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of the term “craft.” Many small businesses would welcome the success of not only building a successful business, but to be able to one day have the option to sell parts of it to create further growth. Nobody should dish out judgement against a craft brewery for doing just that. What this highlighted, though, was that there was also a need to protect the integrity of what “small and independent” or the term “craft brewery” meant to the consumer. This complication is further compounded by the USA’s particular method of selling alcohol, known as the “three-tier system”. Originally brought in to combat the “tied house” businesses of the era around the end of the first world war, a “tied house” essentially meant a brewery that was linked to a retailer. In practice, this meant the brewery would help set up the retailer and in exchange would receive exclusivity from the retailer, which often prevented the retailer from becoming profitable. This, in turn led to some businesses turning into “houses of ill repute” to stay profitable, offering other services that was often illegal. US Prohibition brought an end to this system and when prohibition laws ended, the government introduced a “three- tier” system to block the operation of tied houses. The system is made up of the producer, the distributor and the retailer (bars and restaurants.) The legislation is in place to separate the brewery from the retailer by introducing a distributor in the middle. But what bearing did this have on the Goose Island buy-out? Bob explains, “… with AB as the largest supplier, [it] has outsized influence at the middle-tier; at the distributors.” And of course, that means that in a free market, the largest supplier gets the most attention and thus essentially Goose Island was suddenly able to leapfrog their products into more retailers; which clearly distinguished them from independently owned craft breweries. “How we responded,” Bob continues, “was the creation of the small and independent seal.” He describes this as the fourth seminal moment, due to the success of the “seal” that was launched in 2017. The Brewers Association (at time of writing) has just over 6,000 breweries that have signed up to use the seal. This is only open to craft breweries that meets the Brewer’s Association’s definition of an independent craft brewery and is aimed at giving the consumer a choice to support small and independent businesses. With all this context, I sat down with Bob to find out a bit more. Bob ended up in beer after spending 4 years working at a ski resort in Boulder Colorado. He holds a Political Science degree, which is why he eventually had a choice tomake: tomove into this field towardsWashington, DC, or stay in Boulder. He applied for the position of Customer Service Manager at the Homebrewers Association (or the Association of Brewers, as it was also known) in 1993. He moved up the ranks to Operations Director and in 1999 was promoted to Vice President of the Homebrewers Association. There had been a decline in membership and it was Bob’s job to help refocus certain elements of the association. They set about downsizing and sharing jobs and relooked at how the Great American Beer Festival could work better as a fund-raiser for the organisation. At the time it was contracted out and it had become clear that it needed to be run from inside the organisation. He promoted Nancy Johnson from her role as the Event Registrar to Event Director, with the aim of bringing events back into the direct operations of the association. Bob eventually became Chief Operating Officer at the Brewers Association (post merge in 2005) and in 2014, he became CEO of the Brewers Association. Another long-term objective of the Homebrewers Association and then the Brewers Association, was to work to get homebrewing legal in all 50 states. Surprisingly, the last states to legalize homebrewing were Alabama and Mississippi as late as 2013. But the big question everyone wants to know is how they managed to convince politicians to reduce excise tax to craft breweries. What did they do? Bob explains: “We used to say there’s no red states, no blue states, only beer states.” They led a simple strategy over 12 years. He says it was particularly effective to remind the senators and governors that the beer industry was “… wonderfully inefficient and [we] threw people at the problem.” They doubled-down on the fact that the majority of craft breweries were small businesses that would use tax cuts to reinvest in their businesses. They supplied economic studies to government and over the course of a decade led what they named the Hill Climb,“…which was to take hundreds of brewery owners, and schedule appointments for them with their local representatives in Washington, DC.” The result of this was cross-aisle awareness and support for the cause, from representatives that were and were not likely to drink beer (or any alcohol). There was a clear focus on growing the economic potential of the industry that was heavy on employment and low on automation. The result was incredible. The US government not only ceased tax escalations, but went as far as to cut them by half for smaller craft breweries with the implementation of the Craft Beverage Modernization and Tax Reform Act in 2018. That meant that breweries that produce less than 60 000 barrels (roughly 7 040 865.95 litres) would pay less than half the excise than a brewery producing more than what is essentially over 7 million litres a year. The legacy of the work done by Bob and his team will forever be linked to this massive victory for small breweries. In 2015 and 2020, he was named “Beer Person of the year”, while also being recognised as one of the top lobbyists in Washington, DC, by “The Hill.com.” Hopefully the Beer and Craft Beer Associations of South Africa can take a leaf out of the Brewer’s Association’s playbook and win a similar victory for the South African craft breweries and help unlock the industry’s economic potential. 22 | Spring 2024 | ontapmag.co.za