THE GIST
The Brewers Association has released its annual list of the top 50 largest craft breweries by sales volume, offering the most up-to-date snapshot of the upper echelon of the industry.
For the third year in a row, the top five breweries were Yuengling, Boston Beer, Sierra Nevada, New Belgium, and Gambrinus, in that order.
But there are some new entries, exits, and consolidations of note, which, taken together, reflect the proliferation of both the unique partnerships being forged between companies and the corporate cash now flowing through the industry’s tap lines. But all that ambiguity is pushing the BA to define craft in a way that's increasingly disassociated from drinker's impressions and experiences, the alignment of which they've benefited from greatly over the past 10 years.
WHY IT MATTERS
Since the BA amended its definition of a “craft brewer” in 2014 by de-emphasizing ingredient restrictions (thus, welcoming Yuengling, Narragansett, and others into the fold), the top five has been in a state of stasis. And for drinkers, the inclusion of those names did nothing to clarify the value of the term "craft." In fact, most drinkers wouldn't even recognize some of the names on the list as breweries at all, names like Matt's and Minhas, which operate more as contract hubs than craft breweries in the marketing sense that the BA has been pushing for years.
And the down ballot considerations have only gotten more interesting recently because the BA’s definition of “independence” (“Less than 25 percent of the craft brewery is owned or controlled by an alcohol industry member that is not itself a craft brewer.”) excludes some heavyweights from its ranks that drinkers largely recognize as craft (Lagunitas and Founders, for starters) but not others.
Consider: Lagunitas, Ballast Point, Breckenridge, and Four Peaks, who last year ranked 6th, 11th, 47th, and 49th respectively, are all missing this year because all four companies sold major stakes to multinational corporations.
We'd like to suggest, though, that the idea of "independence" is a more complicated philosophy than the parameters outlined in the BA’s diktat. Check this small but notable roster from outside the top five but inside this year's top 25:
9. Stone
10. Oskar Blues
11. Brooklyn
13. Artisanal Brewing Ventures (a private equity-backed holding group formed by Victory and Southern Tier)
14. Dogfish Head
15. SweetWater
20. Abita
24. Long Trail
These eight craft brewers, all independent according to the BA's rules, have some sort of financial backing, primarily of the private equity variety, which many brewery owners claim is even more dangerous than corporate ownership because it aims to flip investment much faster and more aggressively than a longterm partner. And that’s just from the top half of the list. Head outside the top 25 and you’ll find more, like Full Sail (29) and Uinta (39) as well.
This isn’t exactly rocket science. The first group no longer meets the BA’s definition of a "craft brewer" while the second group does.
But the definition is fluid. The BA has, in the past, updated it to allow inclusion of producers that make beer with adjunct ingredients such as rice and corn. It has also lifted the production cap from two million to six million barrels to better represent the rate of growth companies like Boston Beer were showing. Which leaves us wondering now if the current definition isn't primed for an overhaul, specifically as it relates to the concept of ownership: should corporately-owned breweries be let back in?
That an unlikely shift, but the number of breweries recently topped 5,000, and many of those are incredibly small and localized compared to their VC-backed regional and national competitors. And all of this means that the BA has to decide who it represents and how. There may be building pressure in the next few years to draw the line even more strictly, especially given that one of the factors that weighs most heavily in the BA's representation in their lobbying efforts is the fairness of competition and access to market.
This wouldn't be without drastic ramifications, of course. If we were to remove barrelage from the likes of Dogfish head, Stone, and Oskar Blues (and, by extension, possibly Cigar City and others still), craft beer would become a much smaller industry—and with that a loss of power in the legislature, to boot. That might be problematic for the stated “20% of the market by 2020” goal, a goal the BA has softened its stance on since Lagunitas and others exceeded the parameters.
But all of this comes back to whether the BA definition of “craft,” which has long built its marketing engine on the back of consumer alignment with the term, is entering an age now where its definition no longer concerns most drinkers. Your average beer lover is making his or her own qualitative decisions on what is and is not "craft" to them. And that means they’re leaving industry lobbying group efforts behind—for better and worse.
—Dave Eisenberg and Michael Kiser
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Brewers Association Releases Top 50 Breweries of 2016 [Brewers Association]