June 27 (Bloomberg) -- The Brewers Association, the main trade group for U.S. beer-makers, announced June 20 that the number of American breweries had surpassed 2,500, more than at any time since at least the 1880s and more than in any other nation.
The vast majority (more than 2,300) are craft breweries, independently owned companies that make beer on a small scale using traditional ingredients. There are also, according to the association, as many as 1,559 breweries in the planning stages, most of them craft.
This growth shouldn’t be surprising, given that craft beer’s share of the $99 billion U.S. beer market increased to $10.2 billion in 2012, from $8.7 billion in 2011.
European beer was once considered the world’s best. Brewers there didn’t produce in the same volume as Anheuser-Busch, but their products were regarded as higher quality. That perception began to change in the 1990s, as U.S. craft beer makers racked up successive years of double-digit growth.
By the new century, many critics recognized U.S. beer for its excellence. American brewers had redefined age-old styles and created new ones; and their consumers were increasingly savvy.
There were four important milestones in the development of the industry.
Anchor: In 1965, the home-appliance heir Fritz Maytag saved San Francisco’s Anchor Brewing Co., the last craft brewery in the U.S. Anchor’s beer was pretty bad, and so Maytag decided to make it better. In so doing, he set benchmarks for future makers of craft beer.
First, Maytag decided that his brewery would remain small and wouldn’t follow the trend in American brewing of increasing volume and expanding distribution. Second, it would remain independently owned, no matter how much money it lost (and it lost plenty, well into the 1970s).
Most importantly, Maytag used only traditional ingredients. No more adjuncts such as corn syrup or rice -- only hops, malted grains such as barley, and yeast and water.
New Albion: In late 1966, Jack McAuliffe, a U.S. Navy mechanic stationed in Scotland, visited a Boots drug store in Glasgow. Hoping to recreate the rich European beers he knew he wouldn’t be able to get in the U.S., he bought a home-brewing kit.
Back at his stone cottage in nearby Dunoon, McAuliffe brewed a pale ale over a coal-burning stove. It was a hit with fellow service members and with the Scottish locals.
Ten years later, McAuliffe started New Albion, the first new craft brewery in the U.S. since Prohibition, in Sonoma County, California. A lack of funds for expansion caused the company to collapse in 1983, but it inspired a generation of homebrewers to start commercial operations.
Cascade Hop: Typically, hops are added at two points during brewing: the earlier “bittering” stage and the later “aromatic” stage. Until the early 1970s, no U.S.-grown hops were considered good enough to be added during the aromatic stage, when a beer acquires its distinctive aroma.
In 1972, Coors tested the Cascade hop, which had been developed by an Agriculture Department farm in Corvallis, Oregon. It eventually came to the attention of Maytag at Anchor, which was preparing a brew called Liberty Ale, in honor of the 200th anniversary of Paul Revere’s 1775 ride. It would be the bitterest domestic beer.
The Cascade-infused Liberty Ale spawned imitators (including the modern India pale ale, the most popular style in American craft beer) but it also fostered a new, experimental way of thinking about brewing.
Tax Breaks: Since World War II, the industry had been lobbying the federal government to cut taxes for smaller brewers. They had little success until Henry King, the head of the now-defunct U.S. Brewers’ Association, took up the cause in the mid-1970s.
King cajoled contributions from big-time brewers and leveraged the political muscle of manufacturing unions. In September 1976, he got Congress to cut excise taxes on beer by more than 20 percent, from $9 a barrel to $7 on the first 60,000 barrels a brewery made -- so long as the brewery didn’t make more than 2 million barrels a year.
When the tax cut went into effect, there was only one craft brewery: Anchor. The number grew exponentially in subsequent decades.
New Amsterdam: In 1981, Matthew Reich, a top executive at Hearst Magazines, flew to Boston to meet with Joseph Owades, a leading consultant in the brewing industry. Reich wanted to start the first craft brewery in New York City; Owades told him the cost would be prohibitive.
Instead, Owades suggested contract brewing: Reich would rent the equipment and subcontract the labor at one of many under-capacity regional breweries that were being squeezed by national giants such as Anheuser-Busch.
Reich’s decision to contract-brew New Amsterdam through the F.X. Matt Brewing Co. in Utica, New York, inspired imitators such Jim Koch and Pete Slosberg, the creators of Samuel Adams and Pete’s Wicked.
The craft beer movement also has had some setbacks along the way. From 1996 to 2000, almost 200 craft operations, or around one-third of all small brewers, closed. The main reason: too much beer of dubious quality being produced by too many uncommitted new entrants to the market.
That isn’t likely to happen with the current craft-beer boom. This time around, much more stringent quality controls are in place: modern breweries, equipped with top-shelf technology and staffed by highly trained brewmasters.
(Tom Acitelli is the author of “The Audacity of Hops: The History of America’s Craft Beer Revolution.”)
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