However, with growing profitability expected for brewers operating in the segment, a number of challenges are also expected concerning increasing manufacturing costs and maintaining brand reputation. These emerging "real ale brands", labelled as craft beers within the US market, are often all-malt beers designed to more specific taste requirements than a more mainstream brand. High growth Between 2004 and 2006, the market for these emerging brands in the US, often seen as higher quality independent beer alternatives, grew by 31.5 per cent, according to the US-based Brewers Association (BA). The trade group added that it expected further double-digit increases for the full year 2007 and beyond. Julia Herz, a BA spokesperson, told BeverageDaily.com that the current growth in popularity of the segment was tied not just to the American consumer trading up for more expensive "fuller flavour" beer, but also to a change in the US brewing culture. "We have seen tastes advancing over the last twenty years or so," she stated. "We have a situation where the big brewers are now paying attention and learning from their smaller counterparts." As well as the supposed taste benefits from consuming craft beers, Herz claimed that consumers also enjoy a feel good sensation linked to taking pride in drinking a local brew. "What feels good to a consumer, tastes better to them as well," she stated. "The average American lives within 10 miles of a brewery, and they can support local business through the product." Under the BA's definition on which its statistics are based, craft brewers are manufacturers that produce no more than 200m barrels of their products a year, and must have no more than 25 per cent ownership from larger non-craft manufacturers. Despite this definition, a number of leading brewers are already involved in the segment through both acquisitions and partnerships, which in 2006 accounted for about five per cent of total beer sales in the US, the BA said. Adapting to the market While Herz stressed that retaining authenticity was vitally important to craft brewing, she added that there had been mutual benefits to both main stream and craft beers from expansion of the segment. She pointed to the aftermath of a previous explosion in craft brewing during the mid 1990s. Herz said that a number of players survived a crash, by emulating to an extent the financial practices and expansion strategies of larger players. Anheuser Busch Keith Levy, vice president of brand management for Budweiser maker Anheuser Busch, said that while the brewer was looking to capitalise on recent growth in craft beers, the segment was not a new market for the company. "Anheuser Busch's brew masters have been crafting specialty lagers and ales in the world's most intricate beer styles for more than 130 years such as our all-malt Michelob, Michelob Light and Michelob AmberBock craft brands," he stated. "In addition to brewing our own specialty beers, our alliances with the regional breweries help us reach a wide range of craft beer drinkers." Levy claimed that rather than damaging the smaller craft beer labels, the presence of groups like Anheuser Busch had long been aiding smaller brewers. "There is room for many beers and brewers in this category," he stated. "In fact, competitors have acknowledged our involvement in the craft beer segment is helping build awareness for craft beers overall." SABMiller Isabel Unsworth, business media relations manager with multinational SABMiller, told BeverageDaily.com that the international brewer had also been in the market for some time. She added that, with the brewer increasingly focused on expanding its beer portfolio for a number of tastes and markets round the world, the craft segment was one focus of this growth. "It is true that craft beers are gaining market share in the US now, and Miller is playing an increasing role in this segment, with strong double-digit growth," Unsworth stated. She said that the company had therefore begun to expand the presence of its own craft labels through the geographic roll out of its Leinenkugel's brand across the US, as well as the extension of its Henry Weinhard's range While the group aims to continue enacting this strategy, Unsworth said that the company was being more selective with how it promotes its craft beers to not jeopardise the independent nature of the segment. "The challenge is to ensure careful brand-building and marketing to target consumers as well as tailored selling, merchandising and events that are more finely targeted than the biggest brands in the market, such as Miller Lite," she stated. Future challenges Despite the optimism of both large and small-scale brewers in the country regarding craft beer, growing popularity of the segment is not expected to be without its problems for beer makers, according to consumer analyst Euromonitor. "Hops shortages could damage craft brewers more than their industrial rivals as they simply do not have the means to hedge against rising prices," stated Euromonitor analyst Catherine Mars. "Additionally, as the category becomes more popular craft brewers face capacity problems: the costs and risks associated with adding extra capacity are high for small players." Euromonitor added that besides increasing competition in the market, there was also a danger that the popular view of craft beer as an independent alternative to larger brands was under threat from major brewers, both in terms of authenticity and shelf space. "Despite the fact that global brewers are at pains to hide their association with these craft-style brands, thus retaining their independent image, the competitive landscape is changing and as a result craft brewers are under threat," Mars stated.