U.S. Brewers Bid for Influence on Capitol Hill

There may be a budding food crisis afoot in the land, but at least there's still beer—and a growing amount of small-batch "craft" beer, according to the U.S. Brewer's Association, the Washington trade association for America's favorite foamy beverage.

The growth of craft beer—defined by the association as suds produced in quantities of less than 2 million barrels annually and cranked out by brewers who own at least three-quarters of their output—peaked in the late 1990s, before going the way of the dotcom boom. But it has been inching back up again. In 2007 more than 1,400 craft operations registered with the U.S. Brewer's Association, up 10 percent from the year before. And last spring Oregon Reps. Peter DeFazio and Greg Walden founded the first ever House Small Brewers Caucus, a bipartisan group dedicated to keeping watch over the interests of the microbrewery industry on Capitol Hill.

The food crunch has hit the beer business; rising costs have made quality ingredients harder to come by. And the processes by which craft beer is bottled and shipped have come under fire in a more eco-conscious world. Last week America's small brewers visited Washington to discuss their business and how Congress regulates it. NEWSWEEK's Daniel Stone sat down with Charlie Papazian, president of the U.S. Brewers Association, to learn more about their agenda and concerns. Excerpts:

NEWSWEEK: In your talks with lawmakers, what are some of the craft brewers' key regulatory interests?
Charlie Papazian:
One of the big issues we're dealing with is the nutritional and health labels being put on beer. Brewers support getting more information to consumers, but we're hoping small brewers can list nutritional values in a linear display rather than a graphic panel. To print a large panel, brewers would have to invest $15 million in new printing equipment. Another thing we don't want is an increase on the federal excise tax on beer. In the current climate there are more regulations on different actions. Brewers are one of the most heavily regulated industries in the country. There are already lots of other fees and costs already, and they're increasing, and having an increase in the federal excise tax would be really devastating. At the same time, we're advocating for a rollback of the federal excise tax from $18 per barrel to $9 per barrel, where it was in the early '90s. Those are all on a federal level. On a state level, these kinds of issues come up even more frequently, and these lawmakers are concerned about their local communities.

Is the industry well represented in Congress?
Relatively, yes. The House Small Brewers Caucus asked us to support them with information about small brewers' needs, and we were happy to. They now have 41 members of Congress who are in the caucus. In terms of congressional representation, small brewers are light years ahead of where they were just two years ago.

You were also in town promoting the new growth of small beer. The beverage has been around for millennia. Why the new popularity?
People recognize that there are frontiers to be explored, and there's a lot to be discovered. Part of the mystique and enjoyment is discovery, because you don't see these beers being promoted widely. Our culture is widely tuned into the element of discovering cool stuff.

There was a microbrew boom in the late '90s. Is this another?
That was then. Now the dynamics are different. In the late '90s it was all a new road. A lot of people wanted to get into it for a number of reasons. Some were passionate about beer and making it well. Other people got into it for the wrong reasons, like money. At the end of the '90s there was a shakeout when it hit a wall. It never fell of a cliff because it never experienced negative growth. But it slowly has been building up again. What you have now is an educational process where beer is being respected as a beverage that can be responsibly enjoyed that we can elevate to the status that wine has had.

How can you elevate the status of beer?
We're trying to make people aware that beer is as sophisticated as wine. Think of it this way: with wine you have red and white varieties based on the grapes used to make them. But with beer, for starters, you have dozens of kinds of malts. You have the pale malts, toasted malts, roasted malts. You have malts that give flavor like toffee and caramel and honey. There's every which direction that malts can take the beer. Then you have hops. They contribute not only a degree of bitterness but can add flavors like citrus, apricot, even a jasmine. Then we haven't even begun to talk about strength. When you add more malt, you add more sugar, which brings a higher degree of fermentation and more alcohol. With alcohol comes new complexities, like what wine has.

Are you saying beer is the new wine?
Absolutely. If the success of wine is the measure of something we want to achieve, then yes. But beer has the potential to go far beyond wine, because there is so much variety. There are many directions beside white and red and light and heavy.

Could that lead to a hierarchy system of beer, where price indicates quality?
It's already happening. There are extreme beers that are expensive to make and take a lot of time. Brewers could not possibly offer them without charging $10 to $20 for a six-pack. But people know that and are willing to pay for good, high-quality beer. Obviously, the volume is not tremendous and there's a smaller market for that. But look, it's becoming easy to realize that spending $20 for a world-class six-pack of beer gets you a much higher-quality product than wine you could get for the same amount.

But most people buy based on price, especially younger people who can't afford the same appreciation for quality.
Look, these are different times now. People talk about beer now like they never knew about beer before. Over the past few years younger beer drinkers have embraced the idea that they're willing to shell out a few more bucks for a six-pack of beer that they really enjoy and something they can really relate to, whereas that was a stretch four or five years ago. Now there are more people in their 20s—of drinking age—who are stretching their dollar just in order to experience craft beer and craft brewing.

Is there an antagonistic relationship between beer and wine producers?
Probably, but at a pretty low level. We respect what wine has done. We're trying to do what they did 30 years ago: raise the level of awareness of a beverage that people don't understand and deserves more respect.

What don't most people understand about beer? Sell me on it.
It's the whole idea of discovering that there's a whole world of flavor and diversity. Beer as a beverage offers an opportunity to fall in love with a beverage. Beer offers an opportunity to comfortably explore the boundaries people have put around them as far as their comfort level. Discovering something new is a big part of it.

The food shortage that has hit within past months. Is that affecting microbrew production?
Yes, and a lot of recent factors are too. Energy drives up the cost of malt; transportation now costs more. Glass is a very energy-intensive process to make, and the cost of barley is also going up.

All of which means the selling price will go up.
It's really interesting. The price is going to go up, just like it has been. But [consumption] is still growing, and beer drinkers are still finding enough value in craft brewers to pay the extra dollar or two. It's the psychological and the real value that people are perceiving. And that's what craft beer is all about: perceived value.