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On the definition of craft beer

June 13, 2014

craft_beer_handsWhat is craft beer and why is it so important to have a definition of what it is? Especially for the average consumer who just simply wants to drink the stuff?

Iconic Scottish brewery BrewDog, known for – among other things – their 55 per cent End of History brew, bottled and packaged inside genuine road kill (I’m not kidding, Google it), feels it is important to have a definition for craft beer so that “craft brewers can charge a fair and sustainable price for their masterpieces.”

Australia’s leading representative body in the craft beer industry is the Craft Beer Industry Association. On a recent Radio Brews News podcast, newly appointed CBIA chair Dave Bonighton stated the newly defined craft beer definition as:

“Craft beer is borne of a mindset, an idea between art and science that inherently requires the skill of a brewer.”

The world’s leader in craft beer is the United States. Their equivalent to the CBIA, the Brewer’s Association defines craft beer as:

Small; less than 6 million barrels of beer produced annually

Independent; Less than 25% of the craft brewery is owned or controlled by a beverage alcohol industry member that is not itself a craft brewer

Traditional; A brewer that has a majority a majority of its total beverage alcohol volume in beers whose flavour derives traditional or innovative brewing ingredients and their fermentation.

Clearly the two craft beer associations’ definitions are far different. CBIA chair Dave Bonighton recently told me that the purpose of the CBIA definition was to be used as a consumer facing tool and “not necessarily for excise purposes”. He claims that rather than push for excise tax relief, the CBIA sees “demand opportunity for craft beer from potential customers (as) a much more powerful tool.” This is obviously different to the US Brewer’s Association, whose definition creates definitive lines as to what is and what is not craft beer. The US system also advantages smaller members of the craft beer industry, who pay less taxes based on their size.

Brian Scott, president of the San Diego brewers guild in the US says in an interview that “having bigger breweries saying that what are making is craft” is a “real serious threat to the industry.” This threat is due to, among other things, the economies of scale that exist for larger breweries. It’s interesting to note that two members of the CBIA, Matilda Bay and James Squire, are both owned by Carlton United Brewery (CUB) and Lion Nathan respectively, Australia’s two largest beer producers and that under the US definition would be exempt from being recognised as craft beer.

Consumers inherently want choice, as everyone is different. Whilst beer consumption continues its dramatic decline, now at a 70 year low, the craft beer industry is bucking this trend and continues to grow. Big brewers see the value in craft beer, as evidenced by Lion Nathan’s recent purchase of Little Creatures for well over $350 million. The big brewers want in on the craft beer industry. My question to you is this, is the CBIA helping or hindering craft beer?

Twitter: @ausbeerjourney

Website: www.ausbeerjourney.wordpress.com

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20 Responses to On the definition of craft beer

  1. Paul on June 20, 2014 at 12:46 pm

    Over the past couple of years, I’ve become increasingly uncomfortable with the term ‘Craft Beer’ and I’m stating to question whether the term is that relevant for a maturing industry.
    I note that there isn’t the same sort of debate in the Australian wine industry, but they have a similar mix of small, medium and large producers. Wines seem to be judged on their merits rather than who made them. I think the beer industry needs to get to this point as well.
    I would like to see a lot more clarity on labels. The parent company of any brewery should be disclosed, as should the place of production, so the punter can make that choice if they want to. Personally, I have a pretty good understanding of the various ownership structures in the industry, and where a particular product is brewed and I don’t think it impacts my drinking habits.
    Ultimately, the beer is good, interesting and flavourful, in which case I will drink it, or it isn’t and I won’t

    • Philip Withera on June 21, 2014 at 7:40 am

      Wine is a very open industry. An agricultural industry. They don’t have taps. And the wine variety is a decider. Brand is less important. The tax system is entirely different. And if you set up a winery, you get a wine producer rebate on excise paid to the first $500,000. None of these apply to beer. Beer is not comparable to wine but wine is a competitor of beer. Hence the national decline in beer as one key factor.

      Beer is a duopoly, beer is manufacturing. We have taps that build brands. These are closed to all but 2 breweries. Brand is important. But more so if the ability to build that brand is reduced by greater efficiency of big brewers. Please don’t confuse efficiency and quality with the craft definition. So many do.

      Built over centuries of takeovers and closures beer is as much about efficiency and quality as flavor. Manufacturing speeds and systems engineering is critical to cost and quality for beer. The reverse can be true for wine.

      The local factor is as important to beer as is the grape variety and region to wine. That’s because fresh is best. The best beers are sold and delivered 400 km from place of manufacture because they are perishable. Locavare ( my words) help determine flavour and character in the same way wine character is decided by grape and soil.

      For this reason, wine and beer are competitors if the definition for craft well thought out. Craft is not about lower efficiency or ignoring marketing or ignoring quality. But it is about local real authentic manufacturing wherever it’s best.

      • Adrian Moran on June 21, 2014 at 2:37 pm

        Without professing to be an expert on the matter of excise (although this is something I will be investigating soon), smaller winemakers pay a smaller excise than larger producers (as Phil said) hence offsetting the economies of scale faced by the larger producers .

        Surely one important function of the CBIA is to help facilitate these improvements for smaller producers

  2. Richard Adamson on June 19, 2014 at 12:06 pm

    As an interesting aside, Lion have started to include a “no other Craft Beer” clause in some of their contracts. Whilst they don’t attempt to define Craft Beer in the contract, verbally they include Coopers in their exclusion. In doing this they are effectively enforcing the duopoly , a move I’m sure will attract the attention of the ACCC.

    • Adrian Moran on June 19, 2014 at 7:11 pm

      You’re right Richard, surely the ACCC will have something to say about this.

      Also, Lion (through their James Squire wing) are a member of the CBIA and are trying to inhibit growth in the craft beer industry whilst being a member of the group trying to protect it.


      • Peter donagh on June 19, 2014 at 8:02 pm

        Lion and CUB should be kicked out.

  3. Dean Smith on June 17, 2014 at 1:16 pm

    “Craft” is a pointer to hands-on, brewed beer as opposed manufactured malt beverages – as Dave Bonighton’s definition suggests – but it seems new marketing strategies will need to emerge for independent, small-scale breweries to establish their point of difference. It’s becoming a global phenomenon that mega-corporations are seizing the “craft” moniker, but if that means good quality beers well be hitting the market, that’s not a total disaster, in my view. Microbreweries will simply need to reorient their marketing to emphasise their local character, independence, innovation, tradition, skill, quality or whatever. This rather militates against the need for “Craft Brewer” associations, but if these organisiations aren’t fighting for and winning a strict definition for “craft beer”, will they be missed?

  4. Philip Withers on June 17, 2014 at 8:40 am

    Dave’s definition deserves a fair hearing, after all Mountain Goat is one of the true pioneers of Australian Craft Brewing. I might not agree with it but it has genuine good intention. It’s a lot better than the USA’s definition which irrelevant given the relative brewery sizes between Australia and USA. Europeans laugh at the American definition. Personally, my view is that quality, flavor and local factor combined with independent decision making need to be the key focus of Australian craft definition, if we must have one. Labels and brands per se should be excluded;you must be a brewery.

  5. kenneth on June 14, 2014 at 10:51 am

    interesting that the cbia defines a national craft brewer as between 5 and 40 million litres per annum, effectively blocking the indpendently australian owned coopers from being a member whilst the japanese owned creatures, squires and south african matilda bay are there. but the australian real craft brewers association, which has independently owned as part of its requirements, would also not allow coopers due to size. now whether coopers bottle conditioned beers are craft is a question (they also are the world leader in homebrew equipment)
    but why craft? why not simply ‘good’ as used in the recent ‘good beer week’, or perhaps simply ‘not shit’ beer.
    america leads ‘craft’ beer, but not necessarily good beer. the history of the industry in the u.s (a lack of established breweries, followed by upstarts, prohibition, the end of prohibition and subsequent alcohol supply restrictions, then excessive consumerism and consumption, and cheap corn syrup for adjunct) has all influenced the beers, the supply, and the consumer so that craft beer is ‘fighting the good fight’ against the larger breweries.
    in the u.k and europe, traditional brewers were established enough to withhold pressure from takeover bids, whilst the consumer still supported quality beers as opposed to mass marketed cheap pasteurized adjunct swill. the result is not that these countries lack good breweries, but that these breweries pre-dated the ‘craft’ beer movement, (although some are popping up- brewdog etc).
    so where does australia stand? and what does australia need? australia probably sits close to the u.s but a decade or two behind.

    at the end of the day, a size restraint on an association that is trying to promote growth is self defeating. size restraints on tax exemptions perhaps, in an appropriate stepped system.
    independence would be more helpful for a consumer definition, but many peoples first ‘craft’ beer experience, that opens them up to more, would likely be from the cratures and squires with strong distribution.
    clearly labelled products is of vast importance for the consumer, along with all of the brewed under licence international beers so people know they arent actually drinking an imported italian/dutch/british beer but simply an authorised recipe of such.
    and clear guidelines to fair distribution practices by all brwers, big or small.
    this should be the agenda of the cbia. their defintion should reflect that.
    until then, i dont care about ‘craft’ beer. ill drink good beer, and pay companies who deserve to be paid for what they do

  6. scotty on June 13, 2014 at 8:34 pm

    Sorry, I’m a brewer, not a sales person. Craft beer should be fresh, local and innovative. I’m not concerned about defining the beer, past it being fresh and well made no matter who makes it.

    Unfortunately, the definition is a small wart on the hide of the bigger beast. Yes there had to be one, yes some people disagree with it, some people always will.

    Lets keep the focus on the bigger prize … not get bogged down in a sentence …

    Look at the great picture of what a group like the CBIA has achieved and the good it has delivered.

  7. Glen on June 13, 2014 at 2:18 pm

    Here’s one thing I don’t get about creating a definition of craft beer. How does it stop the (insert scary horror-movie style writing) “mainstream beer industry” from calling their beer craft?
    Unless I’m mistaken, it’s not legally enforceable, so those supermarket beers can still call themselves “craft beer”. If it’s meant to make things less confusing for the consumer, I don’t see it. I don’t see that it’ll change anything about the current situation.

  8. rob deBrewer on June 13, 2014 at 1:25 pm

    Surely the term craft refers to the trade (craftsman) of brewing no matter where or what size of the brewery. Are we to assume that a brewer in a large multi national brewery is not a craftsman I believe that he is. So what we need is a new series of terms that better describe the industry. Perhaps the terms micro and macro would work as a micro brewery could be described as small to medium and macro could be larger breweries. The only thing from here is to decide what constitutes small to medium and large, for this I have no definitive answer.
    Personnaly a bigger issue for me is the truth behind where many beers are made then it be easier for the consumer to make a descision as to what to buy.

  9. Peter donagh on June 13, 2014 at 12:53 pm

    Hindering. Bowing to pressure of CUB and Lion Nathan. Sell out.
    Shame Shame Shame.

  10. Richard Adamson on June 13, 2014 at 12:03 pm

    Some great discussion points here.

    I think it’s worth noting that both Matilda Bay and James Squire were leaders in the change to flavoursome beer in a market where there was very little craft brewing happening in Australia. Whilst Matilda Bay was acting independently before selling to CUB, James Squire rose from the Lion owned Hahn Brewery and was, from the outset, an arm of a larger corporation. Given the leadership role these two breweries took, is it right to exclude them from the club?

    In addition, the size and scale of the craft scene in Australia does not have the same resource base that the US craft scene has. It would be difficult for the CBIA to make real impact without the funding the larger breweries provide.

    I agree with Matt that there is a real danger in ‘craft washing’ but truth in labelling not only impacts the big guys, but also many smaller producers who contract brew as well as a few others who claim providence by virtue of their name and/or marketing when in reality there is none. This issue isn’t just for the big two to fix.

    Lastly, the US Brewer’s Association has had to change it’s constitution several times to allow some of the founding members to remain eligible as they have grown in size and scale. I think a tiered system where the bigger guys pay more for membership but can’t be excluded because of their success makes more sense. As for the question of ownership, maybe Australian ownership should be considered more important than whether the entity itself is independent?

    • Adrian Moran on June 13, 2014 at 1:03 pm

      Hi Richard,

      I think a lot of people feel it is right to exclude them from the club (CBIA).

      I think the problem with the big players being members of the CBIA is that it will be difficult for anything to get done whilst they wield power.

      Any advantageous steps pursued within the craft beer industry that includes the big two (and their subsidiaries) will simply not make the market fairer for the smaller guys unless a concrete definition is defined

      • Editor on June 13, 2014 at 4:08 pm

        Adrian, I think your fundamental mistake is to think that they ‘wield power’. They are two amongst many and they their vote counts now more than the 60-or-so other brewers.

        • Brendan Parnell on June 17, 2014 at 1:42 pm

          I’m not 100% on what you’re saying their Ed, but it seems to essentially be that Matilda Bay and Squires holds no more power than other “craft” breweries. I find this view concerning for the industry reps and leaders. They have economies of scale and buying power (ingredients and contracting taps) that cannot be matched by independent craft breweries, so clearly they do wield significant power over their apparent competitors.
          Clear labelling of where they are brewed is a great start.
          We should remember that while Little Creatures and its early cousins may have been pioneers in the craft industry, they are now a hindrance to its growth and we should not simply doff our hats to them and say thank you. We should reserve this to their founders for their original vision. But equally acknowledge their decision to sell out causes the headaches faced by the small boys today. Now we have supermarkets and Coca-Cola chiming in with their own “craft” brands and with it comes their corporate spin and the crap publicly spouted by the likes of CUB’s PR team.
          This rather excellent publication should make no bones about it; they are in fact the enemy to a thriving craft market as can be seen in the US.

          • Editor on June 17, 2014 at 3:36 pm

            You have misunderstood my comment Brendan. My comment about holding no more power than craft breweries relates only to their power within the CBIA, where they – like every other member – has only one vote. I fully appreciate the differences in their market power.

            I think we stand on our record here at Brews News in terms of holding the big players to account. That said, while I personally choose to make most of my purchasing decisions based on size and ownership (with beer quality being the over-riding factor) I certainly don’t think that Little Creatures, Matilda Bay or James Squire are a hindrance to the growth of craft beer because not everyone makes the same political decision about their purchase that I and, I daresay, you do. For many people it’s price, convenience or other factors that influence their decision and they couldn’t care who makes it. That’s why I think clear labelling will help craft – by letting those who care about ownership make decisions based on that. Even there, I don’t know too many craft brewers or beer geeks whose very first ‘better’ beer experinence was a ‘true’ craft beer, whatever that is. Ed.

          • Brendan Parnell on June 17, 2014 at 5:31 pm

            Thanks Ed, noted.

            I consider consumers buy for many reasons and our biggest growing market are consumers making a conscious, albeit brief, decision to choose a craft beer for a Saturday night/dinner party/pint at the pub. This is the growing craft market and the multi-nationals are going to great lengths for their brands to dominate it.

            We need to ensure these buyers have straight-forward and not overly taxing info on what they are buying and this is what the foreign owned breweries wish to obfuscate because it is these consumers moving to the new market. They want to make informed decisions but don’t wish to have to trawl through forums to know who owns what.

            Squires and Little Creatures are the fox in the granny suit and we should collectively out them and lobby the regulators to do so – particularly while the ACCC is examining these issues so closely.

  11. Editor on June 13, 2014 at 11:21 am

    Thanks for thoughtful addition to the debate Adrian.

    I agree that the US definition gives us a definitive ‘what’s in’ and ‘what’s out’ list, but it is also very arbitrary and doesn’t actually deal with beer quality…and better beer is what I think we want a beer lovers. It’s also subject to much criticism and discussion for excluding beers that arguably should be considered craft, but for technical reasons.

    That said, I also share your concerns about how smaller brewers can compete against the larger brewers if both are labelled as ‘craft’. But for me definitions won’t fix that, it comes down to labelling – clearly labelling who owns the brewery that makes the beer – so that consumers who care about more than how the beer tastes, can make informed choices.

    Many people don’t care about who makes the beer, they just want to drink beers that they like. For them price and availability are the most important factors. Others do care and want to know that they are supporting small, independently owned breweries. They will pay the premium for that.

    For me, arbitrary and exclusionary definitions confuse beer drinkers, clear labelling (such as ‘brewed by Lion’, not ‘Brewed Under Licence to the Kosciuszko Brewing Company’ when KBC is a wholly-owned and created Lion brewery) assist them and are the best way to help consumers make informed decisions.

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