I Was Going To Post About Nutritional Information For Craft Beers

The problem is – it's not available. But what I really didn't know was that I was stepping into a decade long hornet's nest (mixed metaphors? Me? Never!).

 

This is a battle that has been on-going since 1993, when the Bureau of Alcohol, Tobacco and Firearms ("BATF") determined that "there was no significant consumer interest in having nutrition information on alcohol beverage labels." Then, in 2003, the issue was raised again when a brewery contacted the Alcohol and Tobacco Tax and Trade Bureau (TTB, the latest incarnation of what used to be the BATF) desiring to voluntarily put nutrition information on their labels. Then in December of that year the Center for Science in the Public Interest (CSPI) and others formally petitioned the TTB to change regulations to require nutritional information on alcohol labels. But, don't go thanking them just yet – their interests may not be entirely in your interest. The Beer Activist Blog notes that "CSPI has long espoused the dangers of alcohol and is what many beer supporters would refer to as a neo-prohibitionist organization. I like some of the work they do, including this awesome table of alcohol industry donations to members of congress, but their overall attitude toward alcohol is that it is ruining America." This petition requested that that beer labels include the following "Alcohol Facts":

• Alcohol content
  
• Amount of alcohol in fluid ounces
  
• Number of calories
  
• Ingredients
  
• Number of servings per container
  
• The current definition of "moderate drinking" for both men and women published by the US Department of Health and Human Services and Department of Agriculture
  

So, what do you think of these "Alcohol Facts"?

As a consumer, it doesn't seem to me that there is anything too objectionable. Well. Besides that "definition" of "moderate drinking" (currently defined as "one drink per day for women and two drinks per day for men).

Yet, various groups have various objections. For instance, the Beer Institute, the primary beer industry trade group, objects to publishing alcohol content. This group would prefer to keep this information from you because "The alcohol content in most beers is in a very narrow range, and consumers are generally aware of that fact." Like the Beer Activist, I call shenanigans on that one. Beers can range from less than 4% ABV to over 20% ABV, while maybe a 16% range is "narrow" to some, it seems like a pretty broad range to me.

Why does the beer industry promote this theory? Well, "The fact is that distilled spirits can contain up to ten times as much alcohol per ounce as a can or bottle of beer. A whiskey drinker can consume as much alcohol in one swallow as a beer drinker consumes in one beer. Most cocktails that Americans will recognize contain more alcohol than a bottle of beer; many contain twice as much. … The misguided equivalence campaign favors an industry that imports most of its product and contributes disproportionately fewer jobs and tax dollars to the U.S. economy when compared to the beer industry." In plain English? The general theory for taxing alcohol is for the industry to help pay for some of the damage that it causes (e.g., increased hospitalization, drunk driving, etc.) – and the beer industry's stance is that by taxing by volume rather than total alcohol output the beer industry is disproportionately taxed for its relative contribution to public drunkenness. For example, in twelve ounces, you can have 4% ABV of beer, or you can have about a third of a bottle of tequila at 40% ABV. What the left hand doesn't want you to remember is that your average drinker drinks more beer than liquor. Moreover, some of these Beer Institute members are talking out of both sides of their mouth, as Anheuser-Busch, MillerSAB, and InBev (the world's largest beer distributors) are aggressively adding to their liquor holdings as well.

This issue also affects what an appropriate serving size is. I would argue that an appropriate serving vessel for the Dogfish Head 120 IPA, a 21% ABV beer, is a champagne flute. In that case a single twelve ounce bottle is two servings, not one. To get the same alcohol content of one twelve ounce bottle of the 120 IPA, you could drink almost a whole six pack of Miller Lite (which one looks like the better deal now?) This all means that the "typical" nutrition information is effectively cut in half – making beer look almost downright healthy!

Then, in 2005, the TTB finally published a proposed rule, setting out the standards for putting labels on bottles of alcohol. There was significant disagreement among the commenters at this time about whether the labels should be mandatory or optional. The medical associations, CSPI and distillers all favored mandatory labeling. The brewing industry preferred that labeling remain optional; ostensibly because the labels would increase costs. There was also disagreement whether to list alcohol content by percent (as is traditional) or by actual volume (about .6 fluid ounces per 12 ounces of "regular" beer, 5 ounces of wine and 1.5 ounces of 80 proof liquor). Recognizing the wide range of alcohol content of beer, the US Bureau of Consumer Protection noted that "Beers in the marketplace range from approximately 3.3% to 17% ABV, thus delivering between .39 and 2 ounces of alcohol per [12 ounce] serving." Perhaps thinking that consumers may be interested to see exactly how little alcohol is in a 12 ounce "regular" beer (only .6 of an ounce? That's not much is it?), the CSPI withdrew their request to display alcohol content by actual volume. The breweries were also in favor of a percentage approach mainly because "a standard serving size is not consistent with the manner in which many alcohol beverages are actually consumed."

During the course of the 2005 process, the comments clearly indicated that "consumers are very interested in having information about the calorie and nutrient content of the alcohol beverage products they purchase. These consumers expressed the view that this information should be available on the product's label."

The latest proposal, issued in July of 2007, merely amends the 2005 proposal to solidify the requirements around the concerns raised to the 2005 proposal – comments for this 2007 proposal ended at the end of January 2008. This proposal would require a "Serving Facts" label that displays alcohol content by volume (disclosure of ounces of alcohol would be voluntary), the serving size (defined as the amount of the alcohol beverage customarily consumed as a single serving – for beer less than 10% ABV, 1 serving is 12 ounces, over 10% ABV, 1 serving is 5 ounces), calories in the serving, carbohydrates, fat, and protein. This proposal would have a delayed effective date to allow a three year implementation period so that small businesses could use up existing label stock and get new labels produced that conform with the requirements.

While the government deleted a comment from "J. Citizen", as a "J. Citizen" myself, maybe I can use my own forum to comment. Really, more information can't be a bad thing. Unfortunately, so many companies use these labels for misleading purposes (e.g., by using unrealistically small serving sizes, etc.). But, as Starbucks is finding in New York City where all chain restaurants are now required to display calorie, carb and fat information at the point of retail sale, more information doesn't necessarily equate to lower sales. People just want to be informed of what they are putting in their bodies. Moreover, the definition of serving size promulgated by the TTB seems eminently reasonable. While quite a few people will drink an entire bottle of, say, the Dogfish Head 120 IPA at 21% ABV by themselves, it doesn't seem absurd to recognize this as, at least, two servings. Interestingly, the craft beer industry suggests (pdf) even more specific serving sizes: 12 ounces for less than 10%, 6 ounces for 10-20%, and a mere 2 ounce serving size for beers over 20% ABV – a shot of 120 IPA anyone? While I applaud the effort, I think that this breakdown unduly "rewards" high alcohol beers (basically divides calorie and carb information in six!) and is not particularly realistic (to wit: the aforementioned champagne flute of 120 IPA).Where the government gets it wrong, I think, is not requiring full ingredient information. There is some suggestion that this is intentional so that people don't realize just how unprocessed some beers are as compared to others. But again, if we view this as a consumer protection regulation, don't you want to know that the beer you are drinking contains more corn than barley? Or more "lemon flavoring" (and the components of that "flavoring") than actual lemons. I recognize the "hassle" of re-tooling bottling lines, or more specifically the labeling portion of the bottling lines, to accommodate this regulation. However, the phase-in period seems reasonable and, really, how much of a hassle can it be? I don't see how it requires anything more than moving some text around on the label to accommodate the "Serving Facts" and printing the label. Perhaps the bigger hassle is actually learning how to calculate this information? Indeed the Brewers Association suggests that reporting tolerances be expanded so that small breweries without the labs of the bigger breweries don't "accidentally" violate the regulation.

Recognizing the inevitability of this regulation, the brewing industry also finally recommends that they be allowed to use as small of a label as possible, preferably a linear display over a full "serving facts" panel.

Post #100! WOOHOO!!! LET'S PARTY!

Yeah. Uh. Post #100. Big f-in deal, you say. I hear ya. But, I gotta say, when I started doing this last August, I never imagined it would get to 100 posts. Why? Well, because I'm kinda lazy (you did notice that the post didn't get posted until mid-morning today, right? Yeah. Well, after drinking 3 pints of water within 10 minutes of waking up because of those APAs last night - pretty much points out the fact that A) I was in no condition to write this post last night [remember, the whole "lazy" thing? Add to that the lesson learned "don't write about drinking beer while actually drinking beer"], and B) I wasn't in much better condition early this morning).

So, here we are, post #100. Some awesome stuff coming up in the near future. Our next Brewery Profile is in the works - and I'm really excited about it. We have an interview next week with Lucy Saunders, beer-cook extraordinaire. Wha? Beer? Cook? mmmmm.... We interviewed her about her upcoming beer and cheese tasting at Fromagination (fruit ales and mixed-milk cheese). So, that's coming up next week. Spring has sprung, so they say, and we will be putting up some reviews of those spring-time weizens and wheat ales, and pale ales.

In the meantime, the Brewers Association has released some of its statistics on the craft beer industry. Some pretty exciting stuff - assuming of course, you geek-out about statistics like I do. Did someone say r-squared? Ooooo...baby...talk dirty to me. Ummm... yeah, hi, I'm back. Sorry. Where was I? Right. Statistics. Well, as you can see from that little pie-chart (see? beer. pie. the food connection is laid bare at last!) on the left there, pretty interesting, don't you think? The most interesting part of it that I see is that bigger-than-50% chunk labeled "brewpub." We know how the state of Wisconsin defines brewpub. But, how does "the industry" define it?

Brewpub: A restaurant-brewery that sells 25% or more of its beer on site. The beer is brewed primarily for sale in the restaurant and bar. The beer is often dispensed directly from the brewery's storage tanks. Where allowed by law, brewpubs often sell beer "to go" and /or distribute to off site accounts. Note: BA re-categorizes a company as a microbrewery if its off-site (distributed) beer sales exceed 75 percent.

So, rather than focus on how many barrels per year a brewery produces, like the state of Wisconsin, the industry focuses instead on what percentage of beer is sold on-site versus off-site. This seems like a far better metric to define a brewpub. For instance, you could be as big as you like, but as long as your on-site sales don't exceed 25% of your total sales of beer, you are not a brewpub. This would allow breweries like Tyranena or Lakefront or Milwaukee Ale House to have small restaurant facilities without being labeled a "brewpub" and falling under the brewpub laws.

Anyway, what this pie-chart shows us is that over 50% of all of the breweries in the United States sell greater than 25% of their beer on-site. In raw numbers this is pretty astounding. That means that there is a lot of local beer out there. Breweries that are representin' their blocks, yo. Breweries where the only way to get their beer is to walk in the front door and order it from a bartender. Breweries that are literally serving their communities. In the interest of full disclosure, however, if you look at the list of all of the breweries in the United States, you will find that some brewpubs are chains where each member of the chain is considered a separate brewery.

Even despite this, the sales of beer from brewpubs represent less than 9% of the craft beer sold in the United States and less than .35% of all beer sold. In fact, all craft beer only represents 3.79% of the beer sold in the United States. Last year there were 211,489,982 barrels of beer sold. 96.21% of it was sold by 43 of the 1449 breweries in the United States. In other words, 3% of the nation's breweries account for over 95% of the nation's beer. This, to me, seems to show a huge opportunity.

In fact, last year the craft beer segment grew an astounding 12%. This is compared with 1.4% growth by those other 43 breweries and 1.4% growth for imports. Of course, 12% of next-to-nothing is still next-to-nothing. But, as we saw above, there's a lot of room for growth. Given the fact that the whole industry is only expanding by 1.4% (coincidentally, only .5% higher than the population growth of the United States), we can safely assume that the industry has reached its saturation point. There are approximately 211.5 million barrels of beer that can be sold in the United States most of which (96% actually) is nothing more than liquid marketing. There's no reason why all of it can't be sold by quality breweries serving their local communities.

By the way, of local note: 3 of the 50 largest breweries in the United States are in Wisconsin (Miller, Minhaas, and New Glarus) - one of which doesn't even distribute outside of the state. 2 of the 50 largest craft breweries are in Wisconsin (New Glarus and Capital). You'll notice Leinenkugel's is nowhere to be seen - you would find them represented in Miller Brewing Company's number.

The Great Dane Dilemma Part IV - The Great Dane

This is the last of our four part series on legislation currently being considered that would enable The Great Dane to serve its own beer at its Hilldale location. This legislation is currently known as Senate Bill 224. For a detailed look at SB 224, you can read our summary here, and you can view the actual bill here. As we pointed out, this legislation is not without controversy. Many small brewers, including Tyranena Brewing Company, think that this legislation could seriously hurt their ability to compete both here in Wisconsin and on a regional and national level; you can read our interview with Tyranena's owner and head brewer, Rob Larson, here.

In late 2005, co-owner and President of The Great Dane, Mr. Eliot Butler, was introduced to the idea of putting a Great Dane Pub at Hilldale. Mr. Butler, knowing that the current legal environment was against him, nonetheless believed The Great Dane would be successful there whether it could be an active brewery or not. The location would reach its greatest potential as a brewpub, but could still be successful without it. So, he and his business partners agreed to the location. But this story actually begins a few years before that.

In 1994, The Great Dane Pub and Brewing Company set up at the Fess Hotel Building in downtown Madison. It was the first operating brewery in Madison since the Fauerbach Brewery closed its doors in 1966. By 1999, The Great Dane was on its way to becoming the Madison institution that it is today. Around that time, a small brewpub up in the Fox River Valley, appropriately called Fox River Brewing Company, was trying to get the laws changed so that it could have more than two locations. Mr. Butler remembers, "I spoke at the Senate committee hearing that Fox River Brewing instigated that led to the exemption for 'small brewers' (under 4000 barrels cumulative) allowing them to have six retail locations as opposed to two. I begged the senators to set the limit at 10,000 [barrels] and failed due to the wholesalers' power." These committee hearings led to revisions that resulted in a minor exception to the general rule that "tied houses" were prohibited. Namely, that a brewery can have two Class B licenses, but can distribute to up to four more locations if its total brewing capacity is less than 4000 barrels per year.

Clearly, Mr. Butler had his eyes on expanding The Great Dane. In fact, in 2002 The Great Dane opened its second location in Fitchburg. Around this time, Mr. Butler took another shot at convincing the legislature to change the laws. In Mr. Butler's words, "I chose the wrong lobbyist ... those efforts cost me lots of money and went nowhere."

So, in 2005, when Mr. Butler had a decision to make about Hilldale, he chose the same lobbyists that had been successful for the Wisconsin Brewer's Guild.

"I just believed that the current law is so unreasonable and unfair that we would eventually succeed. ... After meeting with [the lobbyist] I was hopeful that the law would be altered in the Spring of 2007. I knew I was taking a big risk, not just with the success of the new store, but with the entire Great Dane brand and concept. Perhaps it was my belief in the excellence of our restaurant operations that provided the courage to move ahead."

Of course, it is now Fall of 2007 and the law has not been changed.

The Wisconsin Beer Distributors Association is a formidable opponent. As has been noted before, no law regarding alcohol passes in this state without the approval of the distributors. The idea that the cap of 4,000 barrels per year would have to be raised would have to have the approval of the distributors. And, thus, the political process of getting that cap raised began. "I was not so naive to think the wholesalers would give us these 'concessions' without getting something in return. Or that they would agree to lift all limits, as I and every other craft brewer would love to see happen."

Modern politics is a game of compromise. Whether it should be or not is another debate best left for another day. But, the fact is, very few legislators are going to go about changing the alcohol laws without first asking the distributors what they think, at least not for the request of a single brewpub. In a perfect world, The Great Dane could propose a law that simply changed the barrel cap from 4,000 barrels to 10,000 barrels - a simple proposal suggested by Tyranena's head brewer in our last post and proposed to the State Senate by Mr. Butler back in 1999. A proposal that was rejected by the distributors.

Bear with me please, but let's analyze this suggestion for a moment.

The following information is based on tax filings in 2006. The Wisconsin beer tax for producers less than 50,000 barrels is $1 per barrel; we will assume that breweries this low on the production scale are not exporting out of Wisconsin in any significant amount (exported barrels are not taxed at all). In 2006, 52 breweries in Wisconsin brewed less than 5,000 barrels (paid less than $5000 in beer taxes). All but 10 of them brewed less than 1,000 barrels. Which means that 10 breweries in the state brewed between 1,000 and 5,000 barrels of beer last year. We know that 1 of those 10 is The Great Dane. Which leaves 9 breweries that brew more than 1,000 barrels and less than 5,000 barrels. There were only 3 breweries in the 5,000 to 10,000 barrel range. What does this mean? Well, this means that raising the cap from 4,000 to 10,000 barrels would affect, at most, 13 breweries (even if we assume that all 10 of them are between 3,500 and 5,000 barrels), one of whom is The Great Dane. Such a cap increase would allow those 13 breweries to distribute to up to 6 locations, instead of 2. How many of them would take advantage? Half of them? Clearly, not all of them; because some of them could have 2 (or even 6) now, but they don't. (If you're interested in where these numbers came from, please see Rep. Terese Berceau's website; somewhat interestingly, it comes from her proposal to raise the beer tax in Wisconsin).

The reality is that the Wisconsin Beer Distributors are putting up a fight that really only affects, at most, half a dozen breweries. Nonetheless, it is a significant move, as any of those 42 that are less than 1,000 barrels could find a market and take off; not to mention those starting up in the future. And, the fact remains that the distributors are opposed to any further erosion of the three-tier system in any form.

So the battle rages on, and the current proposal, SB 224, represents the compromise that the distributors are willing to make to allow 10,000 barrels per year at 6 locations. It basically requires a brewer to make a choice when it starts: brewery or brewpub. If brewery, it must fit fully in the three-tier system; If brewpub, it must stay below 10,000 barrels.

As Mr. Butler notes, "new start-up brewing companies are going to need to have more developed business plans and financing and exit strategies than before." In other words, the owners will need to understand the law and have these options fully mapped out in a defined business plan. The business plan will have to include what strategies will be once these limits are reached and what types of funding will have to exist to stay above or below these limits. Brewing companies that choose the distribution route will have to be creative in how their beer is marketed; opening an on-premises (or off-premises for that matter) restaurant will not be an option. If a brewing company chooses to become a brewpub it must be willing to abandon (spin-off?) its restaurants once it needs to surpass the 10,000 barrel limit. Of course, as Mr. Butler notes, the other option is to simply expand out-of-state once the brewery reaches its in-state limits.

It is useful to be reminded that SB 224 has not yet passed. It is not yet law. It can, and likely will, change from the form it is currently in. Nonetheless, it is a legitimate compromise. It would allow The Great Dane, and other brewpubs in the state, its additional locations and a reasonable path for growth, even if that growth is capped at 10,000 barrels. Current breweries would be grandfathered to the current laws (allowing restaurant permits and up to 2 Class B licenses). Of course, the breweries can still have a Class B license, just not a Class B license and restaurant license; so, breweries could still have a tasting room. On the other hand, starting as a brewpub, even one that's income is less than 40% from sales of food, is an attractive option for entering the market, both locally and regionally. Preventing this income stabilizing and marketing opportunity would handicap small brewers vis-a-vis the region in competing against beers from other states. Moreover, preventing such additional income streams could reduce some of the risks that in-state brewers might be willing to take. Without the safety of non-beer related income, a brewery might be less willing to take a risk that would impact its only source of income, even despite the opportunity for reward for taking that risk.

As of this writing, the Wisconsin Brewers Guild has yet to officially endorse SB 224; in fact, they "officially" oppose it. The Wisconsin Distributor's Association endorses it. Strangely, the Wisconsin Independent Businesses endorses it. The Wisconsin Restaurant Association and the Tavern League are undecided or have reservations. Miller Brewing Company "officially" is undecided, but its CEO has recently made statements strongly supporting the three-tier system ("The three-tier system is the best business model for the beer industry").

For his part, Mr. Butler has this to say:

I do truly believe that the benefits of the bill outweigh the loss of 'total freedom' for future brewers in Wisconsin.

"Craft" Beer

All of the "industry" blogs and news of late is how the "craft beer" segment, for the third year in a row, is growing at a double-digit pace. (see the interesting "Brew" Blog and "Brew" Magazine for a good summary of this discussion) This year happens to be up 14% over last year. And, while this segment is currently 4% of the industry, it is predicted that soon (2010?) the segment will be over 10%. Of course, the problem is: What is a craft beer? And, at least one Wisconsin brewery is right in the heat of this battle. The Brewers Association (a collection of "craft" breweries) has promulgated the following definition:

1) The brewery must turn out less than 2 million barrels per year (production limitation)
2) Be less than 25% owned or controlled by an alcohol beverage supplier that is not a craft brewer (ownership limitation)
3) Either have an all-malt flagship or have at least half of its volume in either all malt beer or in beers that use adjuncts to enhance rather than lighten the flavor (quality limitation)

This is an interesting definition. On the face of it, as a consumer, I have no real problems with this definition. In fact, I might go further. I would set the production limits lower. 2 million barrels is a lot of beer. Sierra Nevada is 600,000+ barrels. And, really, much over 1 million barrels I can't imagine that you are "craft" anymore. You don't have the production ability to experiment, your brewing schedules are extremely regimented, your marketing costs are outrageous; in other words, it is no longer a "craft" but acts, for all intents and purposes, as a small "big brewer".

I would argue that the biggest "problem" with the definition is the quality limitation. Really, how can you decipher what the intent of the brewery is in using adjuncts? It's too subjective. Using adjuncts, for example rice, for both "flavor" and "lightening" is a fairly ingrained (haha, pun!) tradition. It doesn't make sense to me to take a relatively objective definition, one that will be used to parse an industry, and read brewing motive, a subjective limitation, into it. It would make more sense to set out a list of adjuncts and acceptable brewing ratios that set out presumptions of the intent. Rather than base the definition on the subjective intent of the brewer (e.g., what is the purpose of using the adjunct in question) set out guidelines that make it clear that you have crossed the threshold from "flavor" enhancement to "cost-saving and flavor deprecation". For example, and I'm not a brewer on any much of a scale, so I don't know if these are reasonable, just a guess, but say "If your grain bill is over 10% rice" it is presumed that you are using the rice not as a flavor component but simply to reduce costs and lighten your beer (although, as mentioned earlier, one could argue that this is not an inherently troublesome motive).

But, back to the question at hand, can you figure out which Wisconsin brewery has the biggest problem with this definition? If you guessed "Jakob Leinenkugel Brewing Company" you win the prize. Leinie's seems to be regretting getting into bed with Miller in 1988 (for reasons that are not entirely clear to me, but I was just a young teenager in 1988 so it's not like I was paying attention to such things). Yes, Leinie's is run as an "independent" brewing operation; but the fact is, at the end of the day, their board and by extension their brewers, report to Miller SAB. And, if Miller doesn't like what it is seeing, it has significant ability to step in. More importantly, by being part of such a large enterprise, Leinie's has relegated itself to a mere "profit center" in the eyes of Miller. It's not a craft brewery to Miller; Miller sees it as a growth opportunity and a profitable division.

While Leinie's points to 140 years of family management, the fact is, at this point, it is not entirely family managed. It's family managed unless Miller has a problem with the management. Maybe I'm wrong, maybe they are truly "independent" of any Miller influence. But then, I would argue, what's the point for Leinie's? Why not buy yourself out? But, the fact is, Leinie's likes being in bed with Miller. They get great marketing teams, and excellent distribution; and for that price, they had to sell their soul.

So, Leinie's wants to eat their cake, too. They want to be considered a "craft" brewery, despite all the benefits of ownership and stock control by a non-craft brewery (even assuming that they fall inside the production limitation of 2 million barrels; I suspect that my revision, of 1 million barrels would rule them out).

Leinie's would prefer to define a "craft" brewery as "having a variety of interesting styles of beer." We'll ignore this; by any accounts this is not a reasonable definition. So, I would say, even if we discount the Brewers Association's definition, what makes Leinie's a "craft" brewery? The fact that they have a Berry Weiss? Because they have a Big Eddy series? (which, as a side note: the Big Eddy is a river near their Chippewa Falls plant, but they don't even brew these beers there; a second-hand account related to me tells that the brewers there didn't even know about the Big Eddy IIPA). I would argue that, even absent Miller's influence, Leinie's acts more like Sam Adams and the larger regional breweries rather than a small brewery truly concerned about the trade. At the end of the day, I suspect that Leinie's board of directors talk about "pallets" being moved and "product" getting to the shelf and "brands" being introduced rather than any overwhelming desire to participate in the world-wide beer discussion.