Industry News | January 4, 2011

Brewers Association Redefines 'Small' Breweries

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The board of directors of the Brewers Association (BA), the trade association representing the majority of U.S. brewing companies, voted to change the BA's designation of "small" in its definition of a "craft brewer." The Association's board of directors also revised its bylaws to reflect the change.

In the BA's craft brewer definition, the term "small" now refers to any independent brewery that produces up to 6 million barrels of traditional beer. The previous definition capped production at 2 million barrels. The changed definition is in effect and can be reviewed on the BA website, BrewersAssociation.org. The change to the bylaws went into effect December 20.

In the Brewers Association's bylaws, two classes of membership (Professional Packaging Brewers and Associate membership) have been redefined with a qualifying barrelage of 6 million barrels versus 2 million barrels.

The association cited several reasons for the change, including the recognition that "small" is a descriptive term relative to the overall size of the industry.

"Thirty-four years have passed since the original small brewers tax differential defined small brewers as producing less than 2 million barrels," says Nick Matt, chair of the Brewers Association board of directors and chairman and CEO of F.X. Matt Brewing Company. "A lot has changed since 1976. The largest brewer in the U.S. has grown from 45 million barrels to 300 million barrels of global beer production."

"The craft brewer definition and bylaws now more accurately reflect and align with our government affairs efforts,” Matt says. On the legislative front in 2010, the Brewers Association supported H.R. 4278/S. 3339, which sought to update the cap on an excise tax differential for small brewers to 6 million barrels per year in production for their first 2 million barrels.

The industry's largest craft brewer, The Boston Beer Company, is poised to become the first craft brewer to surpass 2 million barrels of traditional beer within the next few years. Loss of The Boston Beer Company's production in craft brewing industry statistics would inaccurately reflect on the craft brewing industry's market share.

In addition to Boston Beer, the growth trajectory of other sizable BA member breweries places them on a course approaching the 2 million barrel threshold in the coming years.

"With this change to the craft brewer definition and BA bylaws, statistics will continue to accurately reflect the 30-year growth of market share for craft brewed beer," Matt says. "Brewers Association statistics on craft brewers will continue to keep pace with the growth of the industry."

Craft brewed beer market share is now approximately 5 percent of the U.S. beer industry, and growing. The BA has a stated mission of helping America's craft brewers achieve more than five percent market share by 2013.

"Rather than removing members due to their success, the craft brewing industry should be celebrating our growth,” Matt says.