Is your brew true to its craft — or just another Big Beer?

The Washington Post Sunday - - TECHNOLOGY & INNOVATION - BY CAITLIN DEWEY caitlin.dewey@wash­post.com

As Big Beer has snapped up craft brew­eries, it’s grown harder to tell who the true indies are. But a new in­dus­try ef­fort hopes to clear up the con­fu­sion with dec­la­ra­tions of own­er­ship right on the bot­tle.

Nearly 1,200 brew­eries — in­clud­ing Sa­muel Adams, Sierra Ne­vada and New Bel­gium — will soon be­gin print­ing seals on their beers that iden­tify them as “Cer­ti­fied In­de­pen­dent Craft.” The ini­tia­tive, which was spear­headed by the trade group for in­de­pen­dent craft brewers, is in­tended to dif­fer­en­ti­ate “true” craft beers from those made by the likes of MillerCoors, An­heuser-Busch and Heineken.

To qual­ify to use the seal, brew­eries can­not be more than 25 per­cent owned or con­trolled by an al­co­hol com­pany that is not a craft brewer. Its an­nual pro­duc­tion also can’t ex­ceed 6 mil­lion bar­rels.

The growth of the craft-beer seg­ment has slowed dra­mat­i­cally since those multi­na­tion­als en­tered the fray, from 18 per­cent in 2013 to 8 per­cent three years later. Some be­lieve they could stem that de­cline if con­sumers re­al­ized some “crafty”-look­ing beers weren’t ac­tu­ally made by in­de­pen­dent brewers.

“We’ve been hear­ing from our mem­bers for al­most two years that there is a lot of con­fu­sion in the mar­ket­place, fu­eled by the Big Beer ac­qui­si­tions,” said Bob Pease, chief ex­ec­u­tive of the Brewers As­so­ci­a­tion, which rep­re­sents the in­de­pen­dents. “This is a way to give beer drinkers more trans­parency and more in­for­ma­tion.”

Small brew­eries have grown in­creas­ingly anx­ious about Big Beer’s in­cur­sion on their lim­ited turf. Five in­ter­na­tional con­glom­er­ates — An­heuser-Busch InBev, MillerCoors, Con­stel­la­tion/ Crown Im­ports, Heineken and Pabst — con­trol more than 80 per­cent of the U.S. beer mar­ket, ac­cord­ing to the Na­tional Beer Whole­salers As­so­ci­a­tion.

That mar­ket dom­i­nance has given the big cor­po­rate brewers sig­nif­i­cant ad­van­tages over their in­de­pen­dent com­pe­ti­tion. On the brew­ing side, large com­pa­nies can lever­age their vol­ume, and their cap­i­tal, to score more and bet­ter hops. Thanks to the fact that these com­pa­nies brew at mul­ti­ple fa­cil­i­ties in dif­fer­ent mar­kets, they can also re­act more quickly to lo­cal de­mand and, the­o­ret­i­cally, sup­ply a fresher prod­uct.

The larger is­sue, how­ever, lies in dis­tri­bu­tion. Be­cause the five Big Beer com­pa­nies rep­re­sent the ma­jor­ity of busi­ness for the mid­dle­men who move beer from brew­eries to tap lines and re­tail stores, they ex­er­cise enor­mous in­flu­ence over how their beer is dis­played and pro­moted.

Dis­tri­bu­tion con­tracts fre­quently al­low ma­jor beer brands to dic­tate where their beer is placed on shelves, for in­stance. And Big Beer has suc­cess­fully driven in­de­pen­dent beers out of some sta­di­ums, mu­sic venues and chain restau­rants by ask­ing dis­trib­u­tors to stock their crafts brands in­stead of in­de­pen­dents.

In Mas­sachusetts and Cal­i­for­nia, in­ves­ti­ga­tors have ac­cused An­heuser-Busch of brib­ing stores to give their beers bet­ter place­ment. In Mas­sachusetts, the com­pany gave away equip­ment worth $942,200 to more than 400 re­tail­ers, ac­cord­ing to a 14-month probe that con­cluded in May. In Cal­i­for­nia, the com­pany set­tled with lo­cal reg­u­la­tors for $400,000.

“Our com­pa­nies have com­pletely dif­fer­ent busi­ness dy­nam­ics,” said Sam Cala­gione, the founder of Delaware-based Dog­fish Head. “They don’t have the chal­lenges of ac­cess to dis­tri­bu­tion, cap­i­tal and raw in­gre­di­ents that we have. It’s not a level play­ing field, and that’s cap­i­tal­ism — but to pre­tend they’re the same type of busi­ness, when they’re ac­tu­ally brewed by a multi­na­tional con­glom­er­ate? It’s not ap­ples to ap­ples.”

Brewers say these con­cerns have only been ex­ac­er­bated by Big Beer’s in­cur­sion into craft. The ac­qui­si­tion of in­de­pen­dent brew­eries, they ar­gue, has eroded the few ad­van­tages the indies had — higher-qual­ity beers in dif­fer­ent styles and a cooler, vastly less cor­po­rate brand.

Since 2011, An­heuser-Busch has bought Goose Is­land, Blue Point, Kar­bach, Golden Road, Devils Back­bone, Elysian, 10 Bar­rel, Breck­en­ridge, Four Peaks and Wicked Weed. MillerCoors now owns Ter­rapin, Heineken has La­gu­ni­tas, and Con­stel­la­tion owns Bal­last Point.

“If I walk into a farm­ers mar­ket, I as­sume the pro­duce was grown by an in­de­pen­dent, lo­cal farmer,” said Daniel Kle­ban, the co-founder and brewer at Maine Beer Co. in Freeport. “If I found out that stuff ac­tu­ally came from Dole, I’d be up­set, per­son­ally.”

Big brewers have, for their part, played down these con­cerns. Jim McGreevy, the pres­i­dent of the Beer In­sti­tute, which rep­re­sents large com­pa­nies, said he was “dis­ap­pointed” that the Brewers As­so­ci­a­tion was “try­ing to cre­ate more di­vi­sions and dis­tinc­tions” within the in­dus­try. The com­plaints of in­de­pen­dent brewers dis­guise the fact that the seg­ment is gen­er­ally do­ing well, he added — a point also made by Joao Cas­tro Neves, the pres­i­dent of An­heuser-Busch’s North Amer­i­can divi­sion, in a May in­ter­view with The Wash­ing­ton Post.

Over the past five years, the num­ber of craft brew­eries in the United States has more than dou­bled — as has the seg­ment’s share of beer sales, in dol­lars, which grew to 22 per­cent this year from 10 per­cent in 2012. That growth has stalled in the past two years, how­ever, largely among the na­tion­ally dis­trib­uted craft brewers, such as Sierra Ne­vada and Sam Adams, that com­pete with Big Beer most di­rectly.

Since 2011, 16 in­de­pen­dent craft brew­eries have been ac­quired by Big Beer, of the more than 5,000 in the United States.

“It’s a very small num­ber, whereas craft brew­ing has ex­ploded,” Cas­tro Neves said. “I un­der­stand where crit­ics are com­ing from, but I can’t put to­gether what they’re say­ing with the facts or the re­al­ity of the mar­ket.”

Ul­ti­mately, craft brewers say, they just want the re­al­i­ties of that mar­ket to be clearer. That way, when con­sumers reach for a six­pack or or­der at a bar, they know whether they’re re­ally drink­ing in­de­pen­dently brewed beer.

Cala­gione, of Dog­fish Head, ac­knowl­edged that many drinkers won’t care. But he sus­pects some pas­sion­ate mi­nor­ity will — and in an in­creas­ingly com­pet­i­tive in­dus­try, that could make all the dif­fer­ence.

“Peo­ple are al­ready seek­ing out fair-trade cof­fee and or­ganic veg­eta­bles,” he said.

Now he and other brewers hope that “Cer­ti­fied In­de­pen­dent” craft beer will be next.

SCOTT OL­SON/GETTY IM­AGES

Delaware-based Dog­fish Head Craft Brew­ery of­fers sam­ples at the Amer­i­can Beer Classic craft­beer festival at Chicago’s Sol­dier Field in 2015. Growth in the craft-beer mar­ket has slowed.

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