Tuesday, January 4, 2011

News Alert! Sam Adams Still A "Craft" Brewer

The Brewer's Association, the national promotional and lobbying organization for craft breweries has decided that Sam Adams can still belong to its club.

The problem was this: the BA defined a "craft" brewery as one that is "small" (among other things). To them, "small" meant "under 2 million barrels" per year. The argument being that no brewery that makes more than 2 million barrels per year could possibly be considered as doing it as a "craft"; at that point it was Big Business.

Last year Sam Adams (Boston Beer, stock: SAM) surpassed 2 million barrels making them, under the Brewer's Association definition, not a "craft" brewer. And, more importantly, the Brewer's Association would lose Sam Adams' statistics in its fight for market share and relevance.

Oh. They'd lose its dollars and political clout, too.

So, rather than do the right thing and eliminate arbitrary barrel requirements entirely or jettison the wholly inapplicable "small" nom de guerre, the Brewers Association simply raised the barrel qualification to 6 million barrels. Done. And done.

Jeff Alworth over at Beervana suggests calling this the "Jim Koch Exception" after the NBA's "Larry Bird Exception" that allows teams to exceed the salary cap in order keep veteran players.

Finally, not to pick a fight, but consider the comparison to Ben and Jerry's purchase by Unilever a decade ago: can a company that is publicly held, by definition acting in the best interests of its nameless, faceless, profit-seeking, stock holders, be considered "craft"?

-----------START PRESS RELEASE--------------

Boulder, CO • January 3, 2011-The board of directors of the Brewers Association (BA), the trade association representing the majority of U.S. brewing companies, has voted to change the BA's designation of "small" in its definition of a "craft brewer." The Association's board of directors also has revised its bylaws to reflect the change.

In the BA's craft brewer definition, the term "small" now refers to any independent brewery that produces up to 6 million barrels of traditional beer. The previous definition capped production at 2 million barrels. The changed definition is currently in effect and can be reviewed on the BA website, BrewersAssociation.org. The change to the bylaws went into effect December 20, 2010.

In the Brewers Association's bylaws, two classes of membership (Professional Packaging Brewers and Associate membership) have been redefined with a qualifying barrelage of 6 million barrels versus 2 million barrels.

The association cited several reasons for the change, including the recognition that "small" is a descriptive term relative to the overall size of the industry.

"Thirty-four years have passed since the original small brewers tax differential defined small brewers as producing less than 2 million barrels," said Nick Matt, chair of the Brewers Association board of directors and chairman and CEO of F.X. Matt Brewing Company. "A lot has changed since 1976. The largest brewer in the U.S. has grown from 45 million barrels to 300 million barrels of global beer production."

Matt added, "The craft brewer definition and bylaws now more accurately reflect and align with our government affairs efforts." On the legislative front in 2010, the Brewers Association supported H.R. 4278/S. 3339, which sought to update the cap on an excise tax differential for small brewers to 6 million barrels per year in production for their first 2 million barrels.

Retaining Market Share for Craft Brewers
The industry's largest craft brewer, The Boston Beer Company, is poised to become the first craft brewer to surpass 2 million barrels of traditional beer within the next few years. Loss of The Boston Beer Company's production in craft brewing industry statistics would inaccurately reflect on the craft brewing industry's market share.

In addition to Boston Beer, the current growth trajectory of other sizable BA member breweries places them on a course approaching the 2 million barrel threshold in the coming years.

"With this change to the craft brewer definition and BA bylaws, statistics will continue to accurately reflect the 30-year growth of market share for craft brewed beer," said Matt. "Brewers Association statistics on craft brewers will continue to keep pace with the growth of the industry."

Craft brewed beer market share is now approximately five percent of the U.S. beer industry, and growing. The BA has a stated mission of helping America's craft brewers achieve more than five percent market share by 2013.

Matt added, "Rather than removing members due to their success, the craft brewing industry should be celebrating our growth."


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  2. Jim Koch of Boston Beer is on the AHA board I might add. Conflict of interest? Yes. Hurts anybody? No


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