Craft Brewer vs Macro: How the Brewers Association Draws the Line

The line between a craft brewer and a macro brewer is, on close inspection, not a line at all but a small administrative cliff drawn at six million barrels per year by a trade association in Boulder, Colorado. It is not a federal definition. It is not in the U.S. Code. It is a definition the Brewers Association maintains for its own membership and statistical purposes, and the rest of the industry has, by long habit, agreed to use it.

That single fact accounts for most of the confusion that follows.

The definition itself

The Brewers Association currently defines an American craft brewer as "small and independent." Per the Brewers Association, "small" means annual production of six million barrels of beer or less, and "independent" means less than 25 percent of the craft brewery is owned or controlled by an alcohol industry member that is not itself a craft brewer. A third historical criterion, "traditional," was retired in earlier revisions, leaving the present two-part test.

Each of those words is doing more work than it appears to be doing.

A barrel, in this context, is the U.S. beer barrel of 31 gallons, which is the unit the Alcohol and Tobacco Tax and Trade Bureau uses for excise tax. This is not the same as a British brewer's barrel, not the same as a wine barrel, and not the same as the 42-gallon barrel petroleum people use, a coincidence that has caused a great deal of pointless argument over the years. Six million barrels works out to 186 million gallons, which sounds enormous and is, until set against the Anheuser-Busch InBev or Molson Coors numbers, at which point it becomes a ceiling rather than a horizon.

The 25 percent ownership threshold is the other half of the definition and the half that has done most of the recent work. When a private equity firm or a foreign brewing conglomerate acquires a stake in a regional brewery, the question is no longer about beer at all. The question is about cap tables. The Brewers Association's Independent Craft Brewer Seal, which appears upside-down on cans across the country, is essentially a graphic representation of that ownership test.

Why the definition is not federal

The Alcohol and Tobacco Tax and Trade Bureau, which actually regulates beer in the United States under 27 CFR Part 25, does not use the words "craft" or "macro" anywhere in its regulatory text. Per the eCFR, Part 25 governs the production, labeling, and tax treatment of beer at federal facilities, and Part 7 governs the labeling and advertising of malt beverages. Neither part contains a craft brewery definition. The Federal Alcohol Administration Act definitions at 27 USC § 211, accessible via the Cornell Legal Information Institute, define "malt beverage" and "brewer" but say nothing about size or independence.

What federal law does have, and what often gets confused with the craft definition, is a tax break for small brewers. Per Cornell LII's text of 26 USC § 5051, the Internal Revenue Code applies a reduced excise tax rate on the first 60,000 barrels produced by a brewer who produces less than two million barrels in a calendar year. That two-million-barrel figure is a tax threshold, not an identity. A brewery producing 2.1 million barrels still calls itself craft and still trades as craft within the Brewers Association's framework. It simply pays the higher rate on every barrel.

The two thresholds — six million for craft status, two million for the small-brewer tax rate — are routinely conflated, including by people who should know better. They come from different bodies for different reasons.

How the six-million number got there

The ceiling has moved. For years the Brewers Association used two million barrels, which was, perhaps not coincidentally, the same threshold the federal tax code used. In 2010 the Brewers Association raised it to six million, a change widely understood to have been driven by the Boston Beer Company, maker of Samuel Adams, which was approaching the older limit and would, under the previous definition, have ceased to be a craft brewer for purely arithmetical reasons.

This is the sort of moment that tells one a great deal about how trade definitions actually work. They are written by people, revised by committees, and adjusted when the boundary stops describing what the members of the trade association recognize as themselves. The Brewers Association is a membership organization, and the definition is, in part, a description of who the members are. When a prominent member outgrows the definition, the association has a choice: lose the member, or move the line. In 2010 the line moved.

This is not a criticism. It is simply what the definition is. The Brewers Association is open about maintaining the threshold as a useful descriptive boundary, and the boundary has, by industry consensus, held since.

What "macro" means, more or less

The word "macro" is even less formal than "craft." No regulator uses it, no statute defines it, and the Brewers Association does not employ it in its own taxonomy. In common industry usage, "macro" describes the largest brewing companies — Anheuser-Busch InBev, Molson Coors, Constellation Brands' beer division, Heineken, Diageo's beer holdings — whose individual brands are produced at scales an order of magnitude or more above the six-million-barrel ceiling.

The Beer Institute, which represents brewers across the size spectrum and includes the largest companies as members, publishes economic impact data and an annual Brewers Almanac and broadly uses the language of "brewer" without the craft-or-macro split. Per the Beer Institute, the trade body covers brewers, beer importers, and industry suppliers as a single constituency. Reading the Beer Institute and Brewers Association materials side by side gives a fairly clear picture: the same industry, viewed through two different lenses, with significant overlap in membership and substantial divergence in policy emphasis.

There is also a middle category, sometimes called "regional" or "mid-sized," that has become genuinely awkward. Breweries in the 500,000-to-three-million-barrel range are larger than what most consumers picture when they hear "craft" but well under the ceiling. They are craft by the Brewers Association definition, often regional in distribution, and frequently family or employee owned. Whether the category needs a third name is an open question and one the trade press has been asking, intermittently, for over a decade.

The "independent" test and the seal

The 25 percent ownership threshold is the part of the definition that requires the most ongoing administrative work, because ownership changes constantly. When a brewery sells a stake to a private equity fund, takes investment from a beverage conglomerate, or is acquired outright, its status under the Brewers Association definition can change overnight without anything about the beer itself changing at all.

Per the Brewers Association's description of the Independent Craft Brewer Seal, the seal is licensed at no cost to qualifying breweries and is designed as a consumer-facing mark indicating that the brewery meets the small and independent criteria. The seal is the visible expression of the 25 percent rule. When a brewery is acquired by, for example, a major international brewing group, it loses the right to use the seal, and the loss tends to make news in the beer trade press in a way that the underlying transaction sometimes does not.

Whether consumers actually read the seal, recognize it, or care is a separate empirical question. The Brewers Association has commissioned consumer research on the question over the years, and the results, depending on which year and which subgroup, range from "encouraging" to "cautionary." The seal exists, in any event, and is the most concrete consumer-facing artifact of the craft definition.

Where the definition runs into edge cases

A few situations sit awkwardly against the formal definition and are worth naming directly.

A brewery that meets the volume and ownership tests but produces only flavored malt beverages — the category of canned cocktails and hard seltzers built on a malt base — is technically a brewer under TTB rules and may technically meet the Brewers Association criteria, but is not what most people picture when they hear "craft brewery." The Brewers Association has at various points clarified its expectations about product mix without changing the formal definition.

A contract brewer, who produces beer at someone else's facility, raises questions about whose volume counts and which entity is the brewer. Per 27 CFR Part 25, the TTB has clear rules about contract brewing arrangements for tax and labeling purposes, and the Brewers Association has its own rules for membership purposes, and the two do not always align neatly.

A foreign-owned brewery whose ownership is technically held by another brewer that is itself craft-sized in its home country presents a genuinely difficult case under the 25 percent rule. These cases tend to be resolved individually rather than by clean formula.

And then there is the Authentic Trappist Product designation overseen by the International Trappist Association, the Belgian Lambic traditions documented by HORAL, and the German brewing tradition operating under the Reinheitsgebot framework referenced by the Deutscher Brauer-Bund — none of which map onto the American craft definition at all. A monastery brewery in Belgium producing tens of thousands of barrels under monastic supervision is not a "craft brewer" in Brewers Association terms because the term is American and the framework is American. The brewery is something else, governed by its own rules, and the comparison only goes so far.

Why any of this matters

The practical stakes of the definition fall into three rough buckets. First, statistical: the Brewers Association's National Beer Stats and State Craft Beer Statistics use the definition as the boundary for what counts in the craft column, which means industry growth narratives are sensitive to where the line sits. Second, regulatory and political: when craft brewers lobby Congress, the definition shapes who is at the table. Third, marketing: the Independent Craft Brewer Seal exists as a labeled artifact in the marketplace and changes hands, or fails to, when ownership changes.

For a drinker standing in front of a cooler, the definition is at best a partial guide. A beer made by a 5.9-million-barrel craft brewer and a beer made by a 50,000-barrel craft brewer are both craft by the formal test and are very different objects in nearly every other respect. A beer made by a brewery acquired last year by a global conglomerate may taste exactly as it did the year before, when it still carried the seal. The definition is doing work, but it is not doing the work of judging the beer.

Which is, in the end, the right division of labor. A trade association can draw a defensible boundary around its membership. It cannot tell anyone what to drink.

Further reading

• Brewers Association, Craft Brewer Definition
• Brewers Association, Independent Craft Brewer Seal
• Beer Institute, Economic Impact and Brewers Almanac
• Alcohol and Tobacco Tax and Trade Bureau, Beer regulatory home (27 CFR Part 25)
• Cornell Legal Information Institute, 26 USC § 5051 (excise tax on beer)
• The Brewers of Europe, continental industry context