Friday, August 24, 2007

"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.


  1. I would set the production limit much lower than 2M barrels. That's a staggering amount of beer, requiring a production system and schedule to match.

    Funny that you mention Leine's. I recently toured the brewery, and they make no mention of their deal with Miller. I actually learned of the relationship on a subsequent trip to the Miller brewery. The only way you'd know of the link in Chippewa Falls is the outlandish variety of merchandise available in the Leine's Lodge.

    I love their beer, and will continue to support it, but they dropped a bit in my estimation once I learned the full story.

  2. I highly doubt Leines is regretting their alliance with Miller. Their beer is now getting west of the Mississippi. That's why Goose Island sold 35% or so of themselves to Anheuser Busch - distribution. The Ale Street News had a good article on it recently. Lots of consolidation. Hang out at Woodman's when the distro rep is there and listen to him and the store manager talk.

  3. I know it can be purchased in New York, and as far south as Georgia. So they're definitely benefiting from that deal.


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