(Boston, MA) – A comprehensive look at today’s landmark decision by the Brewers Association…



Though it may not be a big deal to consumers, the Brewers Association saved itself some headaches with a recent decision to modify its bylaws. The association announced today that it has increased the production ceiling in which a brewery may produce beer and still qualify as a “craft brewery.” The number, set to two million barrels annually for the past three decades, has been increased to six million barrels.

The only brewery that is currently impacted by the change is Boston Beer Co. (Samuel Adams). The next closest craft brewery is Sierra Nevada Brewing and, at fewer than 800,000 barrels, it would likely not have been impacted by the limit for at least another ten years. Even with the number tripling, the Brewers Association may need to re-visit the rule again by 2025 should current Boston Beer growth trends continue through the next decade and beyond.

With the drastic change of the numbers, some conspiracy theorists are calling into question Boston Beer Chairman, Jim Koch’s, relationship with the BA as a member of the Board of Directors. Most are taking the Brewers Association’s reasonings at face value though: a) why punish growth and success? and b) excluding BBC from future craft beer industry reports would inaccurately reflect the growth (or, in that case, decline) of craft brewers. With an increasing number of media outlets covering craft beer like The Washington Post, The New York Times, The Huffington Post and CNBC, the latter point is becoming increasingly important.

Until now, the production limit imposed by the Brewers Association has been virtually synchronous with the small brewers tax regulations set back in 1976. The main difference that impacts Boston Beer is that the Brewers Association excludes “malternatives” like Twisted Tea from its production figures. This is how it is possible that Boston Beer exceeded two million barrels produced last year, disqualifying it from small brewer tax breaks, while enabling it to remain a “craft brewery.” The malternative exclusion brought the BA’s figure below two million in 2009.

Boston Beer reported a few weeks ago that production increased 12% in 2010, meaning that, even with the exclusion, there is a possibility that the BA number could eclipse two million barrels. An inquiry made to the brewery of Twisted Tea figures went unreturned. In order to cross the BA threshold, the brewery’s malternative line (which also includes HardCore Cider) would have had to increase in the vicinity of 40%. This is conceivable considering that the brewery is setting year-over-year Twisted Tea growth goals at 30% but unlikely given it would be a drastic increase from prior years’ growth.

Legislation is currently sweeping through Congress that would increase the amount of beer that a brewery can make up to six million barrels and still allow it to get tax breaks as a “small brewery.” Rather than wait for Congress to vote on the legislation, the BA opted to change the bylaws ahead of time. Though it is still receiving new supporters, the House version of the bill (HR 4278), was introduced way back in December of 2009. The Senate version (S 3339) was introduced just this past May.