by Tom McCormick

The 61st annual conference of the Brewers Association of America convened in Seattle in Novenber with attendance up over last year, and featured an extremely talented set of speakers and content. An exceptional conference in all regards, the meeting provided a diverse group of attendees and a positive outlook heading into next year for small brewers. Although the industry faces some questions in the coming year, primarily due to an unknown economic situation, other threatening issues such as a federal tax increase and the wild malternative fad are showing signs of passing.

Kicked off with a brief welcome from Kim Jordan, Chair of the BAA and owner, co-founder of New Belgium Brewing Company, Jordan noted that attendance this year was 170, up from 110 last year in Chicago. Speaking next, Daniel Bradford, president of the BAA noted some of the thorns the industry navigated through last year such as the post 9/11 sales slowdown and an economic slump. On the rosier side however, two myths have been solidly set aside. Myth one, that the shakeout of the late 90's singled the end to the craft beer "fad" has of course proven to be false. "Absent the top three producers, this segment grew in double digits the entire 'shakeout period.' Those three producers were subject to entirely different set of dynamics," Bradford said. Myth two, that craft breweries turned the consumer onto high priced beers who then shifted their buying from craft to imports has also proven not true evidenced by 25 years of consistent growth in the craft category.

Bradford also pointed to the changing face of the beer industry as it now becomes bimodal. "Gone is the middle of our industry; yesterday's second tier brewers - the Strohs, Heilemans and Schlitzs of days gone by," explained Bradford. As global consolidation continues, a new "international light lager" industry is emerging. The Big Three, once competing primarily on a domestic front, have now expanded their influence globally, competing with other beverage giants such as Interbrew and Diageo. "At one end are the big three or big seven or big ten, depending on how wide you cast your net. Domestics and imports no longer are relevant distinctions for this group of breweries." On the other end, the small specialty, quality brands - both domestic and import - have proven their staying power. "The irony of the bi-modal environment is that the industry as a whole is as close as ever," explained Daniel. "The BAA has forged a strong relationship with the NBWA" and others. "The large brewers have political power and access to market while the smaller players bring a renewed consumer enthusiasm to beer and a local, more community oriented base." Among other agendas, the BAA will be working on bringing these two sets of strengths together to benefit the small brewers.

Keynote speaker Howard Shultz, founder of Starbucks Coffee Co. -- a vibrant, charismatic speaker (even though hit with food poisoning the night before) -- talked on how small companies with limited marketing dollars can build loyal customers through building a loyal employee base first. In the small brewing business where advertising and marketing resources are limited, Shultz suggested that content employees provide a positive "face" of a company, spreading goodwill through a one-on-one, personal level. Shultz emphasized that this technique gained Starbucks the critical growth momentum early on and the philosophy continues today. His other point was for small brewers to showcase one of their biggest marketing assets - smallness and quality - and to emphasize and realize a stewardship of its customer, employees and environment.

Other topics covered in talks and panels included the threat of state tax increases, direct shipping, the future of malternatives, trends in the on-premise business, making sales presentations to grocery chain buyers and the future of the distribution environment.

Amidst the classic Seattle mix of rain and clouds, the conference provided a stimulating mix of attendees including distributors, suppliers, brewery owners and brewery sales and marketing staff. Most of the breweries attending indicated that 2002 was a solid year and were expecting positive growth in the coming year. Many were also either completing expansion (New Belgium, Bell's, St. Louis) or planning expansion (Harpoon, Deschutes, Lost Coast). A small trade show of about seven vendors was also included.

Next year's conference will be held Nov. 7-11 in San Francisco.