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With ‘craft’, small is relative

January 4, 2011

The US Brewers Association has today announced that it has amended the definition of craft beer.

What exactly is 'craft' beer?

The association, the trade body representing the majority of U.S. brewing companies, has amended the craft brewer definition so that the term “small” now refers to any independent brewery that produces up to 6 million barrels of traditional beer. The previous definition capped production at 2 million barrels. One barrel is the equivalent of 117 litres of beer.

The US’ largest craft brewer, The Boston Beer Company, is poised to become the first craft brewer to surpass 2 million barrels of traditional beer within the next few years. In 2009 the brewer of the Samuel Adams range sold almost 1.85 million barrels. By contrast Coopers Brewery, arguably the largest Australian brewery that would fit within the Brewers Association definition due to being ‘independent’, last year brewed 60 million litres. This represents less than 513 000 barrels, a quarter of the old definition.

The association cited several reasons for the change, including the recognition that “small” is a descriptive term relative to the overall size of the industry.

“Thirty-four years have passed since the original small brewers tax differential defined small brewers as producing less than 2 million barrels,” said Nick Matt, chair of the Brewers Association board of directors and chairman and CEO of F.X. Matt Brewing Company.

“A lot has changed since 1976. The largest brewer in the U.S. has grown from 45 million barrels to 300 million barrels of global beer production.”

“The craft brewer definition and bylaws now more accurately reflect and align with our government affairs efforts,” Matt added.

On the legislative front in 2010, the Brewers Association supported a Federal law which sought to update the cap on an excise tax differential for small brewers making up to  6 million barrels per year for their first 2 million barrels.

Australia has no equivalent trade body to the US Brewers Association and no comprehensive trade figures for the industry are available.

According to the Brewers Association, the top 10 US craft brewers in 2009 were:

Top 10 US craft breweries 2009*

Brewery2009 Sales (Barrels)% change in 2009Share of craft segment
Boston Beer Co1 841 348120.20
Sierra Nevada Brewing Co723 88087.94
New Belgium Brewing Co583 160186.4
Spoetzl Brewery409 00044.49
Pyramid Breweries Inc192 199-82.11
Deschutes Brewery186 78342.05
Matt Brewing Co171 70061.88
Magic Hat Brewing Co154 236211.69
Boulevard Brewing Co138 95411.52
Harpoon Brewery130 516111.43

*Note, following the 2010 sale of Magic Hat Brewing Co(#8), which also owns Pyramid Breweries Inc (#5), to North American Breweries in August 2010, these breweries no longer fall within the definition of craft beer on account of the ‘independent’ element of the definition.  North American Breweries describes itself as “the national platform for investments and growth in the beer and malt beverages industries for KPS Capital Partners, LP.” The ease with which breweries can fall out of the definition on account of ownership is a cause for some criticism.

We have previously covered this issue with many brewers providing their perspective on what craft beer means to them. You can see what they think below:

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