Brewers Association Updates Craft Brewer Definition

BBC was once small and became one of the pioneers. As with many pioneers we can easily identify them by the arrows in their backs.

The original 2 million barrel limit was a semi-arbitrary choice based on US Gvt tax rates. Nobody, including BBC is close to exceeding that newer 6 million limit.

BBC has a history of looking out for the small guys. In a Hop shortage year they sold their surplus hops at the same price they had paid before the shortage developed, so no profit to BBC. Those hops helped some small brewers to do their flagship beers, etc. rather than have compromise on what they were able to brew.

So I’d say any lobbying going on typically is of potential benefit to more than jus BBC, e.g. this recent change also benefits lots of small operations that would otherwise not be eligible for membership benefits.

 

So it sounds like it may not benefit BBC as much as others, but keeping them in is a big advantage to the organization. And BBC is happy to help smaller breweries this way. Makes sense.

 

Try this thought.

Yes, the classic model for PE has been flipping, especially acquiring-flipping businesses that have both perceivd value and management problems. However that has been a chaingin’ with at least some PE firms investing in minority shares to help the business grow and solidify its management, operations and/or market presence. Then the Investment becomes more long term and less volitile with less risk of losing a gamble that there will be a predictable return coming from the eventual reselling of something that has had stability and has grown in value. (Diversification of investments.)

But in both cases the PE firm wants the business to grow more valuable in its own right. Thus they are not sucking the business into their own corporate matrix but they are motivated to see the business succeed so it can acquire value for resale. The business may eventually be sold to become part of a big kid corporate matrix, but as we have seen that can happen without a PE firm being involved.

Thus PE is not “them,” or those we don’t want to be like given that we value independence highly.

 

Yes, and this can actualky be said, cynically, of most any professional organization, not just the BA. In my professional life I have been a member of 5 or 6 different professional organization (not all at one time). Every single one of them defines their role, at least in part, by clarification of who they are not as well as of who they are. Throw in the perception that the “other” wants to use big kid bullying tactics to destroy you....

 

Leaving aside the "us" against "them" issue for the moment, it is certainly possible that the PE firms are set up as "some guys with money who want to be in the craft beer business" rather than corporate flippers. The key issues is who has the controlling interest and what are their objectives?

Still, I can't help but think about whether the story of the scorpion and the frog applies...

 

Yes, controlling interest and motivation are what counts, and not all VC are created equal.

Well, at DFH there is venture capital at just below 25% and I’d wager dollars to donuts that Sam is in control and also has right of first refusal when the VC decides their work is done.

 

Pedant that I am, I would point out that BA is a trade association, not a professional organization!

As a past member of several professional organizations, and as a representative of my employer to a couple of different trade associations, I agree. They all tend to define who they are, at least in part, by defining who they are not.

The BA's self-imposed problem (IMO) is they tried to get too cute with it.

 

Sure the risk always exists that the VC will "shoot itself in the foot." But is that all that much different than incompetent management from the folks who did the start up in the first place? (Also, I doubt that a VC has the instincts of the Scorpion and has a bit more cognitive reflection on its learned reactions. )

 

My experince with trade organizations is more limited than yours, but while their objectives may differ aren't their goals similar, i.e. to look out for the interests of their membership?

I'd suggest that back in the day it didn't look so cute and was as much or more a reaction to a perceived threat from the big kid bullies.

Also, frankly, I've not seen any one propose a better definiton of a craft brewer. Most of them are like pornography, I don't know how to definte it but I know it when I see it. (I don't think that would fly for a trade organization. )

 

Permit me to make the following proposal:

Since the name of the trade association is the Brewers Association how about they simply “look out for the interests of their membership” and just classify (define) things via the term “brewery”. Therefore, no need for a definition of the term “craft brewery”.

Or alternatively they could change their name to the Craft Brewers Association and as part of the by-laws they would refuse the money from businesses like AB, Miller-Coors, etc.

Cheers!

 

No, at least not directly. The trade associations I have been involved with have a board of directors that are voted on by the membership, and the board handles setting policy, major decisions, hiring of the top manager, and providing him direction, etc.

The membership has no direct control of the overall operations (it is not a democracy), but the board typically operates more closely overseeing operations (especially with any controversial issues) than does a typical corporate board. If the membership is upset, they can vote to replace the board, although I have never seen that happen. The board, after all, are senior executives from a few of the member companies, who are voted on by the entire membership.

In the BA case, it is highly unlikely AB-Inbev could ever get one of their executives on the BA board (they may not even be a voting-class member, for that matter), so they have no influence over BA policies and positions. AB-Inbev, of course, knows this and chooses to join anyway. My guess is for access to the market data and the like, plus generally keeping an eye on that segment of the market.

The real issue is size. They are getting closer to boiling it down to that. The fretting over adjuncts and "traditional" was merely nice sounding folderol in the beginning, and was one of the first petards they managed to hoist themselves on.

 

Hmmm, that difference is less than it seems. In at least one Professional organization I was elected to an office on the board by the general membership vote, helped set policy, major decisions that have had visibile impact in the following years, etc. But the president of the organization was part of the elected committee and so first among equals all of whose vote counted at the end of the day..

 

At this point, craft is only a marketing term that increasingly does not reflect the product it is disguised as trying to sell. At least IMO.

 

I apologize if this is general knowledge, but do you have a link that shows these stats? I don't really keep up to date with these things, but I'm kind of intrigued by your post as I had no idea those places had other ownership. Is there somewhere that actually lists all of the breweries and who has other stakes in them as opposed to the truly independent ones that are small and still fully owned by whoever started it up?

 

Two online, non-industry sources:

FORTUNE - October 12, 2016 - Here's Why Brooklyn Brewery Sold a 24% Stake to Japan's Kirin

WESTWORD -November 28, 2017 - Avery Brewing Sells Minority Stake to Spanish Beer Conglomerate

For those breweries with over 25% ownership by non-craft breweries, check the Brewers Association List.

 

That makes perfect sense.

 

This is an excellent point. In fact it is probably the best one made in this thread so far.

Because I’m personally completely stumped as to how I would define a craft brewer in 2018.

 

Whenever this issue comes up, many struggle with how to define "craft" (beer or brewer). As much as the BA has fiddled with it, they are a trade association, and at their core, they are trying to define who they represent as a trade association. There is a vast difference between small brewers and macro brewers in many areas where a trade association can help: regulation, legislation, taxes, quality control, marketing, and on and on. In that context, all they really should be concerned with are small (from a production standpoint) and that whoever has controlling interest is not large and is focused on brewing. JMO, obviously. Regardless of how you think of "small" and "large", in comparison with the smallest macro brewer, BBC, Yuengling, et al are tiny, and fit well with their smaller brethren in many/most areas of interest to the BA trade association.

"Craft" as a market segment is an entirely different thing. This is from the general consumer's perspective, and clearly (IMO) includes Blue Moon, Shock Top, Goose Island, Founders, Avery, etc. as well as the group the BA recognizes.

"Craft" as a beer enthusiast/advocate/geek is yet another thing, and is also concerned with creativity, innovation, passion, community, local, anti-macro as a cause, and on and on.

 

All I can think any time this happens is that, as many have pointed out more eloquently than me, this is a TRADE ORG. defining their membership. 'Craft Brewer' in this context really just means 'brewer whose interest the BA will attempt to represent'. If you are in the brewing industry it has meaning in that it helps you understand who the BA will be stumping for and what sorts of things they might be trying to change. None of us really need to care at all in regards the beer we like to drink.

 

This is how I take it also. I am not any kind of doctrinaire political partisan/thinker, but The Brewers Association reminds me of the hackneyed version of a bureaucratic entity endlessly justifying the need for its existence.