2017 has been quite the transformative year for craft beer both in the United States and here in Maryland. Since the calendar nears 2018 with a mere turn of the page, I thought it fitting to review the peaks and valleys, and the impact 2017 had upon the industry.
January 2017 roared into Maryland and the nation with craft beer on the upswing, garnering even greater market share. Several breweries were slated to open with a multitude of others in planning. In a tumultuous year of catastrophic weather events, American breweries stepped up to selflessly aid hurricane victims from Texas, to Florida, to Puerto Rico. Nationally breweries were nearing apogee with notable shifts in ownership, prompting action from the Brewer’s Association of America. The number of craft breweries in the United States started at 5,301 on January 1, 2017, and crested beyond 6,000 by December. From 2010 to 2016 many of them were purchased (in whole or in part) by AB-InBev for their High End Beer Division. Those acquisitions continued in 2017 when they took ownership of Wicked Weed in May, and Aussie brewery Pirate Life in November. This occurred despite AB-Inbev laying off 90% of their High End employees after promising “No more Craft Beer Acquisitions”. (1) Some of the larger craft brewers in America stepped up to assist the smaller, independent plants, and stop them from selling to the monopoly. Brooklyn Brewery purchased minority stakes in both Funkwerks and 21st Amendment in 2017, ultimately leaving control (and distribution) in the hands of the brewers, keeping them (mostly) independent.
This activity was the impetus for the Brewer’s Association of America to take a shot across the bow, singling out craft breweries with a distinctly ‘Independent’ seal. The purpose was to provide an easily recognizable symbol for consumers, delineating the beer they were drinking as truly independent. To participate, the majority of ownership {75%} had to be held by the craft brewery (defined as 6 million or less barrels per year) and not a conglomerate. Some brewers thought the added restrictions were onerous and limiting to freedom of expression, while others (Lagunitas) were no longer considered independent craft breweries and could not partake of the seal. Since July 2017, just over half (2,835) of the craft breweries in America have adopted the seal.
On another independent note, a new campaign was launched to release the world from the fetters of the monopoly known as AB-InBev: Take Craft Back. In reality this was a stunt perpetrated by the Brewer’s Association of America to ‘buy’ AB-InBev and stop them from consolidating all of the little craft breweries that have cut so deeply into their market share. The crowd funding campaign garnered over $3 million in pledges, which was not nearly enough to purchase the monopoly ($213 billion). It served however to reinvigorate the craft beer debate, and increase support for the use of the Independent Craft Brewery Seal promoted by the BA. A clever marketing ploy most certainly, a realistic proposition- not even likely.
More good news for the industry came in the form of the 2017 U.S. hops report. 2017 was a record breaking year for hop production, rolling in at 56,738 acres, roughly 98 million pounds of hops! This was the largest of any nation in the world. U.S. hop acreage combined with Germany’s 48,293 acres to account for ¾ of the world’s total hop acreage. This was very good for craft breweries that chose only locally sourced ingredients, fomenting regional agricultural development, job growth, and economic stimulus. The flip side of this fabulous news was the decline (29%) in malting grain production in the United States, harvesting the smallest barley crop since 1934. Primarily this was due to the weather, which contributed to lower yields in the top producing states (Montana, North Dakota, and Idaho.) Canada also saw substantially lower yields as well. This has sparked the planting of more malting grains nationwide. Conditions are beyond suitable for planting these grains in several states, and the need to expand acreage offers not only a greater supply to our craft brewers, but another avenue for job creation as well.
The crowning achievement for the industry arrived in the shape of the historic, bipartisan Craft Beer Modernization and Tax Reform Act (CBMTRA) that was part of the tax reform bill which passed both houses of congress December 20, 2017. This sweeping bill transforms the industry, and attempts to level the playing field for the craft brewer by reducing excise taxes on those producing less than 2 million barrels per year, while simplifying labeling, and other cumbersome and costly processes.
That brings the conversation around to Maryland. Although 2017 started off with a bang for Maryland breweries, it quickly deteriorated, leaving many considering relocation to the legislatively friendlier climes of Virginia, or closing up shop all together.
High notes included the expansion of malting efforts across the state with the opening of Dark Cloud Malthouse in Howard County. This supplemented Chesapeake (Harford), Amber Fields (Carroll), and the growing number of malt houses planned across the state, along the Eastern Shore, and Delmarva Peninsula. The beauty of this goes well beyond locally sourced malts, and to the heart of the Chesapeake Bay, as the planting of malting grains actually saves the Bay. These plants hold harmful toxins like nitrogen within the pulp, instead of releasing them into the soil, which then leeches into the Chesapeake Bay and damages the fragile ecosystem. This is a fabulous alternative (or additional lovely winter crop) for farmers hampered by debilitating planting restrictions.
Other great news on the brewing front came in the form of Union Craft Brewing announcing the purchase of an old, abandoned warehouse that will be transformed into the Union Collective. This space allows for the expansion of brewing operations with the added bonus of housing Earth Treks, Vent Coffee Roaster, Charmery (ice cream), Huckle’s Sauces, and the Baltimore Whiskey Company. The collective’s incredible venture will be an economic lynchpin in the Medfield/Hampden neighborhood, and is already spurring both neighborhood revitalization, and job creation prior to its 2018 opening.
Other big Maryland brewing news included the parting of ways at Duclaw. After 18 years brewmaster Jim Wagner bid adieu to the brewery, and owner Dave Benfield. His search for greener pastures led him to open his very own operation in Hunt Valley with partner Richard Mak. Balt County Brewing is on schedule to open to the public in February 2018. Shortly after Wagner’s departure from the plant, Benfield found another partner and head brewer. Ernie Igot will be dually responsible for Duclaw’s operation while maintaining his position as brewmaster at Peabody Heights. Raven Beer founder Stephen Demczuk has moved operations out of Peabody Heights and into the Duclaw facility in Rosedale, in a shakeup many did not see coming. Benfield and Demczuk remarked that this was only the beginning of this prosperous new partnership.
In addition to these surprising revelations, a host of other breweries opened in 2017 including Attaboy (Frederick), Hysteria (Columbia), Saints Row (Rockville), Suspended (Baltimore), and the big one known as Guinness (Relay). The announcement (January, 2017) that Guinness would be opening in Baltimore County was indeed welcome news, at least for a few months. That was when the earth shifted and the corner stones were pulled from the foundation of many Maryland breweries.
A brief look at the Reform on Tap page will quickly inform any reader of the deleterious legislation (HB1283) that was passed in the 2017 legislative session by the Maryland General Assembly. This bill was passed to incentivize and favor the opening of the Guinness Brewery, while keeping other Maryland breweries ‘in check’ by destructively limiting the ability to manufacture and sell their products. HB1283 killed jobs, and destroyed economic opportunities right along with the businesses it purported to help. Two major breweries (Ballast Point and Stone) halted their planned relocation to Maryland due to the passage of the bill. Flying Dog (Frederick) also placed their $60 million expansion plans on ‘permanent hold’ citing legislative issues as the cause.
Since then the Comptroller of Maryland put together a task force addressing the true nature of the bill, how breweries were impacted, and what could be done to fix it without damaging the supporting tiers of the industry. It was an eye-opening lesson on what little regard the legislature had for its constituents (in their entirety) when making (un)informed decisions on their futures. The task force ultimately recommended the Reform on Tap Act of 2018 to restore the balance. This landmark legislative proposal removes arbitrary limits stifling the manufacture and sale of craft beer in Maryland, while protecting the integrity of the three tier system, thus allowing craft breweries to thrive, unencumbered by loathsome, needless, outdated regulations, and inept Franchise Laws. As the third largest job creator in America, breweries provide incredible economic opportunities in every neighborhood they operate within. Of course increased beer production requires a rise in hop and malting grain acreage, resulting in a healthier Chesapeake Bay! That is a win for everyone.
What will 2018 have in store for craft beer? I don’t know yet. I do know that the forces of opposition have already begun their march against The Reform on Tap Act. I also know that breweries like Checkerspot (originally slated to open in 2017) will be operational in a few short months. Full Tilt is expected to open their very own plant in the B-More Kitchen complex. Jailbreak wlll have a fully functioning restaurant accompanying their brewing operations, and Balt County Brewing, along with a host of others, will open their doors to the public. What are my hopes and dreams for 2018? A world without limits, and a lot of great Maryland craft beer!
Sláinte
P.S. If you haven’t done so yet please sign the petition to #SaveMDBeer
Every Signature Counts
- Tara Nurin, “AB-InBEv High End Beer Division Lays Off 90% of Its Sales force,” Forbes, Sept.7, 2017.
