Sam Adams to lose craft beer status

So I read this a couple of weeks ago, but I found it interesting. The godfather of craft brewing is in jeopardy of losing it's craft brewing status.

Boston Beer Company, which owns and operates Sam Adams beer, is trying to hold on to their official designation as a "craft beer," as the New York Times reported.

The company is eager to keep the designation not only for its cache (craft beers tend to focus on flavor rather than, say, 'drinkability'), but also for its tax benefits -- brewers who produce fewer than two million barrels per year are subject to lower excise taxes than the larger brewers. Boston Beer president Jim Koch remarked to the Times, "If we're not a craft brewer, what else are we? We're certainly not Budweiser."

Hoping to maintain that status and keep their low excise tax, Koch went to Washington where Massachusetts Senator John Kerry and Idaho Senator Micahel D. Crapo are fighting for a bill they introduced six months ago that increases the yearly production limit on "craft" breweries from two million to six million barrels. As Bloomberg reported:

[T]he law "would reduce the excise tax for small breweries from $7 to $3.50 per barrel for the first 60,000 barrels of beer produced each year. For every additional barrel up to 2 million, the bill would lower the excise tax from $18 to $16.

-Huffington Post 6-14-10

A tax on success? Yes it is.......

However, Sam Adams will be the next BMC if it's allowed to be, and they will have to fight with the big boys.

I'm still in favour of supporting the smaller breweries, and a tax exemption is a good thing IMO. Small breweries need all the help they can get, and SA is just not a small brewery any more.

Laughing_Gnome_Invisible said:

A tax on success? Yes it is.......

However, Sam Adams will be the next BMC if it's allowed to be, and they will have to fight with the big boys.

I'm still in favour of supporting the smaller breweries, and a tax exemption is a good thing IMO. Small breweries need all the help they can get, and SA is just not a small brewery any more.

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Agreed, and I have a hard time considering SA 'Craft Beer'. It's mass marketed and mass produced.

If you have to advertise on national television to sell your beer, you are out of the Craft Brewery crowd. I am all for lessening the tax burden on small breweries, but Sam Adams isn't in that group and I have no sympathy for them.

I kind of agree. It's more nostalgia than anything that makes people want to look at SA as a craft brewery. I mean 2 million barrels a year is a lot of beer. Jim Koch is huge in the history of craft brewing, but he isn't brewing 1,000 barrels a year and selling door to door anymore.

They'll call themselves whatever they want (craft), this is 100% about $.

The excise tax thing is cool though.

JJL said:

The excise tax thing is cool though.

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It is, but now that I am thinking about it, what other Brewery would this increase effect? If it is just a tax dodge by SA, I don't think I could support it.

BendBrewer said:

It is, but now that I am thinking about it, what other Brewery would this increase effect? If it is just a tax dodge by SA, I don't think I could support it.

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sierra nevada maybe??? I wonder what their annual production is.

EDIT: never mind, they're still well under a million.

EDIT #2: it would put Yeungling into the craft beer status!!!

Why wonder when you can google.

SN
Production output 680,000 barrels

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Not even close.

BendBrewer said:

Why wonder when you can google.



Not even close.

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see edit #1.

BendBrewer said:

It is, but now that I am thinking about it, what other Brewery would this increase effect? If it is just a tax dodge by SA, I don't think I could support it.

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It impacts all small breweries. It cuts the tax from $7 to $3.50 on the first 60,000 barrels.

Whoops.....

JJL said:

It impacts all small breweries. It cuts the tax from $7 to $3.50 on the first 60,000 barrels.

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Yeah, that part I do like, but it's not like beer prices are going to go down anytime soon.

Damn you John Bryant.

Although, you are correct, the second half of the bill probably would only impact SA.

BendBrewer said:

Yeah, that part I do like, but it's not like beer prices are going to go down anytime soon.

Damn you John Bryant.

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I wish. If I could get craft brew for the same price as BMC, I'd do a happy dance.

I don't think it makes any sense to base whether or not something can be called "craft" on how many units are sold or produced. Doesn't "craft" refer to the quality of the product, or the manner in which its made?

Just because they are selling a million bottles instead of a thousand bottles doesn't necessarily mean they care less about their products, or that they now use inferior procedures or ingredients.

Sam Adams still makes good beer. I think they deserve recognition for being among the original innovators of the American craft beer movement. But, perhaps they have grown to a size that doesn't qualify them for the same tax advantages that the smaller guys get. Regardless, the only thing that should determine their categorization as a "craft" brewery amongst consumers, is the quality of their product.

I don't think they should designate a "craft" brewery based on its output. Sam Adams still has more of a focus on quality, and they make more than just a generic american light lager. Its more a question on size, they are getting bigger, so they have to roll with the big boys now. It's definitely a good sign, if a small brewery can get so big, that means that more people are getting into craft beer.

I would never take anything away from Jim Koch's achievements, but in the most technical sense the craft designation is based on units.

Besides, who is truly to say what is quality beer and what isn't?

Regardless, the only thing that should determine their categorization as a "craft" brewery amongst consumers, is the quality of their product.

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And who is going to judge that? Their customers? You might want to ask a Bud drinker what they think about the quality of Bud in a can. I bet they would consider it the highest of quality.

I say this as you can't let some objective opinion determine tax codes.

Let me clarify. I didn't mean that consumers' opinions should determine the tax codes. I meant that the word "craft" should have ever been tied up in the middle of tax laws.

BendBrewer said:

And who is going to judge that? Their customers? You might want to ask a Bud drinker what they think about the quality of Bud in a can. I bet they would consider it the highest of quality.

I say this as you can't let some objective opinion determine tax codes.

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True. It really all comes down to money.

Maybe we should have some foresight and be applauding the efforts of Congress to pass a bill that will benefit every small brewery, even if it only affects SA right now. Who knows, maybe there will be couple of 2 million bbl craft breweries in a few years.

Bashing SA because they are too big is ridiculous. Half the people on this board probably used SA beer as a segway to new beer. I know I did...

Ichthy said:

Maybe we should have some foresight and be applauding the efforts of Congress to pass a bill that will benefit every small brewery, even if it only affects SA right now. Who knows, maybe there will be couple of 2 million bbl craft breweries in a few years.

Bashing SA because they are too big is ridiculous. Half the people on this board probably used SA beer as a segway to new beer. I know I did...

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Not considering them to be a craft brewery because they mass produce and mass market their beers isn't bashing them, it's just calling it what it is.

My hat's off to them for their success, but trying to get the same benefits as the true craft breweries enjoy is just wrong to those smaller breweries.

SA wants to compete with the big boys but they don't want to play by the same rules.

Ichthy said:

Maybe we should have some foresight and be applauding the efforts of Congress to pass a bill that will benefit every small brewery, even if it only affects SA right now. Who knows, maybe there will be couple of 2 million bbl craft breweries in a few years.

Bashing SA because they are too big is ridiculous. Half the people on this board probably used SA beer as a segway to new beer. I know I did...

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Not taking anything away from SA. They've been extremely successful. The law as a whole actually helps breweries that produce under 60,000 barrels/yr more than anyone else, which is great. We were just saying that it really would be kind of unfair and unnecessary to pass a law that only benefits one brewery.

To your point, it could impact others down the road, but part of the law is truly only being written to benefit SA.

I say no excise tax on breweries producing less than 100 bbls/year. As for craft beer status, I think as long as they keep coming up with new products (such as Porters, high gravity beers, flavored beers, etc..) they are a craft beer.

My hat's off to them for their success, but trying to get the same benefits as the true craft breweries enjoy is just wrong to those smaller breweries.

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thats where you are losing me. Sam Adams is a true craft brewery, just not according to the tax codes. I do not think they should get the same tax breaks as the smaller guys. But, I don't think that they lose the right to be referred to as a craft brewery just because they sell a lot of beer.

I think a term like "high volume" would be more appropriate.

SA just wants the name "Craft Brewer" plus as much $$ from sales as he can get. I very much appreciate they work that they have done in bringing quality beer into people's lives, but it does seem that they want to sell more beer without appearing to be a big brewer.

jamest22 said:

thats where you are losing me. Sam Adams is a true craft brewery, just not according to the tax codes. I do not think they should get the same tax breaks as the smaller guys. But, I don't think that they lose the right to be referred to as a craft brewery just because they sell a lot of beer.

I think a term like "high volume" would be more appropriate.

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The term craft brewer is defined by the volume of beer they produce. You might not consider that to be a craft brewer in your own mind, but that's how the government defines them, and has for a while now. The process and passion has nothing to do with it.

jamest22 said:

thats where you are losing me. Sam Adams is a true craft brewery, just not according to the tax codes. I do not think they should get the same tax breaks as the smaller guys. But, I don't think that they lose the right to be referred to as a craft brewery just because they sell a lot of beer.

I think a term like "high volume" would be more appropriate.

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From a Marketing standpoint they can call themselves whatever they want. I don't think this designation applies to how they can market themselves.

They are publicly traded on the NYSE. I think they have lost the benefits afforded to Small Businesses.

How many barrels do the big 3 brew in a year? I couldn't find it. My guess is 2 million bbl. is a drop in the bucket relative to BMC?

AB

As of 2008, it has 48.9% share of beer sales in the United States (by barrels), and produces about 11 billion bottles of beer a year.

Saw that, didn't want to figure the math for 11 billion bottles to barrels...

Ichthy said:

How many barrels do the big 3 brew in a year? I couldn't find it. My guess is 2 million bbl. is a drop in the bucket relative to BMC?

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It is a drop in the bucket. A-B broke 100 million barrels over 10 years ago.

Ichthy said:

Saw that, didn't want to figure the math for 11 billion bottles to barrels...

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According to my quick math, assuming 12oz bottles that is 399,193,548 bbl.

EDIT: not sure that's right

weirdboy said:

It is a drop in the bucket. A-B broke 100 million barrels over 10 years ago.

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Back on topic, kind of, what's wrong with extending a tax break to someone who brews up to 6 mil bbl/year? They still have to compete with AB, and they aren't even brewing at a tenth of ABs capacity.

I have to agree with Bendbrewer. It's the fact that they are publicly traded that really gets me. They can label themselves whatever they want, but from a competitive standpoint to let them play in the same pool as small privately held breweries just doesn't seem right.

Ichthy said:

How many barrels do the big 3 brew in a year? I couldn't find it. My guess is 2 million bbl. is a drop in the bucket relative to BMC?

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BMCP did a combined 210M barrels in 2008. They haven't been growing much over the past few years.

This is just US data, not worldwide.

Homercidal said:

SA just wants the name "Craft Brewer" plus as much $$ from sales as he can get. I very much appreciate they work that they have done in bringing quality beer into people's lives, but it does seem that they want to sell more beer without appearing to be a big brewer.

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I agree with them wanting to seem like a small brewer. Their newest commercials stress the fact that they produce "less than one percent of the entire US beer market". 2 million BBLs a year is an awful lot of production to still want the same benefits as some of the smaller "craft" brewers around.

This is how you know they are not a craft brewer anymore:

"Hoping to maintain that status and keep their low excise tax, Koch went to Washington where Massachusetts Senator John Kerry and Idaho Senator Micahel D. Crapo are fighting for a bill they introduced six months ago that increases the yearly production limit on "craft" breweries from two million to six million barrels."

Lobbying Senetors to change laws when it only benefits them, is a very BMC thing to do.

Next thing they are going to do is contribute money to the Partnership for a Drug-Free America.

Wait, the designation for craft brewer is 2,000,000 liters or 50,000 barrels, not 2,000,000 barrels! Source Considering they came up with that in the 80s, maybe it is time to up it to 6,000,000 liters.