Craft Beer's Renaissance Continues to Grow
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By DAVID ZINCZENKO and LEIGHTON McCLELLAN
Aug 30, 2013, 10:09 AM
American craft brew sales are up 15 percent over last year's, according to the Brewers Association's mid-year report, which was released in July. The organization represents more than 1,400 small and independent U.S. breweries, or around 70 percent of the brewing industry.
Brooklyn Brewery, a small craft brewery based in New York, is producing only a tiny fraction of beer compared to the big guys, but says business is booming. Brewmaster Garrett Oliver said the microbrewery is making 10 times more beer than it was three years ago.
"This movement is happening now because our entire culture is moving toward more flavor," Oliver said. "I don't want to sit on the couch and drink something that has no flavor to it. It is like it is no fun. It is better to have two beers that taste great then to have six beers that don't taste like anything, and I think people have finally come to realize that."
Today, craft beer is taken as seriously as fine wine. Jim Koch, a sixth-generation brewmaster and the founder of the Boston Beer Co., knows that better than anyone. The Boston Beer Co. is the home of Samuel Adams, the largest craft beer maker in the country.
"Beer can give you everything that you can get in a great wine or a great Scotch or a great bourbon," Koch said. "Beer deserves to be considered at that level, and that's what craft brewers are doing. We are bringing respect to beer."
There is a lot at stake because beer is obviously big business -- a $100 billion industry across the board, with more than 6 trillion gallons sold each year.
In the past, big dogs like Anheuser-Busch InBev and MillerCoors were calling the shots, spending millions on Super Bowl ads and other campaigns to keep their brands on top.
But over the past few years, craft breweries have exploded in the United States. There are currently 2,538 breweries in operation -- with 446 new breweries launching in the past year alone. From January to June this year, small craft breweries sold 7.3 million barrels.
Koch started brewing in his kitchen 30 years ago. Now he ships 2.5 million barrels a year.
What sets craft beer apart, he says, is the quality of the four main ingredients: water, malt, yeast and hops.
"I still go to Bavaria, [Germany], every year and hand-select every single batch of hops that goes into Boston Lager," Koch said.
But the big beer companies stand by their staples.
"We have the first selection of ingredients from the best growers in the world," said Peter Kremer, the vice president of brewing for Anheuser-Busch.
"There's a reason why we sell as much Bud and Bud light that we do. It's because people like it and it's good," added Paul Chibe, the company's U.S. chief marketing officer. "A Budweiser has to sit in the tank 30 days to get the smooth flavor that it has."
And often those craft brews come at a price -- they tend to cost a few dollars more per pint than their domestic counterparts.
But as the craft brewing business keeps growing exponentially, big beer companies are scrambling to get a cut of the craze.
Belgian-owned Anheuser-Busch has long been a Goliath in the world of beer. With help from their brands such as Budweiser, the self-proclaimed "King of Beers," the company owns 47 percent of the American market.
Anheuser-Busch said it was not only embracing the craft beer renaissance but helping it.
"In this instance, Goliath is helping the industry," Chibe said. "We provide that source of distribution, that pathway to get their products on the shelves efficiently. We help provide sources of raw materials or ingredients that are the finest because of the specifications. ... And honestly ... a lot of what they're doing is bringing excitement and helping fuel this renaissance."
One of the popular craft brew brands Anheuser-Busch started making is Shock Top, and it is also buying small breweries like Goose Island in Chicago.
"We're the rich uncle who provides them the resources that they need," Chibe said. "They continue to innovate, they continue to dream these new amazing beers up and bring them into the market, and we let them continue with that culture of innovation."
In the face of critics, who might chastise Anheuser-Busch for selling a craft brew product without putting its name on the label, Chibe said they don't need to because the information is out there and "people will find out."
"People are going to find out that we make them, and actually it's a source of pride for us when people do find out that Anheuser-Busch makes a beer," he said.
But Jim Koch thinks companies like Anheuser Busch have an obligation to tell the customers upfront if they own a microbrew label.
"I get a little bit of a chuckle out of it when the largest brewer in the world wants to pretend like they are little Sam Adams," Koch said. "I certainly would be happy if they put their names on those beers so it's a little more transparent to consumers."
Brooklyn Brewery's Garrett Oliver said "of course" the big beer companies are going to copy the microbrewery model because they can see that craft brews "excite" people. The way for microbreweries to make their presence known in the crowded beer market, he said, is to get creative.
"We just have to be more interesting and better than they are, and I think we're doing alright," he said. "At the end of the day, craft brewers are the ones who are creating this excitement, and if people start with copycat beers from the big brewers, well, they're going to soon graduate and discover the real thing, so it all works out."
ABC News' Lauren Effron contributed to this report.