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In a Country Where 1 in 4 Beers Sold Is a Bud Light, Microbrews Are Showing Promising Growth

Independent craft brewers have established a significant niche over the last generation in the beer market, in an industry where six companies make 90 percent of the beer.

In a country where one out of every four beers sold is a Bud Light, and more than 80 percent of all beer sold comes from two giant corporations, indie brewing is showing promising signs of growth and staying power.

Independent craft brewers have established a significant niche over the last generation. Since 1980, the number of commercial breweries has risen from less than 100 to about 1,600, including brewpubs. Independent craft brewers now account for about 7 percent of U.S. beer sales, and the Boston Beer Co. (Samuel Adams) is now the leading American-owned brewer.

This situation might inspire the corporate majors to colonize the indies, as they did in the music business of the 1990s and more recently, with the corporate acquisition of several leading health-food brands and body-care products such as Burt's Bees lip balm and Tom's of Maine toothpaste. Yet so far, that doesn't seem to have happened. The majors have created a few brands aimed at the craft-beer market, most notably MillerCoors' Blue Moon, and Anheuser-Busch owns part of four of the top 20 craft-beer brands, according to store-sales figures for the year ending June 13 from SymphonyIRI Group, a Chicago-based market-research firm. Beyond that, however, they have not made many inroads--or tried that hard, say several professional observers.

Two multinational behemoths dominate the $100-billion-a-year American beer market. The Belgian company InBev acquired Anheuser-Busch in 2008, and with it, the half of U.S. beer sales claimed by Budweiser and Busch. Another 30 percent belongs to the amalgamation of South African Brewing, MillerCoors, and Canada's Molson.

These two "have certainly carved away some of the craft-beer market," notes Maureen Ogle, author of Ambitious Brew: The Story of American Beer. On the other hand, she says, they haven't come close to dominating it.

Indie Beer's Comeback

The emergence of craft brewing rescued the diversity of American brewing from the nadir it reached around 1980, when the nation had barely 80 breweries--fewer than it had in 1810, when the population was a scant 6 million people, and they mainly drank hard cider and slave-trade rum.

What is craft brewing? The Brewers Association, a nonprofit trade group of more than 1,000 independent brewers, sets the following standards. A craft brewery uses the traditional ingredients of malt, hops, yeast, and water. It adds other ingredients only to enhance the flavor--instead of lightening it, as the majors do with "adjuncts" of corn and rice. It produces less than 2 million barrels a year (about 660 million bottles). And such brewers must also "have distinctive, individualistic approaches" and "maintain integrity by what they brew and their general independence." Specifically, that means a brewery cannot qualify as "craft" if more than 25 percent is owned or controlled by "an alcoholic beverage industry member who is not themselves a craft brewer."

Craft brewers "do it for the love of beer," says Brewers Association spokesperson Julia Herz, "and they're fortunate enough to do it in a time when the culture appreciates what they're doing." Almost 50,000 people attend the annual Great American Beer Festival, she adds, and the market is growing. According to the Brewers Association, overall beer sales dropped 2.2 percent in 2009, but craft beer sales rose 7.2 percent by volume and 10.3 percent by dollars. Some brewers have failed, but others have taken their place. The Brewers Association says there are now almost 1,000 brewpubs in the U.S., more than 500 microbreweries, and 68 regional craft breweries.

Boston Beer is threatening to reach the 2-million-barrel limit--but during a serious hops shortage in 2007, the company sold part of its stash at cost to other craft brewers, forgoing a profit to help its fellow indies, says Herz.

How Big Beer Was Born in the USA

The rebirth of craft brewing in the 1970s went against more than a century of trends in the American beer market.

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