OHIM – Is CRAFT trying to be more papist than the Pope?

In the predominantly neatly raked Netherlands, its beer scene seems a bit out of place. Although there is only one consumer organization (Pint) and one club for collectors of brewery attributes (BAV); on the production side we find Dutch Brewers, CRAFT and Non-Organized.

Dutch Brewers, in a previous life called Central Brewery Office, represents the interests of ten of the largest Dutch breweries. In addition there is CRAFT, an association of more than 150 independent Dutch brewers, formerly known as Small Brewery Collective (KBC). The majority of the Dutch brewers has not (yet) become a member of either of both associations, a sad situation I would like to see come to an end soon because the Dutch beer industry will endure heavily in the coming years and will benefit from unity.

Dutch Brewers was, for a long time, seen as an enemy by many “small” beer parties, not just breweries A few years back it had eight members, all the survivors of the consolidation strokes struck by large lager brewers over the last three quarters century. At its founding in 1939 there were still 99 brewery members, and it seemed the association couldn’t be bothered with the newcomers in the Dutch beer scene. In recent years, the sentiment changed dramatically: Dutch Brewers is a driving force behind and co-founder of the Dutch Beer Week and more and more looks after the interests of the entire beer industry: it also caters for the interests of smaller brewers.

Yet we also have CRAFT, the Dutch association of independent brewers. Many people wonder why a Dutch trade association has an English name, which is also a somewhat burdened term, in all its emptiness. Choosing the name CRAFT refers in my mind to the international aspirations of (many) connected members so abroad, one knows exactly whom one’s dealing with. This burden seems to pose no real problem to the members. I myself am not yet decided, but tend to find it a chest beating and polarizing name.

Perhaps the latter is also the intention. The board of CRAFT is formed by Michel Ordeman (Jopen), Fer Kok (De Prael), Sander van de Streek (Vandestreek), Paul Brouwer (Oedipus) and Erwin Moll (Van Moll) supported by an association manager (not a brewer ): none of all kittens to handled without a glove. In his role as president Michel Ordeman has recently often hinted at seeking confrontation with non-Craft brewers, especially the Big Boys of Dutch Brewers. He addressed the practice of “binding contracts”, which are used in the horeca by many lager brewers, in the Panel Discussion “The Craft Beer Revolution (in Holland)” (1:19:20), and he likes, like the hard-liners from America, to refer to mass-produced pilsner as tasteless and colored water – whereby he emphatically positions himself against these beers and their brewers. Perhaps having a common enemy, or to create one, isn’t such a crazy idea – that is, when you desire to have one.

My unease with the name is in the inevitable association with the American term ‘craft brewer or, worse, “craft beer”. Remember, the term “craft beer” is not defined, and even the obvious explanation “craft beer is beer brewed by a craft brewer” isn’t supported or used by anyone. The term ‘craft brewer’ indeed is defined. “Craft beer” for me is just an as misguided nickname as “specialty beer”: hold on, all beer is special. The disdain implied to lager brewers is not for me.

But what again is a ‘craft brewer? Below is the definition of the American Brewers Association, the American equivalent of CRAFT and after which CRAFT is modeled, and the definition of a “Craft brewers” according to CRAFT:

Brewers Association CRAFT
less than 6 million barrels (6.6 million hl, a hectolitre is 100 liters) maximum volume is one million hectoliters
not more than 25% of the shares are held by an alcohol producer who is not a craft brewery itself Independent: up to 25% of the shares held by a non-CRAFT brewer
the majority of beers are brewed with “traditional or innovative ingredients and fermentation methods” Authentic: (main) beer is brewed and undiluted, and uses no corn, rice or other ingredients to reduce costs
  Honest: open about ingredients, origins and production

By and large, CRAFT follow the US example, whereby it should be noted that the American version has been modified several times. The maximum production has been raised several times to fit the growth of Boston Beer Company, just to keep them on board. The American definition used to exclude the use of ‘adjuncts’, considered to be inferior raw materials, intended to reduce costs, such as rice and maize – until the oldest American brewery, Yuengling, subtly pointed out that these are ingredients they used since their inception, namely in order to promote the drinkability. The Brewers Association backed down, and Yuengling is now a respected member of the club.

Incidentally, I would, if I was a member of CRAFT, have phrased the definition of “independent” differently. As it reads now, only members of the association CRAFT can have an interest in another member of CRAFT, and I cannot imagine that that’s what they meant. Since CRAFT is the union of Dutch independent breweries (and again, not all independent Dutch breweries are members), it could have read: “Independent: up to 25% of the shares held by a non-independent brewer” and if they find it very important, they can always add the specification ‘Dutch’.

Anyway, the Dutch definition, among other things, led to some well-known and pioneering Dutch breweries having had to give up their CRAFT membership: per January 1, 2017 both Brouwerij ‘t IJ and Brewery De Molen are no longer CRAFT breweries since both have a higher proportion than 25% of shares held by a “non-CRAFT brewer”. Bavaria currently holds 35% stake in Brewery De Molen and Duvel Moortgat NV is reportedly owning 51% of the shares of Brouwerij ‘t IJ, with an option for complete takeover. Both Duvel Moortgat and Bavaria exceed the production ceiling of CRAFT and therefore do not count as CRAFT brewer. Ironically, both parties would without any problem be considered ‘craft brewer’ by the Brewers Association. Bavaria still falls well within the permitted production volume.

Particularly since both Brouwerij De Molen as Brouwerij ‘t IJ shareholders do not interfere with the daily routine, and the entire beer creativity is left to the original owners, one may question the production ceiling value and its relevance of use by CRAFT. Of course, total or partial acquisitions in the past and present show that this can lead to great quality loss, it is not a given. The bloody trail that AB InBev has left we cannot ignore. But for example Heineken is behaving exemplary with Lagunitas: even when they were thrown an additional two percent of the shares they chose to place the corresponding voting rights in a ‘trust’ that founder Tony Magee controls – so he maintains full control over the brewery.

I find it hard to understand that CRAFT, when determining those conditions, knowingly accepted that it meant showing two leading Dutch brewers the door. Menno Olivier has accepted the situation although he – with me – is convinced his peer brewers could have had a very valuable ambassador, activist and advocate in him. This not even looking at the technical and substantive knowledge he brings with him on brewing, something that many CRAFT members could benefit greatly from. He remains silent and focusses on creating wonderful beers. In terms of value addition, the same goes in my mind for Bart and Patrick Brouwerij of ‘t IJ but I didn’t speak to them about it.

I spoke to Michel Ordeman on the other hand, and even though he admits it was a difficult decision, he defends it with passion “because you have to draw the consequences of the choices you make.” Thus he does not rule out that some choices will be reviewed. May be even things get added: CRAFT find, for example, the conclusion of anticompetitive agreements between major brewers and bars a bad thing (which I agree on) and who knows, we may ever see this become so important that it is made a condition for the CRAFT membership .

The chosen production ceiling of one million hectoliters is as arbitrary as that it is not: production, in the end of the day, does not necessarily reflect in better or poorer the quality of the final product. As Willem van Waesberghe, Global Heineken Master Brewer & Global Craft and Brew Master Heineken, aptly remarked his employer actually is “the wet dream of any craft brewer”. Heineken is independent, as a family business; started with two thousand hectoliters per year; and uses no corn, rice or other ingredients to reduce costs and is open about ingredients, origins and production. However, they brew high-gravity (higher extract content brews which are diluted later) but so do many “craft brewer” members of the Brewers Association as it is more environmentally conscious and efficient. And yes, they brew just a little more than one million hectoliters, two hundred times more to be almost exact. But to get back to the quality of the finished product (taste and qualifications as ‘good’ play no role since these are personal): again, many CRAFT members can learn a thing or two here.

To complete the silliness Brouwerij De Leckere is member of both CRAFT as well as Dutch Brewers. Technically speaking, five members of Dutch Brewers could, under the current conditions, also apply for CRAFT membership: Texelse, Budels, Alfa, Gulpener and Lindeboom comply with all standards, lest they should secretly brew high-gravity. According to well-informed circles one of these five intends to apply for CRAFT soon and, like De Leckere, embrace a dual membership.

Where I understand entering the production ceiling for a share by any larger scale party is the generally unfavorable terms of competition for CRAFT members. The pockets of AB InBev, Bavaria, Heineken and Grolsch are much deeper than those of all CRAFT members together. Also, having a large market share gives more control over the market than smaller parties have, and thereby can thus limit or even impede the potential of these smaller parties to join the market. In that light, it is not surprising that De Molen and Brouwerij  ‘t IJ may no longer be a member of CRAFT: by selling their shares to a major player they obtain large market advantages over CRAFT members, and the mutual interests no longer run parallel. If Bavaria wants, tomorrow every controlled Bavaria bar has a De Molen on tap – perhaps at the expense of a CRAFT member. And if the sales team of Duvel Moortgat Netherlands really give it a go, they will put ‘t IJ beer on every menu – perhaps at the expense of a CRAFT member. Whether that is enough reason to make the choice as it is, whereby De Molen and ‘t IJ may no longer be a member of CRAFT, is not for me to judge, although I have an opinion about it.

All that being said: it is getting more difficult in the coming years for all Dutch brewers. Growth as we now see, and have seen in recent years is unsustainable, among other things not because consumption is not growing enough to keep up with the increasing production. Things like consistency and quality of the final product will have to be closely monitored – not everyone starts a brewery ‘for the love of beer. And then there are a number of social developments going on which we must guard and with which we can only cope if we collectively, and with a clear common purpose, face the market: by “we” I mean all relevant parties in the Dutch beer market, with clear clusters such as producers, consumers, retailers and wholesalers. Today we feast but tomorrow neo-prohibitionists may aim a gun on all of and our beautiful beer may be under siege.

CRAFT phrased it nicely: “The diversity in our CRAFT culture is our strength. In the Netherlands, more than 400 independent breweries hold only 5% of the market. Together we give color to the beer landscape amidst the vast range of lager. <…> The main point of agreement for CRAFT brewers is independence. Craft brewers are free to brew creative and traditional ales. Craft brewers brew beer ‘for the love of beer. “And not said in so many words, but also CRAFT brewers have mouths to feed and need focus on a healthy business, which is something fundamentally different from profit maximization. Precisely to keep an industry-wide healthy beer culture is why we need to join together: in fact, it will prove necessary.

In America, the Beer Institute and the Brewers Association sometimes work together. I express the hope that the “not united” brewers will join soon in Dutch Brewers or CRAFT. I hope too that the management of CRAFT finds a mode to welcome iconic breweries like De Molen and Brouwerij ‘t IJ again, or at the very least work closely together. Without Nice & Ruthless, Natte, Hell & Damnation, Columbus, Kopi Luwak and Ijwit The Netherlands would in fact now be but a barren barrel-aged IPA desert.

1 Comment
  • The Beer Nut
    March 6, 2017

    I think breweries holding dual-membership is a healthy thing. It’s good that a brewery can make good beer, in a transparent way, in quantity. Here in Ireland, Carlow Brewing Company was one of the instigators behind the formation of a small brewers’ representative group, the ICBI, but it has also joined the large brewers’ club the Irish Brewers Association, along with Diageo and Heineken. Indeed, Carlow’s owner Seamus O’Hara is now the IBA chairman. Seeing Irish craft beer leading the industry can only be a good thing in my view.

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