Hopslam: How Big Beer Is Trying to Stop a Craft Beer Revolution

A long-brewing fight between big beer and craft brewers is spilling over to Capitol Hill.

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Craft brewers are heeding Koch's advice. The Brewers Association, a trade group of some 2000 small and independent brewers, was founded in 2005 to be a "passionate voice for craft brewers" and craft beer, and it has made itself as vocal as the bigger Beer Institute.

The association has even created what appears to be the first definition of a craft brewery: a brewery that is "small, independent and traditional." The brewery must be less than 25 percent controlled by a big beer conglomerates, and must brew less than 6 million barrels a year.

Sam Calagione, who founded the craft beer favorite Dogfish Head and chairs the Brewers Association, says it's about a lot more than the numbers. "The craft brewing renaissance happened because American consumers fell in love with the taste of craft beer and the idea of craft beer: supporting small, family, local, artisanal businesses."

The Beer Institute's spokesman Chris Thorne offers a very different definition. Craft beer "is a marketing term," he says.

The Fight Stays Fresh

Fifteen years after Anheuser released its slew of negative ads about Boston Beer, the fight between craft and big beer is more intense than ever.

Greg Engert, the beer director for the Neighborhood Restaurant Group, a group of nine restaurants and bars in the D.C. area, believe this is because craft brewers have truly taken off. Despite its relatively small market share, the popularity of craft beer has experienced a meteoric rise in recent years, while big beer's sales in the U.S. have seen a continuing decline.

"Now that craft brewers are so successful, there's more riding on it. The investment in your business is huge. Your staff has gotten enormous. It's at that point when you start to be a little more concerned about how this game has been playing out," he says.

When Calagione started Dogfish Head in the back of his Delaware restaurant in 1995, he was brewing just 100 barrels of beer a year. Today, his brewery produces more than 171,000 barrels, and distributes it to some 30 states. Dogfish is among the fastest growing craft breweries in the country. And Calagione himself is known widely for his role on the Discovery Channel TV show Brewmasters.

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At a December event held at the New America Foundation in Washington, Calagione spoke passionately about the negative impact of big beer's influence as several Department of Justice anti-trust lawyers sat in the audience.

"The success or failure of a beer should depend on how great that beer is… instead of artificial restraints to distribution," said Calagione. He also said he had "grave concerns" about the Modelo deal because it would give "more control and more power" to the two biggest beer companies.

The New America Foundation released a report that day agreeing with Calagione, and warning that big beer was using its power to "squeeze independent beer distributors" and "marginalize craft beer makers"—hurting both brewers and beer drinkers in the process.

The result, according to craft brewers: independent beers get squeezed out of liquor store and grocery shelves, restaurants and bars, and sporting venues and airports.

The Space Race

Bottles of beers, Budweiser and Stella Artois are seen on display at Dixie Liquors, Monday July 14, 2008, in Washington.

Both Anheuser-Busch InBev and MillerCoors employ "category space analysts," whose job is to visit a store like 7-Eleven and consult them on the optimal placements of beer on the shelves.

"They are doing the sets, they [say to a store]: 'We can do that for you,'" says Koch. "And then they can take my beer from eye level to the top shelf, which drops my sales rate in half."

With thousands of small breweries in the works, beer buyers and brewers say the battle for shelf space may only get worse.

Koch says he has also seen Samuel Adams beer pushed out of airports and sports venues—two places where consumers do a lot of sampling. "We work very hard to get our beer into a sports venue, and then when the big brewer realizes we got in there... they buy out the bowl, and then we're gone."