This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why 2013 Could Be Last Call for Craft Beer

Stocks in this article: SAM BREW TAP BUD

PORTLAND, Ore. (TheStreet) -- If the term "craft beer" wasn't wheezing its way into irrelevance before 2013, it collapsed into oblivion at some point during this year.

Boosters at the Brewers Association craft beer industry group argue that craft beer added $34 billion to the U.S. economy this year. Meanwhile, the 2,480 craft breweries operating among the 2,540 U.S. breweries that existed as of June far outpaces the 2,011 breweries that existed in total during U.S. brewing's peak in 1887.

But that's not making a happy little community of beer artisans dedicated to experimenting with existing styles and improving their beers. Instead, it's exposed a swelling undercurrent of animosity that's eroding any intangible definition of the term "craft" and is replacing it with a production number and dollar amount. We saw the first evidence of this in January, when the Brewers Association felt it would be a good idea to lay down the law and determine which beers were "craft" and which were just "crafty."

It surprised no one by putting Anheuser-Busch InBev's  (BUD) recently bought Goose Island brand and MolsonCoors (TAP - Get Report) and SABMiller joint venture MillerCoors' Blue Moon and Leinenkugel's on the list, but it managed to draw some ire by lumping pre-recession brewers including Pennsylvania-based D.L. Yuengling and Minnesota's August Schell into its grouping of bad guys. It also includes the Craft Brew Alliance and its Redhook and Widmer Brothers brands on its blacklist, which puts its figures for craft beer sales and production at odds with industry observers including Beer Marketers' Insights -- which includes Redhook, Widmer and those brewers' roughly 30 years of history in their publication's craft numbers.

Yet it is something that Boston Beer (SAM - Get Report) founder and Samuel Adams Boston Lager creator Jim Koch said to Tom Cardella, head of MillerCoors' Tenth & Blake craft division, at a Beer Marketers' Insights conference in spring that gave a better idea of how brewers -- or at least larger craft brewers -- define "craft":

We craft brewers have created a category that is able to command a price premium based on our points of difference from the mass domestic brewers. And that has created a lot of profitability in the category and a lot of growth.

In that breath, Koch offered a wise, reasoned definition of craft beer that no one could provide until that point. He also, perhaps unwittingly, made it about numbers rather than quality. That argument hasn't killed "craft beer," but it left the term mortally wounded.

Nowhere did that become more clear than in the halls of Congress, where the emergence of legislation that would provide tax breaks for brewers fractured the craft ranks. Forget about the sequester and the government shutdown that left breweries' approvals for new beers in jeopardy for a brief span in September: It was a visit to Washington in May that shook things up a bit. Brooklyn Brewery joined Bend, Ore.-based Deschutes Brewing, Utica, N.Y.-based Saranac brewer Matt Brewing and Kalamazoo, Mich.-base Bell's Brewery in D.C. to ask Congress to support reducing the excise tax on the nation's brewers. Those brewers offered varying levels of support for the Brewers Excise and Economic Relief Act of 2013 (or BEER Act) that would reduce the federal excise tax on beer for all brewers and beer importers. The act, introduced by U.S. Reps. Tom Latham (R-Iowa) and Ron Kind (D-Wis.) with 33 original co-sponsors, would help reduce the overhead on Brooklyn and the others and would, ideally, make it easier for new breweries to break into the business. That, in turn, might actually soften craft beer prices a bit for consumers.

The BEER Act, though, is also supported by Anheuser-Busch InBev, MillerCoors, Heineken USA, Constellation Brands' (STZ) Corona distributor Crown Imports and Magic Hat and Pyramid brewer North American Breweries. That makes it a bit of a sore point for craft beer lobbying group The Brewers Association, of which Brooklyn, Bell's, Matt and Deschutes are full members. That group has been working on its own legislation -- the Small Brewer Reinvestment and Expanding Workforce Act (or Small BREW Act) with members of Congress including Sens. Ben Cardin (D-Md.) and Susan Collins (R-Maine).

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs