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The Merger Craft brewers are letting "Le Bon Temps Rouler" and they want to do it with a unified voice.
The 63rd Annual Conference of the Brewers Association of America (BAA) held in New Orleans Nov. 12-16 signified the last such meeting of the small brewers’ association as it merges with the Colorado-based Association of Brewers (AOB) to form The Brewers Association (BA).
The BAA, the nation’s oldest association of brewers, was formed during World War II to ensure that small brewers got their share of war-rationed materials such as tin and barley. Later it was responsible for successfully lobbying for tax breaks for small brewers. The AOB was founded in 1979 by Charlie Papazian to promote the then fledgling craft brewing industry.
As the larger craft brewers grew in the 1990s, their increasingly proactive owners gravitated to the BAA because of its legislative connections. It also gave them a respected platform from which to interact with big brewers and distributors, thanks in large part to the efforts of Daniel Bradford, who took over as BAA director in 1999. Under his leadership, the BAA became more PR oriented while Papazian’s AOB, based more on an educational foundation, began to dabble in the legislative arena. It became obvious to many that the two organizations were beginning to overlap, so last year a committee was formed to explore a merger.
"We believe that a combined organization will result in a stronger voice for small brewers in the media, in the nation’s capital and in state legislatures," said Gary Fish, outgoing chairman of the BAA and president of Deschutes Brewery.
Many details of the merger still need to be hammered out and while Papazian will take over as president of the new joint organization (though he will not serve on the board), Bradford’s future is more uncertain. He said that after "five years in public service," he expects to return to his former post as publisher of All About Beer magazine, but could stay on as a consultant to aid the transition.
A joint temporary board, comprised of seven former AOB directors and seven from the BAA did a considerable amount of hammering in New Orleans — some 10 hours of meetings — but much still needs to be accomplished by the January 1 launch date.
Papazian sees himself managing 10-15 percent more work than with the AOB, which now runs the American Homebrewers Association, the Institute of Brewing Studies, and the Great American Beer Festival and World Beer Cup.
"It’s a matter of making sure priorities of the BAA are emphasized and adding a few services, some of them very important," Papazian said.
One priority for the board is to establish a legislative office in the Washington D.C. area. Another priority is to retain and represent all aspects of the brewing community. Two homebrewing members will be elected to the board by AHA members and two at-large members will be selected in addition to seven packaging brewers and four brewpub brewers elected by BA members.
Papazian noted that more than 90 percent of professional brewers have roots in homebrewing as does he.
"We recognize one industry as far as The Brewers Association is concerned to represent the interest of brewpubs, packaging breweries and homebrewers," Papazian said. "Our mission is to promote, protect and educate."
The mood in New Orleans was decidedly upbeat with conference attendees applauding, virtually unanimously, the merger. The Conference With the historical backdrop of the Hotel Monteleone in the French Quarter, the 200-plus attendees sat through a two-day smorgasbord of speakers.
As they were last year in San Francisco, legislative challenges and access to market issues dominated.
Bradford, in his last appearance at the BAA helm, delivered a warning against "fractionalism" at the state level. "We need each other more than we need whatever pissing match we think is important," he said.
Marc Sorini, the BAA’s legal counsel and self-confessed "booze law geek" gave a round up of legal issues. At the top of the list was direct shipping which is now before the Supreme Court.
While the topic is of more interest to wineries it also has ramifications for small breweries. At issue is the ability of small wineries to direct ship out-of- state, as they can in-state. Opponents, mostly distributors and wholesalers see it as the first step in the elimination of the three-tier system.
Ironically, the threat of legal challenges has backfired in a couple of states as in-state shipping privileges were repealed as a means of eliminating the controversy. Coupled with direct shipping question is a lawsuit brought by Costco against the state of Washington which seeks to facilitate direct manufacture to retailer supply declaring the three-tier system unconstitutional.
Underage drinking continues to be a hot topic in Washington. While responsible marketing issues dictate that at least 70 percent of an audience should be over 21, anti-alcohol forces are looking for an 85 percent threshold.
On the positive side, excise tax increases on alcohol continue to be shot down at the state level.
Many of the speakers spoke not of beer, but of the parallels in other small industries. David Sloane, president of WineAmerica, spoke of the challenges facing small wineries while local entrepreneur Ron Zappe of Zapp’s Potato Chips addressed a lunchtime crowd with tales of battling chip giant Frito-Lay.
Another lunchtime speaker provided an interesting perspective from the world of big beer. Named president and CEO of Miller Brewing Co. 20 months ago, Norman Adami, who hails from South Africa, said he soon noticed at industry gatherings that the craft brewers always seemed to have more fun than the corporate, suited attendees.
He said while the beer industry is in danger of "boring consumers," craft brewers have not lost the passion and fun that keeps consumers connected to their products.
Adami also said it didn’t take long to realize there are not two beer industries in America (big and small) but three — 1. The small brewers; 2. The national brewers; 3. Anhueser-Busch, which has 50 percent of the pie.
"But, no matter what size you are,"Adami said, "you face your own set of problems. The long-term health of our business depends on how well we stand up for our beer."
Peering into the future, veteran industry analyst Bob Weinberg said Anheuser-Busch is "the only brewery that for sure has a future." No. 2 Miller "is not out of the woods in my opinion." Regarding No. 3 Coors, Weinberg said he simply couldn’t understand them and, using a medical analogy, described their merger with Molson as "a hemorrhoid transplant. The only explanation for it, he said, was that separately the two breweries perhaps felt they were too unattractive for a marriage with a global brewing giant.
Weinberg did have hopeful news for craft brewers however. He said that when he first spoke to BAA members several years earlier, he told them that, "Every brewer here can do something A-B can’t — double in size." Weinberg said the same opportunity still exists. "None of you are limited by market potential."
At the conference’s concluding banquet Bradford was presented with the organization’s first and only Chairman’s Lifetime Achievement Award. Bradford described the conference as extraordinary. "Speaker after speaker dissected their particular part of the industry. Any visionary thinker can see the doors we can walk through."
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