Brewscape

Diction Dustup: Flying Dog Fights for Label Language

Flying Dog Brewery has officially terminated its membership with the Brewers Association (BA), citing changes to the not-for-profit industry trade organization’s Advertising and Marketing Code that are aimed at addressing “sexually explicit, lewd, or demeaning brand names, language, text, graphics, photos, video, or other images.”

Flying Dog CEO Jim Caruso told Brewbound that his company, ranked no. 32 on the BA’s list of largest domestic craft breweries, had cut ties on June 1 even though it had paid its membership dues through June 2018. He made the decision after the BA announced policy changes during the annual Craft Brewers Conference in April.

The new policy prevents brewers from using the BA’s intellectual property after winning medals at the Great American Beer Festival and World Beer Cup. It was put in place, in part, to snuff out offensive labels and to limit how those companies are able to promote their winning beers.

“This sort of policy is nothing more than a thinly veiled side door to censorship,” Caruso said. “It’s anti-free enterprise. It’s interfering with their competitors’ business. It’s thinking for consumers. Americans hate thought police, and they hate censorship.”

BA CEO Bob Pease told Brewbound that the organization was “disappointed” in Flying Dog’s decision to withdraw. However, Pease defended the policy changes as “reasonable” and “responsible.”

“The BA and its members absolutely support the First Amendment,” he wrote in an email. “Invoking the First Amendment in this instance is misplaced and inaccurate. The Brewers Association has no intention nor ability to censor any market initiatives by any brewing industry member.”

However, Caruso told Brewbound that he views the changes as “nothing more than attempting to bully and intimidate craft brewers into self censorship.”

“Self censorship is a particularly vicious tyranny of silence because people tend to over censor,” he said.

Caruso said he asked the BA to reconsider enacting the policy but realized the organization was intent on implementing the changes. He then informed BA CEO Bob Pease of Flying Dog’s decision to end its membership and followed up with a six-page letter that outlined reasons for his company’s departure.

Caruso said Pease “assured” him that the BA had no issue with any of Flying Dog brands, which include labels such as Raging Bitch as well as sexually explicit, innuendo-laden brands such as Doggie Style Pale Ale and Pearl Necklace Chesapeake Stout. However, those assurances were not merely a case of agreeing to disagree, but “a fundamental disagreement on a core principle,” Caruso stressed.

“Free enterprise doesn’t exist without freedom of expression,” he said. “If you’ve suppressed my ability to communicate my marketing message to my potential consumers, you are anti-free enterprise. It’s appalling to think that the brewers who sit on the board of directors and the BA management are interfering in the industry, trying to suppress free enterprise and suppress craft brewers from communicating their marketing message to their consumers.”

Asked about brand names that consumers may consider offensive in Flying Dog’s portfolio, Caruso replied: “The question is, ‘offensive to whom?’”

“Everybody has something subjective,” he said. “There is a free market, and it’s as much a marketplace of ideas as it is products, and over time … good products survive and bad products disappear off the shelves. That’s how it works.”

Slowdown: Craft Sales at 5 Percent Growth

Growth for U.S. craft beer companies is the slowest it’s been in 13 years, according to a recent report from the Brewers Association (BA), a trade group representing small and independent brewers.

The BA in August reported that production at small and independent craft breweries – those companies that are less than 25 percent owned by a non-craft brewer and produce fewer than 6 million barrels of “traditional” beer annually – was up just five percent midway through 2017.

“The growth pace for small and independent brewers has stabilized at a rate that still reflects progress but in a more mature market,” BA chief economist Bart Watson said via a press release.

If that five percent growth trend holds for the remainder of 2017, BA-defined craft breweries will combine to produce fewer than 25.8 million barrels of beer.

The last time growth fell below six percent was 2004, when roughly 1,400 craft beer companies made 5.8 million barrels of beer, according to BA records. By comparison, in 2016, more than 5,200 companies produced more than 24.5 million barrels of beer.

According to the BA, there were 5,562 operating breweries in the U.S. at the end of June, meaning that 906 new beer companies opened during the prior 12-month period.

“The beer world is highly competitive, and there is certainly a mixed bag in terms of performance,” Watson said. “Some breweries are continuing to grow, whereas others are having to evolve their position and nurture new opportunities to ensure they keep pace.”

Indeed, after six straight years of double-digit volume growth (2010-2015), growth in the craft beer segment has become more difficult to squeeze out.

According to a recent Nielsen report, 86 of the top 100 craft brands grew slower over the last 12 months than they did in 2015.

“Although more difficult to realize, growth still exists,” Watson contends, arguing that many craft breweries are “benefiting from on-premises and taproom sales.”

In a “members-only” blog post, Watson explained that growth for the largest craft beer companies in the U.S. was slower, which impacted the organization’s topline figures.

“Regionals, which are far more reliant on distribution, continue to grow at a slower rate than micros,” he wrote, noting that companies that produce fewer than 15,000 barrels annually reported growth of about 25 percent through June 2017.

Around this time last year, BA-defined craft brewers had grown production about eight percent through the first six months of the year. However, growth slowed in the back half of 2016 and category-wide production increased just six percent during the year.

Something that could help trends improve during the back half of 2017, however, are increased taproom sales. Watson said he believes an uptick in beer being sold directly to consumers – something the organization can’t accurately quantify at the moment – could shift industry-wide production “up a point or two,” he said.