USA: Brewers association considers implemeting a new “Lex Koch”

The Brewers Association (BA) has proposed changes to its definition of craft beer to allow members with a big proportion of “non-beer” products like Boston Beer Company (BBC) to stay a member in its organization. So far a craft brewer must according to the BA fit three criteria:

  • small (produce less than 6 million barrels),
  • independent (less than 25 percent owned by a non-craft brewer) and
  • traditional (a majority of beverage volume from beer made from traditional or innovative brewing ingredients)

As already reported earlier, BBC, which is the second largest craft brewery in the U.S. according to those criteria, could soon lose its status because the product mix of the company has drastically changed in recent years and the criteria of traditional ingredients will not be met any longer. (inside.beer, 29.8.2017)

Last year BBC produced 2 million barrels of beer and 1.8 million barrels Twisted Tea, Angry Orchard cider, and Truly Spiked & Sparkling seltzers, which made the company still a craft brewer. As sales of Samuel Adams, the flagship beer of BBC, dwindled the company will sell most likely this year more “non-beer” than beer products and could no longer be considered a BA-defined craft brewer.

Changing the definition will save BBC’s status and save BA the membership fees of one of its largest members. Boston Beer accounts for nearly 8 percent of total craft beer volume, according to the BA, and contributes significantly to the BA’s funding.

It would not be the first time that a “Lex Koch” (Jim Koch being is the name of the co- founder and chairman of BBC) would save BBC from being expelled from BA. In 2010, the BA already altered the definition in favor of BBC. Up to that time the cap in size for being regarded as a craft brewer was two million barrels per year, but as BBC approached that ceiling, the cap was raised exponentially to six million barrels.

However, BA insists that “this move was not made because of Boston Beer, but the timing of evaluating and revising the definition is related to Boston Beer. Other companies will also be facing a similar circumstance in the coming years and it’s natural that the largest of the smallest would get there first.”

The BA just recently polled 1,000 BA members.  “What we learned from this survey is that nearly half of the membership is already brewing — and more than half would consider making in the future — products that fall outside the existing Brewers Association traditional tier, such as cider or mead or other products taxed as beer (hard seltzers/flavored sugar beverages/sake/alcoholic kombucha, etc.),” said Left Hand Brewing founder Eric Wallace, who also serves as the chair of the BA board. “By adjusting the definition, we are being more inclusive of the needs of our voting members.”

The requirement for traditional brewing ingredients was already altered in February 2014. Up to that date the definition said that a craft brewery must make at least half of its product, as well as its “flagship” beer, from only barley malt – not from rice or corn. This restriction was dropped and showed already a first step into a direction which will now be followed one step further.

 

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