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A Not-So Nefarious History of Craft and Crafty Beer

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A Not-So Nefarious History of Craft and Crafty Beer

It was recently announced that Anheuser-Busch plans to acquire Bend, Oregon’s 10 Barrel Brewery, once again firing up the craft vs. crafty debate. The term “crafty” here is a reference to a big brewery’s attempt at masquerading as a small craft brewery, and it was used most prominently by the Brewers Association in a press release entitled “Craft vs. Crafty: A Statement from the Brewers Association,” which they issued in December of 2012.

In this release, the Brewers Association accused the large brewers of “attempting to blur the lines between their crafty, craft-like beers and true craft beers from today’s small and independent brewers.” Crafty is now a commonly used term amongst the craft beer cognoscenti, especially when one of the big brewers acquires a small craft brewery.

While the craft vs. crafty debate has now reached fever pitch, it has been simmering for 20 years. In fact, the debate started in earnest in 1994, and if you look at the years prior, it is easy to see why we can look to that time as the origin of the craft vs. crafty battle.

Craft Brewing’s Early Successes

Most point to Fritz Maytag’s revival of the Anchor Brewing Company in 1965 as the first craft brewery in the U.S. At the time, Maytag and his brewery were outliers—only a handful of breweries would join him in producing craft beer in the decades to come. It would be many years before the craft beer segment would start to really gain ground in the late ’80s and early ’90s, as Americans embraced affordable luxuries.

In 1987, for example, craft brewing represented only 0.1% of the total beer market (according to “The Market for Craft and Specialty Beer,” a lengthy analysis put together by Find/SVP Publishing in 1997). The category would continue to grow year over year, until in 1994 it had reached 1.3% of the total beer market.

David Edgar, then director of the Institute for Brewing Studies, wrote an article for The New Brewer in 1995 called “Craft Brewing: Fastest Growth in the Industry.” He points out that following “three years of 35 to 40 percent growth, the craft-brewing industry surged by 50 percent in 1994 for a total of 2.5 million barrels sales.” And breweries weren’t closing their doors at a high rate either, though that would come later. In 1994, only seven small breweries closed, and three states—Hawaii, Wyoming and South Carolina—saw their first brewpubs open.

The top 10 craft breweries of the time, as reported by the Institute for Brewing Sciences in 1995, were as follows: Boston Beer Co., Pete’s Brewing Co., Sierra Nevada Brewing Co., Anchor Brewing Co., Redhook Ale Brewery, Hart Brewing Co., Full Sail Brewing Co., Widmer Brewing Co., Portland Brewing Co. and Spanish Peaks Brewing Co.

Anheuser-Busch’s Specialty Brewing Group & Redhook Acquisition

While that 1.3% growth may seem insignificant—especially by today’s standards, when craft beer is nearing 10% of the beer market—the big brewers took notice. In 1994, Anheuser-Busch formed a Specialty Brewing Group that was “dedicated to creating hand-crafted beers” (it’s important to note that the term specialty beer was often synonymous with craft beer at this time).

The first such beer was Red Wolf, a red lager that, in its first year, managed to capture 38% of the burgeoning category of “red beers.” The next year would bring craftier styles like the Michelob Amber Bock and Michelob HefeWeizen, as well as a series of American Originals that were modeled after the beers that Adolphus Busch brewed at the turn of the century. These included American Hop Ale, brewed with American Fuggle and Cluster hops; Faust Golden Lager, an all-malt beer hopped with Cascade and Saaz; a Black and Tan, which was not a blend of beers but rather a straight-forward porter; and Muenchener, an amber lager.

These were initially marketed in test markets like Seattle, Denver, Colorado and Washington before being rolled out to other cities. Of the specialty beers they unveiled in 1995, Michelob Amber Bock was the most popular. It quickly took its place behind Red Wolf as the brewery’s second best-selling specialty beer.

Anheuser-Busch also took aim at two popular regional beers at the time. The brewery’s website in 1996 advertised their Zeigenbock Amber as a “Texas-style bock beer” that was only available in the Lone Star State, and their Pacific Ridge Pale Ale as “the distinctive ale brewed in Northern California exclusively for California beer drinkers.” The former was meant to compete with Shiner Bock, the latter with Sierra Nevada Pale Ale. Pacific Ridge Pale Ale also benefitted from a $2-3 million ad campaign, though the brand did not last for a considerable amount of time.

The Specialty Brewing Group’s website, which can still be accessed using the Internet Archive’s Wayback Machine, had information about all of these beers as well as others that they imported, like the Carlsberg line. A page on the site was devoted to the Elk Mountain Hop Farm, from which grew the aroma hops used in Elk Mountain Amber Ale and Elk Mountain Red. If this hop farm sounds familiar to you, it’s because there was a glut of recent coverage about the farm after Goose Island Brewery—which was acquired by Anheuser-Busch in 2011—invited a host of beer writers to come tour the field over the summer of 2014.

Another interesting feature of the website was its “Ask The Brewmaster” page, through which Steven Michalak and Mitch Steele, brewers of Anheuser-Busch’s specialty lines, would answer questions sent in by the site’s visitors. Ironically, Steele is now the brewmaster at San Diego’s Stone Brewing Co., which often decries industrial brewers and their “fizzy, yellow beer” (more on Steele later).

In 1994, the same year that Anheuser-Busch formed the Specialty Brewing Group, it also acquired a 25% ownership stake in Redhook Ale Brewery. Redhook was already one of the largest regional craft breweries in the country in terms of production, and the deal with Anheuser-Busch allowed them to go “from 21 states at the end of September 1995 to 47 states at the end of September 1996” according to The Market for Craft and Specialty Beer.

Miller Brewing Co.’s Reserve Line and Specialty Group

Like their rivals at Anheuser-Busch, Miller Brewing Co. also entered the specialty beer market in the early ’90s. In 1993, Miller introduced a Miller Reserve family that included Miller Reserve Lager and Reserve Light as the line’s original beers. A Reserve Amber Ale came shortly thereafter, and then in February of 1994 the brewery introduced the Miller Reserve Velvet Stout, which, according to a press release, was “brewed in the tradition of the great English and Irish stouts.”

It seems Miller didn’t commit to any of these beers for very long. While I can’t find anything from the brewery announcing the line’s cessation, I did find the following question and answer in the Ask the Brewmaster section of Anheuser-Busch’s Specialty Brewing Group website.

Q&A Miller Reserve Line.png

Miller didn’t give the Reserve Line much time in the market, perhaps after realizing that craft or specialty beer drinkers didn’t want to drink something with the Miller brand. As Philip Van Munching noted in his 1997 book Beer Blast: The Inside Story of the Brewing Industry’s Bizarre Battles for Your Money, the problem with big breweries offering new labels was that “some consumers will have pre-conceived notions about anything you sell.”

So it was, that in 1995, they too set up their own subsidiary called the American Specialty and Craft Beer Co. Just a year after Budweiser’s deal with Redhook, Miller incorporated three craft breweries under this umbrella company: the Celis Brewery, which is now defunct; the Shipyard Brewing Company, which it sold off in 2000; and the Jacob Leinenkugel Brewing Co., which it actually purchased in 1988 and still owns.

Through the language used on the American Specialty and Craft Beer Co.’s website, it was clear this new subsidiary wanted to distance itself as much as possible from its parent company. The “What We Do” featured the following text:

“When it comes to actually brewing beer, we don’t (except maybe at home). We may stir the pot of ideas, but it’s strictly hands off the hops. Our goal is to make it a little easier for our partner brewers to make and sell the same beer they’ve always made, and get it into the hands of more people who will enjoy it. Our partnerships are forged with small, local breweries that have made a name for themselves in their home markets. These breweries and their beers are the real heroes at American Specialty & Craft Beer Company. Each was chosen for its exceptional brews, and each pledged to continue making the beer that brought them their cult-like fame.”

They had tried their own hand at brewing craft beers and failed, so the next step was to acquire brewers that had already established themselves. Leinenkugel and Celis certainly had, and though Shipyard opened just a year prior to being acquired by Miller, the brewery had seen a 211% growth from 1994 to 1995. In the same year that Shipyard reached a “strategic alliance” with Miller, the Institute for Brewing Studies ranked them as the 18th largest craft brewery in the country.

Yet Miller hadn’t yet given up on brewing its own specialty beers entirely. It was around this time that the company started producing Red Dog and Icehouse under the Plank Road Brewery name. And the brewery was just that—a name. Though it referenced Frederick Miller’s original brewery, both Red Dog and Icehouse were produced by Miller. Both beers initially sold well for the brewery. As Van Munching noted in Beer Blast, these beers benefitted from “the cost-efficiencies of mass production and real distribution clout—without any of the potential drawbacks associated with being called a Miller brand.”

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Coors Brewing Co. forms UniBev, Ltd.

To Coors Brewing Co.’s credit, they made inroads in the specialty beer market well before Anheuser-Busch and Miller Brewing Co. The brewery had produced Killian’s Irish Red since 1981, and in 1994 that beer would be the nation’s best-selling in the specialty beer category.

The brewery formed its own specialty line, called UniBev, Ltd., in 1993. The next year, they announced plans to open the SandLot Brewery in Denver’s Coors Field baseball stadium. It was here that Blue Moon Belgian White was born, though the beer would go on to be contract brewed by F.X. Matt in Utica, New York, as well as Hudepohl-Schoenling of Cincinnati, Ohio. These breweries brewed for a variety of brands at the time, including Boston Beer Co.

In addition to the witbier, the Blue Moon Brewing Co. had contract brewed the following labels: Blue Moon Nut Brown Ale, Blue Moon Raspberry Cream Ale and Blue Moon Abbey Ale. As you can imagine, though, the Belgian White was the most popular. In 1997, the beer was distributed throughout all 50 states. Coors also added new labels under the Killian’s line, with George Killian’s Wilde Honey Ale and Wilde Honey Draught coming online in 1996.

Regional Brewers Did It, Too

Adding specialty lines and labels was not limited to just “the big three” — a host of larger regional breweries also started offering new brands. Genesee Brewing Co., for instance, produced J.W. Dundee’s Honey Brown Lager as well as the Michael Shea’s line of beers. Not to be outdone by their bigger brothers, they created their own umbrella label called the HighFalls Brewing Co., which introduced an India pale ale in 1996. Genesee, like so many other breweries at the time, also contract brewed for Boston Beer Co.

Latrobe Brewing Co., a division of Labatt U.S.A. at the time, was most well known for Rolling Rock. In November of 1996, however, the brand also introduced Latrobe Bavarian Black, American Pale and Bohemian Pilsner.

The Response to Stealth Brewers

Today, when a brewery attempts to misguide consumers as to a brand’s ownership, we call them crafty brewers. In the mid ’90s, when the term craft was used interchangeably with specialty, they called such misleading businesses stealth brewers (this seems to have been coined by Celebrator Beer News in 1993). Back then, Blue Moon’s beers didn’t say they were produced by Coors, but that they were “under special license, Cincinnati, Ohio.” Nor did the Killian’s beers, which said they were produced by UniBev, Ltd. out of Golden, Colorado. Red Dog and Icehouse were popular offerings from Miller, yet the packaging only listed Plank Road Brewery, which didn’t exist.

One of the loudest voices against such practices came not from the nation’s small brewers, but from its biggest. Anheuser-Busch created table tents and scratch-off cards asking bar patrons, “Who Really Brews These Beers?” On this material were the logos of brands like Sam Adam’s, Pete’s Brewing Co., Red Dog, Killian’s and more.

They even featured a quiz on their website imploring visitors to see if they knew who produced these brands. In this section, they seemed to fire a shot across the bow at Red Dog, brewed by Miller but labeled as a Plank Road product: “The Anheuser-Busch Specialty Brewing Group is proud to brew Red Wolf … in fact, we put our name right on the label. We just don’t understand why the other brands don’t do the same???”

Even more direct a shot came in the aforementioned “Ask the Brewmaster” section, when someone wrote in asking what the difference was between Red Wolf and Red Dog.

Red Wolf Red Dog.png

Poring over these old Q&A questions, I was struck by two things: the direct and honest way that these brewers responded to questions (some that were negative in nature), and that these brewers—especially Steele—genuinely seemed to enjoy these specialty beers. In one response, the brewers advised someone to “look for an IPA from us maybe next year.” I’m not sure if Steele ever brewed an IPA at Anheuser-Busch, but he certainly brews them at Stone Brewing Co. And he literally wrote the book on the style in 2012.

Reading from today’s vantage point makes the exchanges even more interesting. One hop-head wrote in encouraging the brewery to brew an ale with a Chico yeast and some of the Elk Mountain hops before putting it in Bud cans. The brewers suggested they check out their Elk Mountain Amber Ale, which was dry-hopped with Cascade. As for the Bud cans, they had this response: “Putting the beer in cans? Most specialty beer drinkers don’t want canned beer, but maybe we can start a trend.”

Another person wrote in to ask what Anheuser-Busch learned from Miller’s short-lived Reserve line. The brewers’ response was surprisingly astute and as apt today as it was in the mid ’90s:

“Specialty beer buyers are not all that interested in Big Brewers efforts in the area, UNLESS there’s information given out about how we make the beers, or the beers tell a story. There is a fine balance between over-marketing these beers and not marketing them enough, and legitimizing these beers with the consumers is difficult. I don’t think Miller did enough to sell these beers, and I think they gave up on them too quickly. These beers need time to develop the kind of sales that would make Miller happy, they’ll never take the country by storm as soon as they are introduced.”

Early Attempts at Defining Craft Beer

Anheuser-Busch pulled no punches in their response to stealth brewers, but what were others saying of such misleading practices? And just what was craft beer? In one of his columns from All About Beer magazine from 1997 called “What is ‘craft’ beer?,” longtime beer writer Fred Eckhardt, a very respected advocate for beer both then and now, attempted to answer that question by polling the brewers themselves.

Eckhardt wrote that the term “craft beer” was first used in Vince Cottone’s 1986 book, Good Beer Guide: Breweries and Pubs of the Pacific Northwest. Cottone’s own definition was “a small brewery using traditional methods and ingredients to produce a handcrafted, uncompromised beer that is marketed locally (and is) True Beer.”

Anchor Brewing’s founder Fritz Maytag, who many credit with starting the craft beer movement, had this to say: “There is too much gratuitous defining and categorizing going on in the brewing industry for our own good. Let the brewers brew and label and create on their own!”

Pete Schlosberg, founder of Pete’s Brewing Co., didn’t care for the term either. “I don’t like this word,” he was quoted as saying. “(I) believe most, if not all, brewers have craft, even AB, Miller, Coors, Stroh, etc. What we are producing are special beers; I (call them) ‘specialty beers.’”

And Rogue Brewing Co.’s Jack Joyce, who passed away this year, had this to say: “For Rogue, it means artisans of integrity. The original meaning has been successfully appropriated by crafty marketeers, copying the friendlier aspects of the term undeterred by integrity, with no interest in fueling the flame. The world can do without any more government rules. We will rely on the famous definition of pornography: ‘You know it when you see it.’”

Even in the 1990s, brewers, writers and drinkers had trouble defining craft beer. It was clear that Fred Eckhardt had more thoughts on the subject though, many of which were brought to light in his article “The Budweiser menace” from the March 1997 issue of All About Beer. The piece was inspired by an NBC Dateline segment in which Anheuser-Busch campaigned for “honesty and truth in labeling.” Most of the jabs were directed at Boston Beer Co., who at the time relied on many contract breweries from around the nation.

Eckhardt criticized Anheuser-Busch’s brewing techniques as well as the way they went after contract breweries, which he suggested were very important to the industry. He ended the piece with these words:

“What really counts, for us consumers, is what’s inside the bottle and our choices of that. Choice is the issue. All brewers lose when some lie about their product. (Coors and Miller, pay attention: Plank Road and Blue Moon exist only on Fantasy Island.) Our small brewing industry needs to tolerate—even encourage—its wondrous diversity.”

In an afterword, Eckhardt also noted that he would no longer buy any brands associated with Anheuser-Busch. “I won’t miss Bud, Michelob, or Red Wolf, but I will miss Redhook,” Eckhardt wrote. “I hope they can get off the tiger someday, because this is a bad tiger to ride.”

A Campaign of Confusion

Eckhardt’s words inspired Mitch Steele, then one of Anheuser-Busch’s specialty brewers and now brewmaster at Stone Brewing Co., to write a letter to the editor. Steele first set about correcting some of Eckhardt’s claims about the technical aspects of brewing at Anheuser-Busch, after which he said this of contract brewing:

“We don’t take issue with contract brewing—we just think beer drinkers have the right to know who really brews their beer. We, along with many other traditional brewers and beer enthusiasts, object to those who mislead consumers by marketing their beers as “craft brewed,” when in fact their beers are made in large breweries.”

Though Anheuser-Busch was an unlikely proponent for such a position, it was one that was shared by many. One of the first websites devoted to craft beer was RealBeer.com, which was formed in 1994. The page’s about section from 1997 described how the site was formed to promote real beer, which stood in stark contrast to what Eckhardt called “industrial beer.” When it came to the latter, the site had this to say:

“In fact, the Industrial brewers have already telegraphed strategies to enter the segment through acquisition or through a campaign of confusion or both. We take a neutral position on the actual marketing battle, but, as staunch consumer advocates, aggressively campaign to deconstruct strategies and messages that we feel are counter to the proliferation of the craft movement in all its diverse forms. Because big brewers have larger budgets, their messages are more accessible, and therefore more often the subject of our newsletter editorials.”

This “campaign of confusion” was of concern to beer drinkers and brewers alike. In an interview with All About Beer in 1997, Bert Grant, who founded the nation’s first brewpub following Prohibition, was asked what the worst thing was that he had witnessed in the industry: “The worst thing is the proliferation and prosperity of beers pretending to be craft-brewed beers,” he said. “We really need some ‘truth in advertising.’”

The Bubble Bursts

In the late 1990s, the craft beer market continued to grow. The problem, however, was that it was not growing as rapidly as it did in the early ’90s, and that this much-smaller growth was shared among many more breweries. To put it simply, the bubble burst and many breweries closed their doors around the turn of the century.

In “The Shape of the Beer to Come,” which appeared in the November 1998 issue of All About Beer, Greg Kitsock offered up some thoughts about where the industry was headed. He noted that in 1997, five of the country’s top 10 craft brewers lost volume. Layoffs and shutdowns plagued bigger breweries like Redhook, Pyramid and Pete’s Brewing Co., which saw a 15% decline in sales that year. If these problems plagued the larger, more regional craft breweries, you can imagine how small breweries were affected.

When craft brewers were thriving, the big brewers responded by either acquiring other breweries or brewing specialty beers themselves (whether they advertised them as their own or not). It’s not surprising, then, that as soon as craft beer sales started to slip, the big brewers ditched their own specialty beers, as Kitsock pointed out: “Miller’s Lowenbrau Marzen and Premium Pils sank with barely a ripple. The Jack Daniels Distillery axed its line of specialty beers at the end of 1997. Latrobe Brewing Co. in Latrobe, PA, will probably write finis to its Latrobe Pale Ale, Bohemian Pils and Bavarian Black.”

“The craft beer segment is in such disarray that it’s not wise [to back these specialty beers],” Latrobe marketing director Brad Hittle told Advertising Age back in February. Anheuser-Busch quietly retired its American Originals line, preferring to bank on the less assertive Michelob specialty family.”

Kitsock also suspected that mergers and buyouts would continue, citing the sale not only of Pete’s Brewing Co., but of smaller operations across the country as well. It was a matter of math, according to Kitsock: “Right now, there are 1,300-plus small breweries in the country and a pie that’s not growing fast enough to feed every mouth.”

He was right about that, of course, as well as several other predictions—even if they might have taken a while to really come to fruition. Credit to Kitsock for, in 1998, predicting that craft brewers would start brewing lagers and putting their beer in cans.

The More Things Change…

A lot has changed since those early discussions over what was and was not craft. Molson and Coors merged in 2005 and formed Molson Coors Brewing Co., which just two years after that entered into a joint venture with SABMiller to form MillerCoors. MillerCoors still has a specialty line of sorts through its Tenth and Blake Beer Company, which is the brewery’s craft and import division. Included in this division are brands like Blue Moon Brewing Co., Leinenkugel’s, Batch 19 Pre-Prohibition Style Lager and Henry Weinhard’s. In 2011, Tenth and Blake purchased a minority share in Terrapin Beer Co. MillersCoors also introduced a new specialty brewing group in 2007 called the AC Golden Brewing Company.

After two decades, MillerCoors is still committed to marketing Blue Moon as a craft beer—even suggesting that it is crafted in local markets (it’s unclear whether the image below was produced by MillerCoors or one of their distributers).

Bluel Moon Charlotte.jpg

Anheuser-Busch hasn’t been quiet over the last few years, either. In 2008, they were acquired by InBev, which resulted in the wholly-owned subsidiary Anheuser-Busch InBev or “AB InBev.” And InBev was itself the product of a merger between Belgium-based Interbrew and Brazil-based AmBev in 2004. Also in 2008, the Craft Brew Alliance was formed when Red Hook and Widmer Brothers—once competitors—merged together. AB InBev owns 32.2% of this alliance, which also includes Kona Brewing Company and Omission Beer.

AB InBev made news in 2011 when they acquired Chicago’s Goose Island Brewing Company. In early 2014, they purchased Long Island’s Blue Point Brewing Company; in late 2014, they announced plans to purchase 10 Barrel Brewing Co. in Bend, Oregon.

Just as they did in the ’90s, Anheuser-Busch continues to brew their own crafty beers as well. The main difference between then and now is that they no longer campaign for the transparency they once were so passionate about. The Shock Top line and Land Shark Lager are brewed by Anheuser-Busch, even if their websites tell you they are produced in St. Louis, Missouri by Shock Top Brewing Company and Margaritaville Brewing Company, respectively.

What is Craft Beer?

This debate, which has clearly been going on for the last two decades, has now reached fever pitch, at a time when there have never been more craft breweries in the United States. Back in 1996, the Institute for Brewing Studies changed the definition of craft brewer so that it included an “ownership test that would exclude several well known breweries, such as Celis, Grants, and Shipyard, that have been acquired by large companies” (Market, p. 30).

The Brewers Association has changed its definition several times in recent years as well. For many years, the association said that a craft brewery was one that produced fewer than two million barrels of beer a year. In 2011, they upped that cap to six million when Boston Beer Co. threatened to eclipse the two million barrel mark.

They changed the definition again in March of this year, expanding upon their basic tenants that a craft brewer is small, independent and traditional. Accompanying their “Craft vs. Crafty” press release in 2012 was also a list of non-domestic craft brewers that included the usual suspects (Blue Moon, Shock Top, Leinenkugel’s) as well as a handful of brewers that violated the “traditional” aspect of the definition due to having flagships that were brewed with adjuncts. August Schell Brewing Company, the nation’s second oldest family-owned brewery behind Yuengling, responded to say that in addition to their adjunct lagers they also brewed a host of traditional styles. And so it was that in 2014, the Brewers Association again changed its definition to reflect “that adjunct brewing is quite literally traditional, as brewers have long brewed with what has been available to them.” As a result, August Schell is now once again a craft brewer as defined by the Brewers Association, as are bigger breweries like Yuengling and Narragansett.

As David Edgar pointed out in the aforementioned “Craft Brewing: Fastest Growth in the Industry,” 1994 was a year that saw the big players make significant moves in the craft or specialty beer market. Anheuser-Busch acquired Red Hook in 1994, and it was also then that the “big three” introduced their own crafty styles through specialty lines like Anheuser-Busch’s Specialty Brewing Group, Miller’s American Specialty and Craft Beer Co., or Coors’ UniBev, Ltd.

And while much has changed in the last 20 years, the approach that big brewers are taking in regards to the craft market has not. With craft breweries again making up a significant portion of the market, big brewers continue to compete by either acquiring established brands (as Anheuser-Busch has done with Goose Island, Blue Point and 10 Barrel) or producing their own brands and marketing them under non-existent breweries (as in Shock Top Brewing Co., Blue Moon Brewing Co., Margaritaville Brewing Co., Band of Brewers, etc.).

The difference in today’s climate and that of the mid-to-late ’90s is that—though we still talk about saturation points—craft beer is here to stay. But what, exactly, is craft beer?

Twenty years later, and we’re still trying to figure that out.

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