20:20 vision: take the over
Craft beer growth is unstoppable unless definition concerns trip it up
Gather friends, gather round. For I am returned of late from America, the vast US of A, and have seen wonders, marvels – things that outright amazed in Denver, Colorado the epicentre of the craft brewing movement.
This past September marked fully a decade since my last attendance at the Great American Beer Festival and its associated national brewing competition. The prolonged absence proved instructive: things you’d never notice yet needed to know about from, say, a continued reading of quarterly financial reports were writ large this time around.
Over the past 10 years the GABF has almost doubled in size, with an estimated 60,000 beer drinkers making their way over three days through the vast convention halls. And that’s not counting brewers attending from all corners of the States. You’ll have noted this week’s headline news that the country is now home to 4,144 operational brewers, an all-time record, and one that’s fluid with openings continuing to average two a day. (This suggests that the country’s 5,000th brewery will be with us sometime in early February 2017. The wonder.)
Little things signified much. For some of the most popular stands, brewers with national reputations but just regional or local distribution, people were willing to line up for 15, even 20 minutes to sip a sample of their hoped-for wunderkind taste sensation.
By sample, we’re taking about a one ounce pour.
Let’s pause for a moment and consider the implication. A fifteen minute wait for one-sixteenth of a normal belly to the bar serving size, without complaint. That’s hard core dedicated fandom – and not something that any multinational lager could ever dream of having happen. (Save maybe unfiltered Pilsner Urquell served from the barrel delivered direct from the Czech Republic.)
Another moment: the awards ceremony for this year’s GABF brewing competition was held at adjoining Bellco Theatre in the city’s Convention Center. The Bellco seats in excess of 5,000. And it was packed to the rafters with brewers’ hopeful of medals in shades of gold, silver and bronze.
Centre stage was Charlie Papazian, founder of the forerunner of today’s Brewers’ Association and the GABF. As a parade of brewers whooped, hollered and shouted out their successes as they snaked their way through the throng, in the mind’s eye the whole proceeding began to resemble the culmination of a gifted preacher’s call to salvation at the climax of an evangelical crusade.
And it dawns as the awards roll on and wave after wave of celebratory brewer takes the stage as to the simple core truth as to why craft is booming. Bluntly, simply and to paraphrase the first Clinton presidential campaign, it’s about the people, stupid. Craft is the ultimate populist grassroots movement.
Encountered on the floor of the GABF after the awards, Charlie is keeping up with the times, offering in greeting a fist bump rather than a shaking of hands. (Although, after having gripped, hugged and generally been gently mauled by a parade of Paul Bunyan-esque brewers, his hand may simply have been worse for wear.)
And you can imagine Charlie as the Kevin Bacon-like epicentre of a six degrees of separation game for craft beer drinkers. What’s the minimum number of acquaintance links required to be connected with Charlie? Almost certainly fewer than six, for the game would generally play out as ‘I know my local craft brewer, X, and X is friends with Charlie Papazian.’
Craft is in the ascendancy and will continue to be so in part because people know who brews their beer, quite possibly personally – it’s worth noting the vast majority of Americans now live within 10 miles of a craft brewery or brewpub – or know of them by reputation.
And this: truly, the most amazing thing about Denver was the level of beer knowledge amongst the attendees. Want to discuss the trend towards sour beers, the emergence of sessionable IPAs, where to find the best vanilla-flavoured barrel-aged porter? Chances are that he or she standing next to you in the queue for their one ounce sample would offer a full some answer to any such question.
The Brewers’ Association continues to target a 20% share of the American market by 2020 – given an 18% gain in volumes for 2014 and something similarly robust double digit anticipated for 2015, for the moment it seems likely.
In gambling parlance, if betting the over/under on 20% market share – take the over. And bet big.
Flummoxed by definition
As is becoming more widely understood the Brewers Association has a tripod of requirements that must be satisfied to allow one to be designated as a craft brewer. In order – small, although the ceiling of six million barrels leaves plenty of headroom for even today’s largest producers such as Sierra Nevada and Boston Beer; traditional, with an all-malt flagship beer or minimal use of adjuncts; and independent, with less than 25% of the brewery owned by another company that is not designated as a craft brewer.
Given the current spate of craft acquisitions on the part of national and multinational brewers, it’s the last requirement that has the potential to flummox reaching the 2020 target.
Consider for example Heineken’s recent purchase of a 50 per cent stake in Lagunitas, one of the country’s largest craft brewers at around 600,000 US barrels at the time of acquisition. Under Brewers’ Association rules going forward that volume will no longer be included in its craft calculation. That represents roughly three per cent of current craft beer output.
Imagine one or two other larger craft brewers entering into arrangements with larger non-craft brewers. Excluding Boston Beer’s figures would knock back craft’s volumes by a double digit percentage – and theoretically craft could be in decline. An absurdity given the reality on the ground yet it could be possible under the existing definition.
The most mind-numbing, over-debated question in the industry at the moment is what constitutes craft beer. It’s a debate that arguably matters more within the industry than without amongst the beer drinking population at large, yet it matters greatly when headlines are written, politicians are lobbied, and financial analysts send out their recommendations.
The underlying question isn’t what the definition of craft beer is, it’s who writes and therefore controls the definition. For now that’s the craft brewers themselves as embodied by their Brewers Association. But if craft brewers today are excluded tomorrow from the craft beer pool simply by a change in ownership, it opens a window for market analysts or alternative industry trade associations to redefine and calculate what constitutes craft.
While it’s understood that the BA doesn’t have an appetite as yet to revisit the question, it may well be resolved by simply redefining craft independence as to who retains management control post-transaction. Is the craft brewery still run day-to-day by its originators?
There’s not necessarily a clear-cut answer to that question, requiring an inspection process that would bedevil even someone with Solomon-like attributes. But, from a craft brewing perspective, when Molson Coors CEO Mark Hunter can stand up at an analyst’s conference and declare his company to be America’s largest craft brewer, off the efforts of its 10th & Blake specialist beer division and especially Belgian-style wheat beer Blue Moon – well, actually it does matter. A lot.
Craft beer has USPs that need protection.
A version of this article was first publcished by the good folk at www.just-drinks.com