeal of beer has also been one of its greatest selling points.  With every change in the weather, from cool to scorching, a beer style is there to meet the occasion.  In the chilly winter months, shivering beer drinkers soothe themselves with dark, hearty beers.  With the brightening days of summer, a new selection of beers, including Hefeweizen, Dortmunder and India Pale Ale, is required.  For the most contemplative and mellow time of year, the fall brings a new pace of beers.  Two classic but sometimes under-appreciated styles tend to bring out the harmonies that exist when the leaves change and the air turns crisp.

weizenbock Consider this style an amped up version of the Dunkelweizen, with a dark lager history lurking deep within its body.  Weizenbocks usually pour amber ruby to dark brown in color and with a hazy appearance and impressive foamy head.  While offering the usual fruit and clove dashes, a Weizenbock’s aroma possesses noticeably more alcohol and malt warmth than standard issue Hefeweizen and Dunkel beers, and is more in line with the classic German bock style.  Beers of the style maintain a difficult to achieve equilibrium, with matching parts dark, zesty fruit and toasted, bready malts, all resulting in a smooth, drinkable, if potent, offering.  Weizenbocks offer a last fond look at the fleeting warmth of summer.


 Slam Dunkel
Weyerbacher Brewing Company
Easton, Pennsylvania
With its deep chestnut color, hazy ruby hues, and mild-mannered boost of foam, the creatively named Weizenbock offers wave after gentle wave of neatly folded caramel malt alongside accompaniments of classic Bavarian Hefeweizen yeast notes, including banana and clove. Translated into the tall, slender weizen glass, the Slam Dunkel indeed shuts the door on many other versions of the style, carefully meshing the complex worlds of sweet caramel and chocolate malts and banana and spicy clove phenolics. A touch light on the palate, the beer sneaks up on you with a developing mouthfeel that ends with a velvety wash of caramel fruits.

Moonglow Weizenbock
Victory Brewing Company
Downingtown, Pennsylvania
As a master of German styles, it comes as no surprise that Victory’s Moonglow
is a fantastic Weizenbock. With its mildly hazy rouge-apricot tone and pronounced and pillowy soft beige colored peak, the aroma blends restrained doses of spiced fruit, including cinnamon coated apple pie, with touches of peppery clove, all tucked into a glove of tangy and sweet bready malt. In the glass, the beer transforms into a drinking marvel, with luxuriant toasted malt swirls mixed with touches of cocoa and dry wheat, all surrounded in a cocoon of spicy clove and mild banana fruits. A mild tanginess pervades the heavenly mixture, bringing order where needed to keep this medium-bodied beer in proper order.

Hang Ten Weizen Doppelbock
Clipper City Brewing Company
Baltimore, Maryland
A classic looking Weizenbock with a tawny copper base coat accented by a serious cocoa wheat plume of foam, the nose greets you with subtle layers of caramel malt wrapped around a partially phenolic clove and modest banana dusting. A slow starter, the Hang Ten builds momentum as it warms, with additional sheets of toasted malt peeling back to reveal new layers of caramelized fruit, chocolate malt and a warming alcohol base. Silky smooth in body into the finish, Clipper City’s offering is a welcome addition to the stable of great Weizenbocks.


MARZEN One of the most popular seasonal beers, the Marzen style derives its history from the German brewing center of Munich.  Developed by Gabriel Sedlmayr II, owner of the Spaten Brewery, in association with his brother Josef – and adapting the Vienna style created years earlier by Anton Dreher – the amber-hued, full-bodied, toasted malt lager was served during the annual Oktoberfest celebration, from which it takes its other name.  Sometimes known as “Fest” beer, the Marzen was originally brewed in spring and cellared during the warm summer months for service in the fall, a practice less followed with modern refrigeration.  Versions at today’s Oktoberfest celebration are substantially lighter in color and flavor, while American versions tend towards deep gold to copper colors, with strong Vienna or Munich toasted and bready malt aromas and a slight but present noble hop aroma and bitterness.  Oktoberfests are clean lagers with a dedication to classic German and European malts and around six-percent alcohol.  Many American brewers produce toasty amber ales with a decided fruit aroma and flavor and call them Marzens or Oktoberfest beers. 

Balto MärzHon
Clipper City Brewing Company
Baltimore, Maryland
Playing off the local tradition of calling everyone ‘hon’, this Marzen glows with a brilliant amber-orange body and undulating off-white head, wherein clean and
nuanced rows of sweet malt pack together, with bready and toasted malts predominating over lesser notes of caramel, honey and earthy fruit.  Well-balanced from start to dry finish, the well-proportioned malt base glides with nutty and bready sweet notes, which are prodded into form by a residual but mild, earthy bitterness.  The MärzhHon is a well-crafted fall seasonal.

Oktoberfest
Stoudts Brewing Company
Adamstown, Pennsylvania
A celebration of robust Munich and Vienna malts, Oktoberfest starts with a bright copper hue and a khaki ripple of foam before unleashing a toasted malt nose, replete with bready and caramel notes, all drenched over a reserved earthy noble hop character.  In the glass, the aroma transforms into a more moderate experience, with toasted notes predominating in a creamy formation while subtly spicy hops bring a bitter counterbalance to the moderate sweetness level.  Clean and crisp to the taste, Oktoberfest draws to a close with a dry, nutty finish.


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