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Craft Beer vs Domestic Beer in The United States: What's the Difference?

ventura brewing is a great craft beer brewery

You've probably heard the terms "craft beer" and "domestic beer" before, but what do they actually mean? In the United States, craft beer is defined as any beer that is made in a small, independent brewery. This means that the craft brewery cannot be owned by a larger company. Domestic beers, on the other hand, are made by large breweries that are owned by major corporations. So what's the difference between these two types of beers? Let's take a closer look!

Frankly speaking, these two terms bother me quite a bit because the word "domestic" explicitly implies that the beer is made in the United States but realistically, so are most craft brewers. Further complicating the terminology is that you have "imports" like Guinness, Fosters, Kirin Ichiban, and Bass Ale are all brewed or bottled here in the United States even though they are international icons of their home country. Are these import beers or domestics?

Even at point sale and on-premises consumption, there's no distinct line that separates these popular local breweries from larger corporately owned labels in the craft beer market. For instance, here in San Diego you have cans of "Swingin' Friar's Ale" (produced by Ballast Point) that fly in the face of the notion that a high-quality West Coast IPA has to be expensive.

Furthermore, how do you categorize a company like Ballast Point? At one point they were a shining jewel of the craft beer industry and produced high quality beers for avid beer drinkers that demanded quality ingredients and great flavor from a local brewery. Then they got purchased by Constellation Brands - one of the largest beverage companies and clearly this would shift them to being more of a "domestic beer".

Today though they are owned by Kings & Convicts Brewing Co. which is a corporation and investment group with the power to make a purchase rumored to be as much as $200 million dollars but is certified by the Brewers Association as being Independent Craft beer.

At the end of the day, it might be better to simply think of it in terms of "regular beer" vs "craft beer". I'm going to resist calling the industrial beer producers "corporate brewers" since the reality is that beer is a business and the romantic notion of a garage brewer that rises from a 5-barrel brewing system inside of a pub somewhere to a nationally recognized beverage brand takes millions of dollars more than raw brewing talent.

So, with that bit of editorializing over, let's take a look at some of the most popular beers in the United States right now and what side of the line they come down on when you consider craft beer vs domestic.

 

What Is A Craft Beer And How Is It Different From Domestic Beer?

To better understand the differences, let's take a look at some key areas ...

Size Of The Brewery

The first major difference between craft beer and domestic beer is the size of the brewery. Craft breweries are small, independently owned businesses, while domestic breweries are large corporations. This means that craft breweries have a lot more control over their product. They can experiment with new flavors and styles, and they're not beholden to shareholders or board members. Domestic breweries, on the other hand, are much more focused on mass production and efficiency.

This efficiency and need for scale often results in a paradox though in terms of how the beer is sold on premises at bars and pubs. For instance, locally in the home region of the craft beer producer it will usually be sold as draft beer and potentially for take-home in growlers or crowlers while the first steps outside of the local territory come in the form of distribution deals for canned or bottled product. However, domestic beer is almost always available on tap at bars serving draft beer.

Quality And Variety Of Ingredients

Another big difference between these two types of beer is the ingredients. Craft brewers often use higher quality ingredients than domestic brewers. They also tend to use more unique and interesting ingredients, which gives their beers more flavor and character. Domestic beers, on the other hand, are often made with cheaper ingredients, and they generally don't have as much flavor.

Other times, it isn't even so much the quality as it is the unique flavor profiles that different exotic ingredients ranging from hops to fruit flavors can created for a very niche beer drinker that is passionate about craft beer. By adding different fruit to a standard craft brew, a you can instantly create different types of beers while riding the popularity of the initial product. This has been a popular pattern across craft and craft-like beers such as Sculpin IPA for instance where they took the traditional ingredients and then added pineapple, habanero, grapefruit and others.

Retail Pricing

Finally, craft beer is typically more expensive than domestic beer. This is due to multiple factors and is true both for sales in retail / liquor stores as well as draught beer sold in a bar. The first and most obvious is that most craft breweries are small businesses and lack scale. They can't produce their beer as cheaply as the big corporations.

On the other hand, domestic beers are formulated to allow for mass production, which makes them less expensive. To reach this scale and maximize profit certain elements of the brewing process are optimized and this often means using lower-quality ingredients such as rice or even high fructose corn syrup. Others use caramel coloring to tint their brews instead of the natural malt color. Finally, they also limit the number of beers that are produced under the brand so that they can manufacture as much of it as possible vs smaller, craft production lines where they may have multiple varieties being produced simultaneously.

Alcohol Content

Finally, a higher alcohol content also often defines craft beer from domestic product. While iconic domestic beers such as Bud Lite or Miller Genuine Draft come in at less than 5%, the average alcohol content across the craft beer industry in the last decade is 5.9%, with craft IPA beers ranging from 6-7% .

In recent years though we've started to see a trend where younger drinkers are seeking low alcohol content beers but still want premium ingredients and the better taste provided by craft producers.

 

The History Of Craft Beer In The United States

The history of beer brewing in the United States goes back to a commercial brewery established by the Dutch West India Company in what is now New York City in 1632 but realistically there were certainly many small independent breweries in villages throughout the colonies.

However, beer consumption in the United States wasn't really what we think of "craft beer" today until well after prohibition. During the colonial era, for instance, beer was as much a way to kill dangerous bacteria and other elements in the water. Instead of a drink to enjoy for its mood-enhancing effects, it was consumed for health benefits and generally brewed only to 1-3% ABV. This served as an alternative to cider, rum, whiskey, and wine.

With the arrival of German and Eastern European immigrants to the United States in the 19th century, we start to see the growth of large breweries that introduced mass production, national marketing, and consistent branding that transformed the local and regional "craft" marketplace.

This was the era when Adolphus Busch transformed the American beer industry and more than a century later led to the formation of Anheuser-Busch InBev, the World's Largest Brewer.

While Americans enjoyed this cheap, refreshing, consistent American Lager for nearly a century ... as our palates began to be more sophisticated in all things culinary, we began to also search for new expressions from the beer industry. This consumer demand - and willingness to pay for a premium product - gave rise to explosive growth in the craft beer industry as an alternative to the domestic breweries that had dominated the market for decades.

Ironically, today though many of the most popular craft beers have been purchased by large breweries looking for a type of beer with rich flavor and innovative ingredients that they were otherwise not able to offer.

For instance, with AB InBev now has its own "Brewers Collective" craft beer division that includes many of the top small breweries that would once have been considered true craft breweries. This includes: 10 Barrel Brewing Co, Breckenridge Brewery, Four Peaks Brewing Co, Kona Brewing Co, Red Hook, Golden Road Brewing, Goose Island Beer Co, and many more.

AB InBev isn't alone here in this desire to snap up craft beer breweries and manufacturer them at scale. Some brewers like MillerCoors created "stealth brands" like Blue Moon that was marketed independently as "craft beer" but in fact was produced by the industrial beer producer at large scale instead of in the smaller batches that would define the space otherwise.

Despite this, there are still quite a few large-scale craft brews being produced across the country. Some of the better known names include: Yuengling, Boston Beer Co / Sam Adams, Sierra Nevada Brewing, Bell's Brewery. Though acquisitions continue to change this as Stone Brewing was purchased this summer by Sapporo.

While large industrial breweries are using the term "craft brew" it is important to recognize that the Brewers Association maintains an official definition of craft brewer that would exclude these brands due to the percentage ownership stake by Anheuser-Busch InBev.

Instead, the Brewers Association defines American craft brewers as "small, independent, and traditional", with 'small' defined as an "annual production of 6 million barrels of beer or less". This was a limit changed in 2011 from 2 million to 6 million to ensure the ongoing inclusion of Boston Beer Company - Samuel Adams, "independent" defined as at least 75% owned or controlled by a craft brewer, and "traditional" defined as at least 50% of its volume being all-malt beer.

In the United States we see a sales volume of 187 million barrels of beer, with 25 million of that being crat beer. As you can see, despite popular craft breweries being heralded as rock stars and the popularity of craft beer growing at 7.9% vs 1% in 2021, traditional domestic beers are still the dominant player. (NOTE: 1 BBL / Barrel is 31 gallons)

As you can see, the history of craft beer vs domestic beer brewing in the United States continues to evolve and is never short of political maneuvering and changing definitions to protect the concept of craft beer.

 

Craft Brewing vs Domestic Beer Production Is A Cycle

One thing that I find incredibly fascinating about the cycle of craft breweries becoming popular enough to get bought out is that it often creates a cycle that leads to further innovation and a vibrant marketplace.

Sadly this also means that craft beer titans will sometimes fade away due to mismanagement by corporate overlords and bad decision-making when financial priorities are placed in front of consumer demands - I'm looking at you Green Flash!

However, what I see across the country today is that as big breweries get bought up, often times you find people with incredible amounts of talent leave and start their own smaller breweries where innovation can begin again.

So, at the end of the day, who actually knows where the line is between craft beer vs a domestic beer but maybe it doesn't matter.

I know that friends lost respect for me and my love of 10 Barrel Brewing (owned by Anheuser Busch). However, my friends who worked there enjoyed almost all of the freedoms that they would have had as independent craft brewers and most importantly their beer was fantastic.

As a wise man once told me - drink what you like ... as long as you are drinking mine.

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