The Craft Beer Industry Association is now the Independent Brewers Association and has revised its membership criteria to put more focus on independence.
While they’ve moved away from arbitrary definitions of “craft”, how we define independence looks set to be the subject of continued debate.
I’ll concede from the start, I don’t think a definition of independence is the highest of priorities. There are more pressing issues facing brewers, many of which the Independent Brewers Association is in a position to tackle.
However, it is something that will continue to be a talking point as breweries grow and new ownership models come to the fore. It’s important that we continue to think about why independence is important.
The Independent Brewers Association
Less than 24 hours before the CBIA voted to become the Independent Brewers Association, I’d written an article on how they might define independence.
Perhaps my hot takes are just too hot.
With this change came new membership criteria to exclude brewers that, according to the press release, “are more than 20% owned by large brewers or other business that hold significant brewery holdings in Australia or overseas”.
Lion’s craft brands had already resigned from the CBIA but this new membership criteria also excludes the likes of Mountain Goat (owned by Asahi) and Yenda (part owned by Coca-Cola Amatil that has stakes in brands such as Fiji Bitter).
The Debate Around Independence Will Continue
Obviously the debate around independence will roll on, particularly as the new criteria still leaves room for private equity investment.
From a purely selfish point of view, this means that many of the points in my original article (printed below in full) still hold true.
I’ve said before that arbitrary measures of size should be abandoned. The IBA has retained the cap of 40 million litres a year, loosely in an effort to define “large brewer”. This cap effectively excludes Coopers.
It’s a long way off but what happens if Stone & Wood (estimated 12 million a year) or 4 Pines reach that volume? I still maintain that measures of size are probably limiting in the long run but I understand that drawing a distinction between independence and size is difficult.
It does, however, reaffirm my belief that the association should remain adaptable.
The categorisation of brewers has been simplified too. Now members are either production or contract brewers (no more nano, micro etc.). There are a few other rule changes, all of which can be read in the executive summary [PDF].
There are some major positives from this announcement:
- The IBA has managed to retain key sponsors which should soften the financial blow of the big brewers leaving.
- The IBA has clearly identified and accepted that there is a large, grey area where definition and nuance is going to be tricky. As I said some time ago, I hope the association is committed to being flexible and adaptable as the beer industry evolves.
- The IBA seems to be narrowing its focus on the major issues facing independent breweries. Specific examples cited by Peta Fielding include taxation, market access and licensing. These are great places to start.
Ultimately the debate around how we define independence in beer will roll on. We should accept the grey areas and embrace the discussion as a part of the growth and evolution of independent beer.Ultimately the debate around how we define independence in beer will roll on. We should embrace the discussion... Click To Tweet
This article is published using the title originally intended for another piece. Said article was written before this announcement from the CBIA/IBA but not published. It’s included in full below.
Independence is of increasing importance in the Australian beer landscape, particularly given the CBIA’s recent focus on it.
Not too long ago, a feature on this site reflected on the departure of Lion and its craft brands from the CBIA, as the association looks to redefine its membership criteria.
The CBIA has been clear in its desire to put independence at the heart of what it stands for.
On that feature article, Steve Jeffares, of The Local Taphouse, GABS and Stomping Ground, asked how I’d define independence. Nothing like a softball question, Steve.
But to his credit it got me thinking.
Let’s Define Independence, Not Craft Beer
In its definition of a craft brewer, the US Brewer’s Association defines independence as when “less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer”.
While it’s a definition that has worked well in the US for a while, there are parts that don’t fit with today’s beer industry.
With constantly evolving ownership models, in particular a flood of private equity investment, restricting the definition to “alcoholic beverage industry member[s]” is somewhat limiting.
Private Equity In Craft Beer
Private equity is particularly interesting when we look at the ownership structures of craft (for the lack of a better term) breweries. There’s an argument to say that these are even worse for the sector than corporate beverage companies.
At least the likes of Lion and CUB have an obvious interest in the overall growth of the category. Private equity investment, by its very definition, gets in with a view to get out. They want to accelerate and maximise growth with their sights fixed on an exit strategy. It’s an investment in the simplest terms.
Of course, private equity comes in many shapes and sizes. Most traditionally it’s through firms but it might also be a bunch of mates who’ve pooled their savings to buy a brewery.
You wouldn’t want to exclude the latter just because of a blanket definition to exclude the former.
In case there’s any doubt, it’s worth a reminder that private equity is a multi-trillion dollar industry with hundreds of billions invested every year. It makes craft beer look small fry in comparison.
There’s clearly a need for a great deal of nuance around the subject of independence in craft beer.
Perhaps it’s best if we leave such definitions to the CBIA, or at least their lawyers.
A Starting Point
What we can do is throw around ideas that should be at the core of defining independence. When it comes to beer, that has to be an undisputed interest in seeing good beer grow.
In response to Steve’s comment on the original article, I suggested a starting point would be a definition focused on the proportion of ownership that is directly linked to craft beer.
The example I gave took inspiration from the Brewer’s Association in America. If at least 75% of a brewery was owned by people or an organisation who’s primary business interest is the craft brewery itself and/or a craft beer related business, then that’s not a bad place to start.
The focus on beer related businesses retains an industry-wide focus, allowing for a people with multiple business interests as long as they are involved in buying or selling beer in some form.
If the CBIA worked from there and put a bit of rigour around the definition, it could set them up nicely to keep independence as the central tenant for their membership.
For Now It’s The Debate That Matters
However, I’m not claiming such a starting point is perfect. Immediately a few issues spring to mind. What about the likes of Bruny Island in Tasmania with a brewery attached to a cheese maker? Or breweries that spring from wine makers or cider makers? A strict focus on beer could exclude other independent, craft producers for no valid reason.
For now though, the important thing is to keep the discussion rolling. The definition of independence shouldn’t come from the CBIA and its members alone but from consumers, retailers and publicans.
All have a stake in this game and they should be part of the debate around what it is, at the heart of independence, that matters.
Flexible Definitions And Criteria
I made the point in the original article that we should move away from arbitrary measures of size, however easy a method that would be of separating “craft” and “non-craft” breweries.
If independence is the focus, measuring brewery size defeats the point and serves only to limit growth.
The main point of the previous piece was that the CBIA should remain adaptable and flexible. The landscape is constantly shifting, as are ownership structures.
The association’s membership criteria will need to change as quickly as the industry does, in order to keep up with new challenges, anomalies and brewery models.
Included in that will be the CBIA’s definition of independence.
Leave a comment below with your thoughts on how the CBIA should define independence. Let’s keep the discussion rolling.