Fascinating Interview w/ Widmer Brothers Over Loss of Craft Beer Label

beer-barrels-1371290737GNYThe Brewers Association maintains a definition of which breweries in America can label themselves as craft beer. Their definition focuses on three main elements. The brewery must be small, independent and traditional. This definition is designed as a way to protect consumer from falsely supporting mass market brewers who may try to capitalize on popularity of the craft beer explosion without subscribing to the ideas that define craft beer.

There is a problem with this definition which has led to edge cases where the definition seems to be inadequate. Goose Island was a craft brewery with a sterling reputation for making amazing craft beer. When they decided to partner with AB-InBev to increase capital, distribution, and advertising by selling a 58% stake to the brewing behemoth they immediately loss their craft beer status. Goose Island is still brewing delicious beer via traditional methods and their output is dwarfed by craft breweries like Sierra Nevada or Sam Adams. Is their beer no longer worthy of being craft because someone other than a craft brewery owns more than a 25% stake in the company? The Brewers Association certainly thinks so.

In 2007 Widmer Brothers and Redhook Ale Brewery announced plans to merge thus creating a new company dubbed the Craft Brewers Alliance. Anheuser-Busch had a stake in both companies and when the merger went through the combined ownership by Anheuser-Busch came to a 32% stake, which was above the 25% stake limit set by the Brewers Association. As a result the Craft Brewers Alliance, renamed Craft Brew Alliance in 2012, was no longer considered craft beer. A position that both Widmer brothers are strongly opposed to.

TheStreet.com posted an interview celebrating30 years of Widmer Craft Beer in support of the brothers’ beer and the conversation was quite interesting.

After you joined the Craft Brew Alliance in 2007, the Brewers Association craft beer industry group reached the decision that Widmer Brothers was no longer a craft brewer because the 32% of the Alliance owned by Anheuser-Busch InBev exceeds their 25% threshold for a big brewery’s ownership stake. Does it sting a bit that because of a business decision you made, people you’ve worked with for decades – people you probably still see on a regular basis – hold this opinion of your brewery?

Kurt: From my standpoint, it may be somewhat best that we are distanced from that organization. We just came back from the Craft Brewers’ Conference and it’s a continuation of a bad direction in which they purport to be promoting harmony, beer, good times and positive things, but then there are examples like creating dissent in the ranks by throwing us out. There were members who were not in support of that, but that was a board decision. While they’re saying one thing, they’re doing the opposite, and I’m not sure it’s great for Craft Brew Alliance to be affiliated with an organization that does that.

There’s no point in provoking the large breweries, which they do; there’s no point in provoking wholesalers unnecessarily, which they do.

Mike and I enjoy trashing both Miller-Coors and AB-InBev but we don’t produce a competing product to theirs. Craft beer is generally a place of friendly rivalry but there is a unified front against the common enemy of the mass market brewers. Yet it seems almost suicidal to provoke a competitor as large as Miller-Coors and AB-InBev. While craft beer is exploding and there is a certain level of solidarity between drinkers and the craft beer produces who make their beer I think the Brewers Association (and brewers) themselves might be shocked to realize that if the beer is good enough most people don’t care who owns the company.

However, there are plenty of people who monitor the industry and track the numbers who consider Widmer Brothers a craft brewery and state emphatically that they can’t understand how Kurt and Rob Widmer can’t be considered craft brewers.

Rob: As time goes on, the folks who are at the BA under the level of the board wish that they didn’t have to deal with that. Every once in a while we get someone at the BA who contacts us about participating in something and we have to remind them that we’re not members. Their reactions indicate they wish that they weren’t in that position. And the board changes …

Kurt: The initiative was Jim Koch. This was all his idea. He had his own explanations that were politically motivated and there was a sufficient majority of the board that went along with him.

Jim is a very intelligent man and you can’t knock his success – he’s the most successful craft brewer – but it was always a fascination that he started as a virtual brewer and we started as bricks and mortar from Day 1. He contorted the definition so that a bricks-and-mortar brewer doesn’t exist, but a virtual brewer does. We were fascinated that enough people went along with that, but one of the membership stood up on our behalf and asked to put it to a popular vote. The board said they weren’t going to do that, but they would have lost. I guarantee that.

This revelation was particularly hard to read. I find it repugnant that a man who have the Brewers Association alter their definition of craft beer to better suit his own powerhouse of a brewing company, the Boston Beer Company, would be unwilling to further tweak the definition to include breweries like the Craft Brew Alliance seems extremely self-serving.

The purist in me absolutely wants that all the craft breweries that I know and love be 100% independent but I also know that going it alone can be brutal. While I think breweries like Goose Island who have ceded control of their company’s destiny are extremely smart in joining the devil rather than fighting him it is deeply disappointing. Yet if breweries can combine to make great beer together why can’t a brewery give up a small chunk of its independence for better distribution and some protection without being kicked from the club house.

Jim Koch may be able to take the purists stand because he is able to compete with the big boys. He can buy national ad campaigns and super bowl commercials. When he releases a new beer it can be on special at almost every bar in America. Seems a little specious that he would be calling out a competitor for their lack of purity to me.

I like Red Hook, Kona, and Widmer Brothers and think Omission’s gluten free beer is a great successful experiment in reaching an audience who cannot drink beer with a delicious alternative. I don’t think the loss of the label has destroyed their growth but instead underscored a flaw in the definition of craft brew.

Sam Adams third largest brewery in America that has taps in nearly every bar in America, national advertising campaigns, and unbelievable distribution deals, and had the definition of craft beer changed to include them. Craft Brew Alliance is a combination of Red Hook, Widmer Brothers, Omission, Kona, and Square Mile Cider to collectively be the 9th largest brewery in America.

Which sounds more like craft beer to you?