Calm Down, the Government Isn’t Stripping Anyone of Their Craft Beer Credentials

By Mike Pomranz |
FWX WHY CRAFT BEER IS SO EXPENSIVE_0

© Pinhole Photographic / Stockimo / Alamy

Yesterday, MarketWatch columnist Jason Notte created a buzz in the beer community, claiming that “Sam Adams is about to be kicked out of the ‘craft beer’ category” if the recently proposed Craft Beverage Modernization and Tax Reform Act of 2015 passes.

Let’s all take a deep breath.  Sam Adams’ craft beer cred isn’t going anywhere.  It’s not to say Notte got things wrong: His technical analysis of the bill appears to be spot on.  Instead, where the problem lies is in how and by whom the term “craft brewery” is defined.

The term “craft brewer” is in some ways intentionally vague and was forged out of necessity.  Long ago, at the origins of the modern craft beer revolution – around the late ‘70s and early ‘80s – small breweries were typically called “microbreweries.”  As the market for handcrafted beers gained steam, microbreweries weren’t so “micro” anymore.  Because of this, the Brewers Association, a trade group, grabbed hold of the term “craft beer” to allow larger breweries that maintained a certain level of craftsmanship and independence to still be included with microbreweries – a term that the Brewers Association still defines as a brewery with production under 15,000 barrels a year.

In fact, Sam Adams can be cited as one of the breweries that made the creation of a “craft brewery” term necessary.  And, even as recently as 2011, the Brewers Association expanded their definition of “craft brewery” to keep Sam Adams in the club, as Notte pointed out.  The Brewers Association has continued to finagle the definition of a “craft brewery” throughout the years, changing it as recently as last year, to keep up with the quickly changing craft brew dynamic.  (It’s part of the reason I made the argument last October that the “craft beer vs. big beer” debate is really becoming a moot point.)

This history becomes important because it shows that for at least the past decade, the term “craft brewery” has, on a technical level, been defined by the Brewers Association.  Despite the title of the new bill proposed by Sen. Ron Wyden of Oregon, the law would not create any official legal definition for the term “craft.”  In fact, the only time the world “craft” appears in the bill at all is in the title.  “The government does not recognize a term like ‘craft,’” Bob Pease, CEO of the Brewers Association, told me.  “They recognize terms like ‘small’ and ‘large.’”

Instead, the new bill would create a three tiered system of taxation for breweries based on production.  As Notte adeptly laid out (bless him for digging through the tax code), these breaks happen at 60,000, 2 million and 6 million barrels.  But while many of the smaller breweries may certainly be more “craft” than those in the highest tier, the idea that this law would somehow redefine the term just isn’t true.

“We have our own definition,” said Pease.  And for the time being, any change in the tax code won’t affect that.  “It’d be too early to say if there’s any appetite to revisit the definition,” he said.  “There’s been no discussion at this point of changing it.”

It turns out the reports of Sam Adams craft beer death have been, once again, greatly exaggerated.

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