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As Craft Beer Starts Gushing, Its Essence Gets Watered Down

There was once a time when it was easy to throw around the term "craft beer" and know exactly what you were talking about. For decades, craft was the way to differentiate small, independently owned breweries – and the beer they make – from the brewing giants like Coors, Budweiser and Pabst Blue Ribbon.

But the line separating craft brewers from large multinational companies is growing blurrier. Small breweries are transforming into big ones, while big breweries are masquerading as small brands, selling "crafty" knockoff beers in an attempt to lure customers from the craft beer market.

Part of the confusion over what craft beer means has come from within the craft beer community itself. The Brewers Association, a Colorado industry group that serves as a voice for craft brewers, has changed its definition multiple times.

In February, the organization eliminated a long-standing requirement that a craft brewery must make at least half of its product, as well as its "flagship" beer, from only barley malt — not sugar from rice or corn, which large breweries commonly rely on to make thinly flavored lagers.

The amendment means Yuengling & Sons, Inc., the largest American-owned brewery, will soon join the Brewers Association's voting membership as a "craft" brewery, according to Julia Herz, a spokeswoman with the association. She says the change also brought August Schell and Narragansett, and their respective flagship lagers, into the craft category.

But the change is not going over well with some producers already squarely in the craft category. Dan Del Grande, owner and brewer of Bison Organic Beer, based in Berkeley, Calif., feels the allowance of rice, corn and other alternative sugar sources as main ingredients in craft brewing will compromise the beer.

"I think the Brewers Association has watered down the meaning of craft beer, and of good beer," he says.

The ballooning of craft breweries is another contentious issue. In 2010, the Boston Beer Company, maker of Sam Adams, was fast on track to outgrow the craft category's limit of two million barrels per year. So the Brewers Association, apparently as a favor to Boston Beer, increased the annual cap to six million barrels, allowing the brewery to remain in the craft club.

Del Grande thinks breweries that make more than about 200,000 barrels of beer per year should not be recognized as craft. They especially should not be receiving the lobbying and marketing support that the Brewers Association offers to craft breweries, he says.

"Frankly, those guys don't need the help," he says.

But Herz of the Brewers Association says the higher cap was meant simply to keep a founding member of the craft brewing world in the community.

"Our board of directors decided not to penalize the most rapidly growing of our craft brewers for coming of age, for success," she tells The Salt. "The definition of craft has evolved as the industry evolves."

As of 2012, 25 craft breweries had passed the 100,000-barrel benchmark, according to the Brewers Association. Sierra Nevada is poised to pass one million barrels this year and New Belgium's facility has a capacity of about 900,000.

Stone, based in San Diego, is also thriving and in search of an East Coast location to open a new brewery, according to a company rep. Lagunitas Brewing Company out of Petaluma, Calif., is now producing about half a million barrels and has just launched a new brewery in Chicago that could roughly double its capacity.

But Del Grande feels strongly that such breweries have outgrown the craft category.

"To me, craft means artisan," he says. "Once an enterprise scales up, the beer is no longer craft. It becomes a brand with lots and lots of employees, and you can't point to a small team of individuals who are responsible for the art."

Tony Magee, the founder of Lagunitas, disagrees. He says craft breweries, no matter how big they get, will always be fundamentally different than large global brands.

"Even if we grow to be a 10-million barrel brewery, my brewery will not resemble that of a big brewery," he says. "There are important material differences between their facility and mine." Brewing with rice and corn requires specialized equipment, he says. So does brewing with barley and large amounts of whole hops, as most craft breweries do. "Budweiser, Coors and Guinness are so optimized to make their own beer that they probably couldn't make mine if they wanted to," Magee says.

But they are trying — with widely distributed craft imitation brands, like MillerCoors' Blue Moon, and Shock Top, made by the company that produces Budweiser, Anheuser-Busch.

This is hardly surprising, considering how fast craft breweries, and their sales, are growing. In 1978, there were only 89 breweries in America. Today, the U.S. is home to about 2,800 breweries and 94 percent of them are making less than 15,000 barrels each year, Herz says.

Craft beer still only accounts for about 8 percent of the $100 billion U.S. beer market — but industry heads expect that figure to reach 20 percent by 2020. Much of that growth will occur in the breweries selling more than 100,000 barrels per year — the big boys.

The heavyweight companies are also buying up craft breweries to get in on the action. Widmer Bros. and Goose Island, both once popular independent craft brands, have each been purchased by Anheuser-Busch.

Marty Jones, a longtime craft beer publicist in Fort Collins, Col., believes the parent companies of these brands need to be disclosed on labels and billboards.

"It's absolutely dishonest when giant breweries portray themselves as little guys when they aren't," Jones says.

The Brewers Association recognized the issue of imitation craft beers in 2012 and launched an educational campaign under the "craft versus crafty" slogan to clarify what beers were truly in the craft category.

Del Grande at Bison, who says he is already frustrated by larger craft companies competing for scarce retail shelf space, believes that in several years, competition from corporate "crafty" beer brands could begin cutting into his sales.

Magee of Lagunitas seems only amused. He says the attempts by giant breweries at making craft-like beers is a boost for craft beer. "They're basically telling their customers, 'Hey, go and try some craft beer,' " Magee says.

"The big guys are now parodying us," he adds. "They're running out of ideas."

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