Hi again. Please excuse my absence—it’s been a bit busy on the teaching side.

When things “go legal,” it is difficult to discuss a concept without a precise definition (see “causation,” “reckless,” “negligence,” etc.).  The term “craft beer” is no exception.  When I say craft beer, I might mean something totally different than when you say it—it’s a personal experiential thing.  The problem is that the term, as currently defined, is quite squishy and can mean several different things to different people.  I might think (and would argue) that the term only applies to “independent” breweries.  But another might argue that it does not matter who manufactured the beer; it only matters what is in the glass.

I see both sides, but with big beer purchasing more and more “crafty” breweries and (mis)branding itself as just part of the gang, we should create an easy to use, descriptive way to quickly and clearly communicate who made what is in the glass.

The Existing Definition

The Brewers Association (“BA”) is pretty much the national authority on craft beer policy, advocacy, and education. (See www.brewersassociation.com.)  The BA put forth a fairly comprehensive definition of what it means to be a craft brewer and, almost defining by association, what craft beer means.

According to the BA, a craft brewer is as follows (and I quote):

  1. Small. Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships.
  2. Independent. Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by a beverage alcohol industry member that is not a craft brewer.
  3. Traditional. A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.

(https://www.brewersassociation.org/statistics/craft-brewer-defined/)

Ok. I’m down with that.  Mostly.  As an attorney, I can see a few ways around this definition that a crafty macro brewer could employ to sneak into the club (more on that later).  It wouldn’t be so hard to maintain a 24% ownership or distance oneself through entity creation, etc.

By way of history, the BA changed or modified the meaning of the term “small” from 2 million barrels annually to 6 million in 2014 (makes room for Boston Beer Co., Sierra Nevada, et seq.)  (See https://www.brewbound.com/news/brewers-association-revises-craft-brewer-definition.)  Also, the BA added “or innovative” to number three above and excluded FMBs.  There are some sound reasons for these changes.  (Id.)  But they show that the meaning has evolved as the industry has evolved.

Problems With This Definition

I really don’t quarrel substantively with the BA’s definition. I recognize it needs to be broad to encompass the many categories of widely recognized craft breweries.  That said, I believe it should be narrowed or further categorized.

My issue is with the broad universe that the definition encompasses. The BA data from 2016 shows that there were 5,301 craft breweries in the US that year.  Within that 5,301, there are several types of breweries that bear little resemblance to each other.  And the increasingly sophisticated consumer wants to know and cares what type of brewery made it.  It’s part of the experience. (See lawsuits against various manufacturers for misrepresenting their “craftness.”) It is not unlike the French wine standards known as “appellation d’origine controlee” or “AOC.”  Those laws, and others like them, exist because consumers care about origination and have expectations about products crafted in certain regions and under certain methodologies.

So here are the areas that could use some clarification for consumer use and education in my view.

1.  Small. 6 million barrels of beer is an astronomical amount of beer. To put this into perspective, the largest craft breweries (Yuengling, Boston Beer,Co., and Sierra Nevada) are brewing in the multiple millions of barrels of beer per year (the BA does not release specific numbers, and while I have them, I won’t state them here).  Juxtapose that number with just under 5,000 barrels brewed by one of the largest independent production craft breweries in Los Angeles County (who will remain nameless) in 2016.  You can see how huge the “small” category is—it should be further segmented.

To be fair, the BA classifies a “microbrewery” as a brewery that produces less than 15,000 barrels per year and defines a “regional brewery” as one that produces between 15,000 and 6 million barrels per year. Again, that is a huge variation that can easily be addressed.  And isn’t the term “microbrewery” just so 90s (there are reasons the term has been somewhat abandoned in common parlance)?

2.  Independent. This is the biggest to me. I once heard Mike Rowe say that “production is the enemy of authenticity” or something like that.  I couldn’t agree more.  Mass production devalues a product based on scarcity principles alone, let alone the artisanal nature of craft beer.  But I digress.  Why allow up to a full quarter of a “craft brewery” to be owned by, say, one of the mass producers?  The problem is authenticity.  An attorney cannot “authentically” represent a client while taking up to a quarter of the fee from the adversary (I recognize assumptions and illegalities in here, folks).  Would it be fair to advertise a famous artist’s work as original or authentic when another painter painted a quarter of it?  You get the point.

My view is that independent should mean just that. And only those who are truly independent, meaning 0% owned by non-craft brewers, should be able to lay claim to the title.

3.  Traditional. First, this part of the definition also includes “innovative,” which is really an antonym to traditional. So the definition kind of folds in on itself.  Second, it’s not clear that this really matters anymore.  You can find independent craft breweries making everything from traditional pilsners, to chili beers, to donut chocolate whatevers.  The range is a varied as the styles of beers out there.  To put it bluntly, I’d drop this part of the definition.

Why Bother?

Market confusion. That’s why.  Check out the following “crafty” breweries and who they are owned by (there are more):

10 Barrel Brewing:  Anheuser-Busch InBev

Ballast Point Brewing:  Constellation Brands

Blue Moon Brewing:  MillerCoors

Blue Point Brewing:  Anheuser-Busch InBev

Breckenridge Brewery:  Anheuser-Busch InBev

Devils Backbone Brewing:  Anheuser-Busch InBev

Dundee Brewing:  North American Breweries

Elysian Brwing:  Anheuser-Busch InBev

Founders Brewing:  30 percent owned by Mahou-San Miguel

Golden Road Beer Co.:  Anheuser-Busch InBev

Goose Island Beer Co.:  Anheuser-Busch InBev

Hop Valley Brewing:  MillerCoors

Kona Brewing:  32 percent owned by Anheuser-Busch InBev

Lagunitas Brewing:  50 percent owned by Heineken International

Leinenkugel’s Brewery:  MillerCoors

Mendocino Brewing Co.:  United Breweries Group

Portland Brewing Co.:  North American Breweries

Pyramid Breweries:  North American Breweries

Revolver Brewing:  MillerCoors

Saint Archer Brewing:  MillerCoors

Widmer Brewing:  32 percent owned by Anheuser-Busch InBev

I like to refer to these breweries as “crafty.” Crafty in the sense that the beer can be quite similar to independent breweries in taste, look, and feel.  But also crafty in the sense that they are trying to pull something over on the public.  I’m truly not trying to say that the actual beer is any worse than independent beer generally (there are plenty of lousy independent beers) and will confess to the occasional Bourbon County Stout.  But why are these crafty breweries trying to pass themselves off as something?  The answer, for the naysayers, is because it matters.  If it didn’t matter, you just wouldn’t see the effort from the big players.

So now that you know some basics, you can see how difficult it can be to know precisely what you are drinking. Why not make it easier?

A Modest Scheme

I asked some friends to participate with me in a terminology scheme to quickly and easily identify what is in the glass or what is being recommended. It worked and has now become second nature in our discussions. I’m not married to these terms; I’m sure there are better ones to use, but here goes:

Size: We’ve been delineating size with stars. I’m not particularly excited about this signifier because it seems to go to merits.  But for these purposes, it does not.

One star:          5,000 barrels or less

Two stars:        5,000 to 15,000 barrels or less

Three stars:      15,000 to 50,000 barrels or less

Four stars:       50,000 to 200,000 barrels or less

Five stars:        200,000 barrels or more

You’ll note that the tightest striations come in the smaller breweries. That is simply because there are more breweries in those categories.  And when you start getting into the hundreds of thousands of barrels and up, the differences become less noticeable (more on this in a later post).

Independent: We’ve been using the term “indy” for independent and “crafty” for a non-craft brewer owned brewery—no matter the percentage of ownership (for the reasons described above).  Again, I’m not married to these terms either.  They are just easy.

So it looks and sounds like this:

  1. A new, independent brewery producing 1,500 barrels would be labeled a “one-star indy.”
  2. A big-beer owned brewery producing 10,000 barrels would be labeled a “two-star crafty.”
  3. An independent brewery producing 40,000 barrels would be labeled a “three-star indy.”

You can see how this goes. Now, I recognize that this requires some research and thought to actually properly categorize a brewery under this scheme.  That’s not really the point.  Close enough can work too.  A typical conversation might be along these lines:

Friend: “You should try XYZ Brewing’s new citra IPA.”

Me: “What kind of brewery is it?”

Friend: “It’s probably a two-star indy.”

Me: “By all means then, let’s get one.”

And vice versa.

Give It a Try

The whole point is to try to understand and know who made the beer you are drinking. It adds to the fun and the experience.  The term craft brewery in Spanish is “cerveceria artesanal.”  I like it.  Shouldn’t we know if we are actually drinking something produced by an artisan?

Let me know what you think. Cheers.