Crafty new beer app warns of big-brewer ownership

March 5, 2014: 10:35 AM ET

A new app alerts drinkers to whether a certain beer can legitimately be called "craft" -- and is the latest sign of how heated the battle over that term has become.

The new app Craft Check.

The new app Craft Check.

FORTUNE -- When Anheuser-Busch InBev, the world's largest beer giant, announced last month that it would acquire Blue Point Brewing Company, previously Long Island's oldest independent brewer, vocal craft beer lovers took to Twitter to broadcast their angst.

"Well, there goes that local pride," said @brndnlzzA. "Bleh. Cross Blue Point off the beer menu," said @rickjnewman. And @jpduff was most blunt: "RIP Toasted Lager." The gist: Once an independent brewer sells to one of the big guys (think AB InBev (BUD), MillerCoors, and Heineken), some drinkers will never try it again, no matter what.

To cater to this growing group of craft obsessives, Barrett Garese and Rudy Jahchan have launched Craft Check, a 99-cent mobile app with a simple (to some, perhaps noble) purpose: to let you know whether that beer you're considering is indeed a true craft. Garese, a former digital entertainment executive turned entrepreneur, got the idea while standing in his local beer store in Los Angeles, where he found himself wondering "which beers were craft and which were just marketed as craft." He tells Fortune he was surprised he couldn't easily find an app for such a question. (Information about a brewer's corporate ownership is available online but can often require a bit of hunting.) Necessity being the mother of invention, he and Jahchan built one, and it hit the app store in late December last year. (Garese is quick to acknowledge that Craft Check is merely a side project, something he produced for like-minded craft enthusiasts and not to become the next WhatsApp: "This is never going to sell for billions of dollars.")

Craft Check's design is simple, and while Garese and Jahchan still have work to do beefing up the database, it's quite effective at answering one binary question: Craft or not craft? Scan the barcode from a bottle, can, or packaging, and you'll get your answer. If it's deemed to be craft, the app makes it seem as though you've personally done something worth commending: "Congratulations! What you're looking at is a genuine craft brew from a genuine craft brewery. This is as good as it gets (when it comes to beer)." Scan, say, a Leinenkugel (owned by MillerCoors) and the app warns you with some rather harsh language: "Careful! What you've got there is an imitation craft brew from one of the big guys. It's got all the soul of a spreadsheet. Crafty, but not Craft."

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It's a simple idea, but it comes at a critical time. As the once-niche segment has drawn more interest from bigger players, definitions of "craft" have become a serious bone of contention in the beer business. Craft Check uses the official definition issued by the Brewers Association, a Boulder-based trade group representing craft brewers, which defines a craft brewer as "small, independent, and traditional." Each of those three adjectives is far from simple: "small" means a brewer puts out no more than 6 million barrels per year, comprising no more than 3% of U.S. annual sales; "independent" means it is less than 25% owned by a non-craft brewer; and "traditional" basically means more than half of what a brewer produces is beer. (Flavored malt beverages, like Smirnoff Ice, are not considered beers.)

The Brewers Association says it saw a growing number of non-craft brewers masquerading as craft (for example, using words like "crafted" on their labels). In late 2012 it put out an official press release on the issue, titled "Craft vs. Crafty," igniting an industry kerfuffle that keeps heating up. "Large brewers have been seeking entry into the craft beer marketplace," the statement read. "Many non-standard, non-light 'crafty' beers found in the marketplace today are not labeled as products of large breweries." The statement specifically called out Blue Moon (owned by MillerCoors) and Shock Top (AB InBev).

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Along with the statement, the Brewers Association included a table listing "domestic non-craft brewers." To some of the brewers named, it amounted to a hit list. August Schell Brewing, in Minnesota, produces fewer than than 200,000 barrels per year and is independently owned, but landed on the non-craft list due to its use of certain "adjuncts," unmalted grains like corn or rice that supplement the main "mash" (like malted barley) in making lager, and that critics say dilute the quality. This was because at that time, the Brewers Association's definition of "traditional" excluded brewers that used adjuncts unless they were using them "to enhance rather than lighten flavor." Schell's brewmaster Jace Marti publicly issued a heated response to the B.A., questioning its rigid definition and pointing out that Schell had been using corn for 150 years as part of its natural flavor. Just last week, at a board meeting, the B.A. eliminated the adjunct requirement in its definition of "traditional," and also made changes to its own mission statement. The reasoning for the change almost seems like an overt agreement with what Marti argued in 2012: "The revised definition recognizes that adjunct brewing is quite literally traditional, as brewers have long brewed with what has been available to them," the press release states.

Is laying down a gauntlet on what is and is not "craft" really so important? Julia Herz, craft beer program director at the Brewers Association, thinks so: "We say the beer lover has a right to know, when they have a beer in their hand, if they're drinking a beer from a large global brewery," she says. "There is a difference in terms of what small brewers go through vs. what large, global brewers go through."

That may be. But Chris Thorne, vice president of communications for the Washington, D.C.-based Beer Institute, a beer industry lobbying group, disputes the idea that big brewers are using misleading labeling. "They're absolutely not, and it's an outrageous claim to begin with," he says. (The makers of Craft Check appear to disagree.) "100 years ago, every brewer was a craft brewer. So this discussion of craft vs. crafty is really an effort for that small segment to discount a larger part of the business. At the end of the day, consumers don't care about these industry definitions." The battle to define craft, Thorne says, shows that "cliques are developing within the industry," and "that doesn't help anybody."

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Indeed, the only important question may be: Does it matter to the customer? Craft beer still represents a minor market share (sales were 6.5% of the overall U.S. market by volume in 2012, the most recent data available). But the pricing is higher, and the segment is on a tear: In 1978 there were less than 100 brewing locations in the U.S.; today there are more than 2,700, and the Brewers Association now documents 142 different "beer styles" (from American-syle Black Ale to German-style Doppelbock to Smoke Porter). And yet even given those numbers, close to 80% of overall beer is still light American lager from large, global brewing giants.

For Craft Check cofounder Garese, it doesn't have to be so complicated. "I don't exclusively drink craft," he says. "But for me, if it comes down to two beers and I don't know either of them, and one is craft and one is not, I'll pick the craft beer every time. There is a part of my personality that is very, 'Damn the man, help the little guys.'" Brewing giants like AB InBev will have to hope that "damn the man" remains the rallying cry only for a minor portion of beer-swillers.

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