According to a new proposed law, the definition of a craft brewery might change in ways not thought possible and large craft breweries like Boston Beer may lose their craft beer status.
A couple of weeks ago, Senator Ron Wyden, a Democrat from Oregon, introduced new legislation aimed at craft beer, taxes, and regulatory reform. Dubbed the Craft Beverage Modernization and Tax Reform Act (S. 1562), it includes several key tax provisions that will change craft beer in important ways, all determined by brewery production:
- Excise taxes are cut to $3.50 per barrel for the first 60,000 barrels produced, but only for those breweries producing less than 2 million barrels per year.
- Excise taxes for breweries between the 2 million and 6 million barrel range are reduced to $16 per barrel on all beer produced.
- Excise taxes are maintained at the present $18 per barrel for any brewery producing more than 6 million barrels of beer per year.
Specifics of this bill are not yet known. The only thing we know is the taxation status spelled out above and it effectively defines who is a craft brewery and who isn’t. Based on the tax brackets, breweries below the 60,000 barrel threshold are small craft breweries. The discounted excise tax, which goes up to the 2 million barrel mark, would effectively mark the cap for large craft breweries. Any brewery producing more than 2 million barrels of beer annually is now a large brewery, stripped of any claim to the craft beer label.
Boston Beer sold over 4.1 million barrels of beer, cider, and other malt beverages in 2014. That places it squarely in the large craft brewery camp. But with Boston Beer expanding at such a rapid pace and showing no signs of slowing down, it will likely cross the 6 million barrel threshold in about three years. If that happens, Boston Beer and its iconic Sam Adams brand will be categorized as a large, macro brewery, mentioned in the same breath as Anheuser- Busch InBev, Molson Coors, and SAB Miller.
The Brewers Association has long maintained its own definition of craft beer. For coveted membership in the land of craft beer exclusiveness, a brewery had to be small, producing less than 6 million barrels per year. It also had to be independent, with no more than 25 percent of its business owned by something other than a craft brewery. And it had to be traditional, with more than half of its beers produced in the traditional sense of what a beer should be, using traditional brewing ingredients or other innovative ingredients, so long as the end product was a beer and not a flavored malt beverage.
Over the years, the Brewers Association has modified its definition of craft beer. For one thing, it has increased the barrel threshold of craft so that Boston Beer could continue to fall into the craft category. Some may recall that in 2010, the Brewers Association increased the upper limit from 2 million to 6 million barrels so that Boston Beer could continue to enjoy its craft beer status.
With the Craft Beverage Modernization and Tax Reform Act, there may no longer be any need for the Brewers Association to define who is and who isn’t a true craft brewery. I like the idea of maintaining standards and I agree that there does need to be a way to accurately and precisely define which breweries are small craft, large craft etc. But I just can’t get used to the idea that Samuel Adams may soon join ranks with Budweiser, Miller Lite, and Coors Banquet as a macro beer. It just seems sacrilegious to me that Samuel Adams would be included with these companies known for their homogenous, non- distinctive, mass produced products.
Say what you will about Boston Beer and its Sam Adams lineup not really representing what craft beer is all about anymore, due to the company’s large size. Samuel Adams Boston Lager was the first American craft beer I ever tried and regardless of what the U.S. Congress may say or do, Boston Beer will always be a craft brewery to me and will always represent the pioneering spirit that sets American business apart. I cut my craft beer teeth on Samuel Adams Boston Lager and still consider it a reliable, go- to beer. Boston Beer is directly responsible for the craft beer renaissance that started in the 1980’s and it paved the way for the rich, diverse craft beer landscape we enjoy today.
Nothing, not even an act of Congress, can change that fact.