On Tuesday, the Brewers Association proposed changing some of its bylaws — including redefining what constitutes a “craft brewer.” (Again. The BA has updated its definition two other times.) In an email, the BA wrote the proposal was not “because” of Boston Beer, but is “related” to Boston Beer.
In other words, it’s all about Boston Beer.
Boston Beer, which produces Samuel Adams, Angry Orchard, Twisted Tea, and Truly Spiked and Sparkling, is one of the BA’s biggest members. (It’s second only to Yuengling, which no one considers craft beer.) Boston Beer accounts for nearly 8 percent of total craft beer volume, according to the BA, and contributes significantly to the BA’s funding.
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But there’s one problem: Samuel Adams sales are slowing, while the company’s non-beer beverages, like hard cider and spiked seltzer, comprise a majority of its growth.
This doesn’t vibe well with the BA’s current craft brewer definition, which states that a majority of a brewery’s sales must come from beverages made with “traditional or innovative brewing ingredients.” If Boston Beer’s non-beer products continue to grow and become a majority of its volume, it would no longer be considered a craft brewer per the BA’s current definition.
The BA’s answer? Change the craft brewer definition, again, to accommodate Boston Beer. My answer? Don’t change the definition. Or if you do, be honest about it.
According to Brewbound, the BA says: “This move was not made because of Boston Beer, but the timing of evaluating and revising the definition is related to Boston Beer. Other companies will also be facing a similar circumstance in the coming years and it’s natural that the largest of the smallest would get there first.” Um, O.K. I’m a writer. I get the importance of language. But this seems more like semantics.
It makes sense that the BA would make adjustments to accommodate innovations and changes in the industry. But let’s call it like it is: a business decision to protect one of the BA’s largest members. I can accept that beer is beer, the word “craft” has no real meaning, and, for the BA, a brewery’s funding is more important than its product mix. But actual beer output seems more important than funding when it comes to qualifying as a “craft brewery.”
If the BA changes the craft brewer definition to accommodate companies (which, at this point, only include Boston Beer) that produce as many flavored malt beverages (FMB) as actual beers, then the BA is telling us that craft beer doesn’t have to be beer. Meanwhile, breweries like Founders (incidentally, the No. 1 craft brewery of 2018, according to Untappd) are not craft.
What’s next? If Coca Cola decided to brew beer in Atlanta, would the BA consider its membership? If those weird Starbucks Evenings had actually taken off, and Starbucks thought it might be cool to offer a house brew, would it be eligible for craft brewer status?
Here’s my definition of a craft brewer: a company that makes good beer, is honest about its ingredients, puts quality first, and community at a close second. But no one can define craft beer, apparently. Not even the BA.
Big Brewers Are Selling Less Beer, but (Somehow) Still Growing
No matter how much we try to belittle it, Big Beer keeps getting bigger. Last week, a trio of earnings reports — from Anheuser-Busch InBev, Molson Coors, and Boston Beer — all indicated growth for the third quarter (Q3). But here’s the catch: They’re not getting bigger from selling more beer, or beer alone.
AB InBev posted global revenue growth of 4.5 percent, to more than $13.2 billion, and gross profit growth of 3.5 percent, to $8.3 billion. Yet the world’s largest brewer also saw its stock plummet about 11 percent last week and reported shrinking profits and volume sales in several key markets.
Molson Coors reported a 1.8 percent increase in worldwide net sales, to $2.9 billion; but worldwide brand volumes decreased by 1 percent. And Boston Beer reported a net revenue increase of 24.2 percent, to $306.9 million, but also said sales of Samuel Adams are in decline. Shares of the SAM stock also declined more than 3 percent.
Stocks are plummeting and beer volumes are shrinking. How are big breweries still making bank? Three words: Flavored. Malt. Beverages.
AB InBev is leaning into its “beyond beer” category, pushing products like spiked seltzer, appointing a chief non-alcoholic beverages officer, and even moving Felipe Szpigel, president of ABI’s Craft Unit and High End division, into a new “beyond beer” venture. Boston Beer admits its Q3 growth is mostly due to the success of its hard seltzer, hard iced tea, and hard cider brands.
Breweries that beer nerds like me often dismiss as having an overwhelming grip on beer drinkers’ choice aren’t just choking out craft beer. They’re steamrolling its undead corpse (sorry, it’s Halloween week) with hard seltzer. And, as we learned from the Brewers Association’s proposal to alter the craft brewer definition to include flavored malt beverages, craft beer is following suit. The wars continue. Big Beverage, it seems, is winning.
ABI Monopoly Officially Legal
Well, folks, it’s happening. Last week, a federal judge officially cleared Anheuser-Busch InBev’s acquisition of SABMiller with a “Modified Final Judgement.” Along with A-B InBev giving up MillerCoors in the U.S., the Department of Justice’s Final Judgement will limit ABI in certain areas, namely its involvement in the beer industry’s “middle tier,” specifically regarding ABI’s relationships with wholesalers and distributors.
ABI cannot, for example, buy a beer wholesaler if that purchase would bump ABI’s wholly-owned distribution volume over 10 percent; reward or penalize a beer distributor for selling or not selling ABI brands; or purchase any brewery, distributor, or importer whose annual gross revenue from beer exceeds $7.5 million without giving the DOJ 30 days’ notice, Brewbound reports.
In short, ABI has successfully purchased its largest competitor, and still got the “O.K.” to purchase more brewers, distributors, and importers.
This is terrifying, and a weak effort on the DOJ’s part. It gives ABI the (continued) freedom to pretty much purchase whatever it wants, with some small limitations. I can’t see this slowing them down.