27 May 2009 @ 11:34 AM 

I’ve been thinking about this a lot lately. There’s a problem in the definition. That’s clear. After all, it’s been discussed in other venues prior to this ad infinitum (and those three are just a small example), and now I feel the new to add to the noise. The thing is, I think we’re all running up against the same problem.
Beer!
The problem is the Brewers Association is right and wrong all at the same time. Lemme explain.

The Brewers Association has it right

See this Examiner post by Larry Johnson for a succinct re-hash of the definition without having to scroll through the BA‘s entire statistics and definitions page.

This definition of a craft brewery and craft beer here is based entirely on regulations set by the U.S. Government for taxation purposes. If breweries produce under 2 million barrels per year, they qualify for a small brewer tax break on their first 60,000 barrels. If you’re above that, you’re not a craft brewer. That’s it. The smaller breaks in between are built in for statistical purposes. Plain and simple, when you’re talking about market segments, you need to be able to compare apples to apples. New Belgium and their amazing expanding distribution network just doesn’t compare well vs. a startup brewpub (much less how Sam Adams compares with anybody else). They’re two entirely different segments in the same industry.

There’s only one part of their definition of a craft brewery that isn’t based on an economic restriction:

Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of it’s volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

And it kinda reads like an economic restriction, doesn’t it?

I take this as their way of saying, in every way they possibly can, “NOT megabreweries.”

So, here’s the thing. The Brewers Association is, first and foremost, a trade organization. As a brewery owner, I want them focused on helping to keep the most rigorously regulated industry in the country (aside from probably tobacco) a sane enough environment for my small business to exist in. A startup brewpub can’t afford to hire a full time (team of) lobbyist(s) to look out for their interests in the same way that MillerCoors can, but they can get help from the BA when they’re looking at challenging a law that’s coming through the pipeline. What is beneficial to MillerCoors may not be beneficial to the startup brewpub, so you also need somebody to push back against the corporate behemoths who, let’s be frank, would probably rather not have any competitors, even minuscule ones.

The BA needs tools to be able to do this job, and accurate statistics is one of those tools, consistent standards is another. These definitions are what the BA needs in order to do what breweries need them to do, and the BA can be an invaluable ally to a small craft brewer.

They are really crappy definitions for the average consumer. The consumer cares about good beer.

The Brewers Association has it wrong

Here are a couple of breweries that I would guess that consumers think are considered craft breweries that are not, according to BA definitions:

  • Widmer
  • Goose Island
  • Mendocino Brewing Co.
  • Brewery Ommegang

Soon, Sam Adams will join that list. I would challenge anybody to tell me that any of those breweries don’t make great beer, regardless of percentages of ownership and/or how many barrels they manufacture per year.

The problem is that the BA also makes attempts at functioning as a consumer advocacy organization, most notably via the GABF. And why not? People who make great beer are fans of great beer. It makes sense to function as an organization that gets consumers in touch with great beer. But the definitions of what craft beer is for industrial purposes don’t necessarily work for consumers.

Consumers want to drink great beer, and while I’ve heard a lot of people say they don’t really care where something comes from, I think they do. Behind craft beer there are personalities, there is passion for the product that is being made. That translates down to the customer very easily in small businesses. It’s something that the megabreweries will never be able to harness because they’re too far removed from the consumer.

Here, the problem is: How do you define passion?

In this case it’s almost definitely via selection of ingredients and processes. But you can’t define it as “beer without corn” or “beer without rice.” There was a little bit of a kickback from a few brewers after the IAACB video who do use corn and rice in their beers, but do it in really interesting ways. A brewer in Kansas or Nebraska using a local good (corn – what else?), malted and roasted to make a corn stout? How is that not a craft beer?

It’s sticky when it gets to passion definition. More on this later.

Where the Disconnect Happens

Quick story: At the end of CBC09, I was blitzing through the Farewell Reception grabbing a quick bite to eat and a quick drink before I had to rush to board my plane and I ran into Charlie Papazian. He was strolling through the middle of the ballroom, tie off, collar undone. In his right hand he had a goblet full of beer. In his left hand, hanging casually at his side, he had an open bomber. He wasn’t talking to anybody, he was just walking around with this enormous grin on his face. I wish I could have gotten a picture of him. The only thing I could think was: “This must be what it’s like to have your dreams come true.”

Think about it – this guy, who happens to just love beer, put this all together. He’s not a stupendously successful brewery owner, he’s not a Wall Street investment guru, he’s not a real estate tycoon. He’s a writer, and a homebrewer, and he loves beer so much that he has spent his entire life facilitating this entire budding industry. He is the perfect beer evangelist. Every brewery owner and beer drinker should take the time to shake his hand and thank him for loving beer. (I did.)

But, this is the reason for the disconnect. What eventually became the BA was born out of a passion for beer, but it has become (and thank god) a business organization. When Charlie started everything in the 1970’s, the definition of craft beer was easy: “Not the megabreweries.” But you can’t use that as a definition to define your business organization. You need clear rules that define the segment(s), even if they backhandedly say, “Not the megabreweries.” The definition of a craft brewery as recognized by the BA is spot on. They need to be built around the tax restrictions.

However, governing the definition of product made with passion with a tax-based definition is sure to lead to resentment from the consumer when they’re favorite popular brewery makes a business decision and is no longer considered a craft beer. The consumer wants to support craft beer, but also wants to support their favorite brewery. How do they make that call? By ignoring the tax definitions.

Here’s what I’d like to see: Let the BA define a craft brewery, and let the drinker define a craft beer.

There are a number of different ways this can be done. There are already what amounts to enormous consumer organizations who are devoted to good beer. Use the existing communities to refine a decent definition and go. Maybe the BA creates a spinoff non-profit that handles the GABF and works on creating similar standardized festivals across the US promoting good beer, and they leave the government work and business side of things to the Brewers Association. Let the consumers be consumers. They don’t need to be complicit in business practices, you just want them educated about good beer, because then they’ll be much more likely to buy from craft breweries.

Overall, I think these are growing pains. I think the reason that the craft beer community is hashing this out over and over again is because the segment has been so successful. After all, when the 2 million barrel cap used as the definition of a craft brewer, did anybody reasonably expect Sam Adams to get there so quickly? I doubt it. It’s fantastic that they’re pushing this boundary and allowing us to continue to go through this painful revision process.

In conclusion, I’d like to put out my definition of a craft beer, as a beer drinker: Any well-made beer that was obviously made with passion. You can see it in the labels, the names, in the bottles, cans, or glassware, and in the ingredient selection.

If the beer has a personality all its own, it’s a craft beer. I suspect that there are at least a few drinkers out there who would join me in that.

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 23 May 2009 @ 6:14 AM 

Do it. Could you think of a more perfect thing? It’s not just a cookout, it’s a beer dinner cookout. Come to think of it, every cookout should be a beer dinner cookout.

Flying Dog’s got an article up about this on their BeerDinners.com as well as a truly frightening picture, but.. well.. it’s Flying Dog, so they’re only recommending Flying Dog beers. Which is cool. They make good beer. Tire Bite is one of my favorite summertime session beers.

But I just wanna throw out a couple of style choices, instead, and hopefully get some recommendations from others. When pairing, I tend to shoot for one of three things: 1) Flavors that will complement each other. 2) Flavors that will build on one another. 3) How to use beer to scrub the palate after particularly heavy foods. Here’s what I’m looking at as a potential menu for my Memorial Day Cookout along with some possible pairings.

Brilliantly Prepared Food Beer
Smoked Pork Shoulder aka Carolina ‘Cue and Smoked Brats Smoked Porter or Rauchbier
Masala Grilled Chicken IPA
A Bacon Explosion Saison
Pasta and potato salads Witbier and/or Kolsch
Chocolate cake Raspberry Hefeweizen or a good tart Kriek

 

What about you? What’s on the menu? And, more importantly, what beers are going with it?

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Categories: beer-food pairing, op-ed
Posted By: erik
Last Edit: 23 May 2009 @ 06 14 AM

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 20 May 2009 @ 1:30 PM 

At the risk of beating a dead horse, I – along with probably 5,000 other blogs – am looking at this morning’s Washington Post article about Sam Adams, Super Craft Brewer. (Super. Like the prefix meaning “bigger” not the comic book guy. Word geek; see?)
Samuel Adams
Quick summary: In 2008, Sam Adams produced 1.992 million barrels of beer, 8,000 barrels short of the point where they no longer fall under the definition of a craft brewer by the Brewers Association.

I don’t want to get into a “What is Craft Beer” discussion (right now). That’s been covered amply elsewhere. Instead, I wonder at which is better for the other 1,500-ish craft brewers in the country: Having Sam Adams count as a craft brewer or not?

Sam Adams is, without a doubt, the elephant in the room. The closest regional-size brewery to Sam Adams (Sierra Nevada) makes less than half the amount of beer. I haven’t received my fancy New Brewer with 2008 barrelage numbers, yet, but using just some fancy pants math on the numbers from the BA Statistics page and the numbers we’ve been given by the Washington post, I’m going to make the following estimates/assumptions:

2008 Domestic Craft Beer Sales: 8,493,765 barrels.
Sam Adams alone: 1,992,000 barrels.
Sierra Nevada alone: 700,000 barrels.
Remaining for the other 1,543 breweries in the U.S.: 5,801,765 barrels.
Avg. # of barrels/craft brewery (excluding Sam Adams and Sierra Nevada): 3760 (5801765/1543)

So, to recap: In order for Sam Adams to reach the 2 million barrel cap that means that it no longer qualifies as a craft brewery it must produce a little over twice as much as the average American Craft Brewery does every year in addition to the 1.992 million barrels it already produces.

I have a hard time seeing these as the same animal.

It’s really great to have the sheer size and corporate power of Sam Adams on the same side as all of these other craft brewers. It’s great to incorporate the growth numbers of Sam Adams into the craft brewing world (according to the WaPo article, Sam Adams enjoyed larger growth than the entire craft beer segment last year – gotta wonder how much that skewed the numbers at the CBC) for PR purposes about how great the segment is doing. It’s wonderful to have Sam Adams do wonderful things like the hop raffle during the hop shortage last year, but would they stop doing that if the BA said they didn’t fit a definition?

Sam Adams is so far and away different from its craft brewer brethren that it’s almost unfair to all of the others to call it a craft brewer. How much are statistics inflated because Sam Adams is being included in them? How much does Sam Adams gain from the definition, even? Either they or Yuengling now stands as the largest American-owned brewery (not sure without actual barrel/sales numbers). It seems like that should be distinction enough. What does it mean for Jim Koch if he’s no longer considered a craft brewer by the BA? Is it a drop in sales? I doubt it. And if it is, and they dip back below 2 million barrels, do they get to re-join the club?

Finally, to what benefit is it for the smaller craft brewers to have Sam Adams count in the same definition? They are even more difficult to compete with than BMC because they’re actually producing well-made comparable styles of beer. Sam Adams Boston Lager feels almost as ubiquitous as Bud, even though, yes, Sam Adams only makes something like 1% of the amount of beer Bud does. The difference is that someone who is likely to drink an IPA will probably not have a Bud, but they might have that Sam Adams.

I’d love to hear thoughts from others on this: Is it a big deal for Sam Adams to not be a defined as a craft brewer by the BA? Might it actually be a good thing for other brewers?

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Posted By: erik
Last Edit: 20 May 2009 @ 02 07 PM

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 18 May 2009 @ 9:44 AM 

Pop quiz: What do Kid Rock and Jimmy Buffet have in common?

Okay. You got me. There are actually a lot of right answers to that, but the one I’m looking for is that they both have their own beer.

You may not be familiar with Jimmy Buffet’s Landshark Lager. It is made by Margaritaville Brewing Company, which is to say it is marketed by Margaritaville Brewing Company which is a joint venture between Buffet and Anheuser-Busch InBev who actually makes the beer. It’s not the worst beer I’ve ever had.

Enter Bob Ritchie, aka Kid Rock, who is starting the “American Bad Ass Beer Company” together with Drinks Americas Holdings, Ltd., who are the minds behind Donald Trump’s Trump Super Premium Vodka and Willie Nelson’s Old Whiskey River Bourbon among other celebrity-infused lines. Their one beer project so far has been nostalgia-based Rheingold Beer (which has a higher rating than Landshark!).

In a surprising move, however, Mr. Rock and DAH announced that “Bad Ass Beer” would be contract brewed at The Michigan Brewing Company, a craft brewer where (as far as I know) Hoegaarden founder Pierre Celis still brews his Celis Wit. The Michigan Brewing Company is reportedly investing $7 million into this line of beer, as well as receiving a $723,000 tax credit (over 7 years) from the state as part of an economic stimulus package for the region. Making beer is kinda like making cars in that it employs people in a factory, so that’s a good thing.

Unfortunately, that’s about where I stop thinking that it’s cool.

As near as I can tell, the only people who will really go for this beer will almost undoubtedly be hardcore Kid Rock fans which sounds like a fairly small market to me. Why? Well, here’s an excerpt from a recent Rolling Stone interview:

What does it taste like?

It just tastes like good American light beer, a regular beer and a light beer, an everyday beer.

[. . .]

What’s it called?

It’s going to be called Bad Ass Beer. The ads are so funny. There are so many funny ads you can do with a thing called Bad Ass Beer. There’s one where it looks like the Budweiser horses, and they’re all up in the air, just freaked out, like they went haywire, and whatever they ride on is smashed up, and it just has my beer sitting in the front, it says “Bad Ass.” And “…and the horses they rode in on.” There’s another one where we fuck with Corona. We have an old rusty truck with no tires on it and it’s sitting on the Bad Ass beer, and it says, “The only way you’ll ever see a lemon on it.” We’ve got another one with the Bad Ass beer simulating like it’s fucking the St. Pauli’s girl. We’re all doing it locally with an ad agency here in Detroit that does a lot of car ads. The guy lives next to me and runs my favorite bar here. They come up with really funny stuff. It’s just wide-open for fucking with people. And the beer actually tastes good, there’s no aftertaste.

So, you’re having a decent craft brewery make beer that will compete directly with BMC light lager offerings and instead of investing in the beer, you’re investing in a shit-ton of advertising.

This is doomed to failure. Why? Because they can out-cheap you, Mr. Rock. They can out-cheap you HARD. You can’t sell beer as inexpensively as they sell beer, because the company that you’re paying to make beer can’t make it in the quantity that those guys can, $7 million dollar investment or not. You’ll be making something to the tune of a fraction of a percent of the beer that they make. You can’t get those price breaks. On top of that, you’re throwing millions of dollars at advertising – and unless you’re a bigger philanthropist than I think you are, I’m guessing that you’re going to want to recoup that cost somehow, which means higher priced beer. Ultimately, the guys down at the local might think it’s awesome to buy your beer once in a while, but when they can buy a sixer of Bud Light for the same price as a bomber of Bad Ass, I think the choice is going to be pretty clear.

On a personal level, I also have to admit that this kind of thing pisses me off: When celebrities throw their weight and money into places that they don’t belong. For every bullshit company started on celebrity name recognition there are 100 small businesses with real quality products that fail because they can’t find even a modest investment. The state of Michigan is giving nearly $1 mil in tax credits? Man, I hope that when I start my brewery I can get a piece of that action, even if I don’t have a record out. If they were willing to put that type of effort toward fixing the distribution laws, I bet Bell’s Brewery would be happy to help stimulate the economy, as well.

Either way, Bad Ass Beer should be hitting the shelves sometime right around Labor Day. Look for it and try it, because my bet is that it won’t be around for long.

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Categories: industry, marketing, new beer, news, op-ed
Posted By: erik
Last Edit: 18 May 2009 @ 03 33 PM

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For the past few days, I’ve been planning on writing a piece about the hearing before the Senate Finance Committee earlier this week. The hearing was in regards to financing comprehensive health care reform. However, I couldn’t do any justice to the topic beyond the writeup at the Brookston Beer Bulletin as well as his subsequent call for action.

In case you haven’t been following this end of the news much, it was recommended by 3 of the panel of 13 “witnesses” that a significant increase in taxes on cigarettes and beer would be the best way to pay for Obama’s proposted health care reform. Holy moly. Like beer needs any more taxation. I’ll sum up the expert opinions here, but you should go read the Brookston articles to have them broken down. They’re fantastic.

The expert opinions sum up to:

Alcohol is bad for you. If you tax it heavily, not only do you recoup costs but you also create a prohibitive barrier to over-consumption.

The interesting thing there to me is that there are known health benefits to moderate alcohol consumption. On the other hand, there are no benefits to consumption of high fructose corn syrup, unless, I guess, you really love being fat. In fact, it is considered to be one of the leading causes of the obesity epidemic in the U.S. because it’s in freakin’ EVERYTHING. Walk down the grocery aisle sometime and see how many foods you can find that don’t have high fructose corn syrup in them – especially foods marketed to kids. It’s pretty damn educational.

As far as I’m concerned, if you really want to recoup costs and put a prohibitive barrier on over-consumption that will affect a positive health change in our society, increase the taxes on everything that includes a sweetener and increase taxes on fast food (which is also really high in high fructose corn syrup!). Is it still a tax on the lower class? Unfortunately, but if part of your taxation plan is actually creating a prohibitive barrier to one of the roots of the problem, it’s the way to go.

Beer is a luxury and is already one of the most taxed and regulated products in the country. Raise the taxes on it, and I think you see less income, not more, since you will essentially be on your way to shutting down hundreds, if not thousands, of small businesses and putting tens of thousands of people out of work.

I’ll point you again at BBB’s call for action. Contact your representative, especially if you’re in the beer industry, but also if you just like beer. Let them know that this is the wrong target.

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Categories: industry, news, taxation
Posted By: erik
Last Edit: 15 May 2009 @ 08 56 AM

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