Industry News (Issue 19)

Brewers Association Top 50 Undergoes Big Change In 2014

The changes wrought by the Brewer’s Association’s new definition of what comprises a craft brewery resulted in a radically altered line-up when the 2014 Top 50 Craft Breweries list was released. In its first appearance on the list, D.G. Yuengling and Son, Inc. took over the top spot.

In the past, if a brewer used rice or corn as an ingredient in its beer (other than selected stles such as cream ales), they were not regarded as a craft brewer. That interpretation was changed at the behest of the BA’s board of directors.

If a brewer has used ingredients such as corn and rice traditionally, it is now considered a craft brewer by the BA if it meets other criteria for size and independence.

The additions have boosted the total annual production volume of the craft brewers on the list by 3.5 million barrels, according to the BA’s Chief Economist Bart Watson, and brought the BA another step closer to its stated goal of 20 percent of the U.S. beer market by 2020. In 2014, craft brewers under BA guidelines accounted for 11 percent of the overall beer market and produced 22.2 million barrels.

The 11 percent represented the first double digit share for the BA’s craft segment. The figure excludes other flavorful beer producers such as the Craft Brew Alliance and Tenth and Blake Beer Company. Overall, the shift continues among American consumers toward flavorful beer and away from light lagers.

The BA’s new definition brought some ironic changes. The Boston Beer Company, long recognized as the leader in volume among BA brewers, was unseated by first-time entrant Yuengling. The definition shift also allowed Wisconsin’s Minhas Craft Brewery (formerly Joseph Huber Brewing Company) to enter the list at number 10 and opened the doors for Minnesota’s August Schell Brewing Company (27th) and Rhode Island’s Narragansett Brewing Company (47th).

Blue Point Brewing Company, number 42 on the 2013 list, was removed after being acquired by AB InBev in 2014.

Founders Brewing Company, 17th on the list, announced last fall that it had sold 30 percent of its equity to Mahou San Miguel, the leading brewer in Spain. BA rules have limited ownership to 25 percent by a non-craft. But the Founders question has been postponed until next year’s list appears due to the sale not closing prior to January 1, 2015.

Nutrition Info OK for Beer Labels

Until this year, the U.S. Treasury’s Alcohol Tax And Trade Bureau did not allow alcoholic beverage labels display standard nutritional information. But after a push of more than ten years, labels can now state nutrition information using the U.S. Dietary Guidelines. Those guidelines count 0.6 ounces of alcohol as one serving.

Guiness contains 4.2 percent ABV, for example. Using figures from health.com, the number of carbohydrates in a U.S. pint of Guiness, which contains .672 ounces of alcohol, would be around 165 calories. But its “per serving” rating for carbs would be 148 according to the guidelines.

Craft Brewers Get Acquisitive

Acquisition mania has continued as craft brewers have taken a page from the precedent established by AB InBEv’s playbook.

Former Harpoon Brewery CEO Rich Doyle has partnered with a private equity firm in San Francisco to bring together major regional craft players under one operation ownership called Enjoy Beer LLC. The holding company’s first acquisition was Abita Brewing Company of Louisiana, which produced 160,000 barrels last year and is 21st on the Brewers Association Top 50 List for 2014. 

The owners at Abita, President David Blossman and his five brothers, have taken an equity stake in Enjoy Beer, which plans to continue acquisitions in other regions.

“As the craft brewing industry continues to evolve, there is enormous pressure on brewers to compete against the big breeries,” said Doyle. “Local brewers like David Blossman at Abita have been committed to innovation and finding new opportunities to compete while ensuring the company’s independence and local roots.”

In a move that also mirrors AB InBev’s regional strategy, Colorado-based Oskar Blues Brewery acquired Perrin Brewing Company of Comstock, Michigan, which brewed 14,000 barrels in 2014. Fireman Capital, a family office in Boston, and West Side Beer Distributing owner Keith Klopcic helped finance the acquisition. Klopcic will take over as the brewery’s president.

Craft Owners Continue Push In Education

Two major universities located in craft beer hotbeds have received major donations from craft brewery owners in support of brewing science programs.

Citing the need to support “the next generation of brewers,” New Belgium Brewing Company co-founder and CEO Kim Jordan has announced a donation of $500,000 to Colorado State University. Another $500,000 from New Belgium’s philanthropy program will be donated to the school, located near New Belgium’s headquarters in Ft. Collins, Colorado.

Carlos Alvarez, founder and CEO of The Gambrinus Company, has announced a donation of $1 million to support the establishment of a research brewery at Oregon State University’s fermentation science program. “I am particularly excited to be able to fund this project and give back to the industry that built my business,” said Alvarez.

Gambrinus owns the BridgePort Brewing Company in Portland, which has maintained a relationship with Oregon State for 15 years. Most recently, the school’s fermentation science program collaborated with BridgePort on a brown beer that won a gold medal at the European Beer Star in Germany. The Spoetzl Brewery in Shiner, Texas and the Trumer Brewery in Berkeley are Gambrinus’ other beer-making operations.