A little-noticed bill that slipped through the Legislature this year is sending a chill through the state's small but growing hard cider industry.
The bill, known as AB 779, makes a seemingly minor technical change to the state's alcohol licensing laws. It allows large beer brewers, those producing more than 1.9 million gallons per year, to produce and sell cider at their facilities without obtaining a separate license.
Normally beer and cider makers require separate licenses, since cider is considered a form of wine under both state and federal law.
Cider makers say it's too early to determine whether the new law poses a threat to their business, but they expressed outrage about discovering the rules had been changed to favor another industry breaking into the market.
"When I saw it, I thought 'Oh, great now can I make beer?'" said Ellen Cavalli, co-owner of Tilted Shed, a small cidery in Sebastopol. The bill does not, in fact, allow cider makers to make beer.
"I don't see how this is fair," she said. "The competitive disadvantage is just so unfair."
The law could also accelerate a worrisome trend for cider producers, at least five of which are headquartered in apple-rich Sonoma County. The large beer companies, including Anheuser-Busch, are moving strongly into their market, which is one of the fastest-growing segments of the alcoholic beverage industry.
"Cider is hot as a pistol right now and everybody and his brother wants to get in," said Jeffrey House, head of Sebastopol-based California Cider Company, maker of the Ace Cider line, one of the largest independently owned cideries in the country.
Cider makers say they were completely unaware of the bill until The Press Democrat called to inquire about it, despite the fact that it passed the state Senate and Assembly with no opposition and was signed by the governor on Sept. 27.
Mike Faul, owner of Sunnyvale-based Red Branch Cider, said he worries that well-financed breweries will use their marketing muscle to dominate the emerging cider market and limit the ability of craft producers to find space on store shelves or bar taps.
"Most cider producers have been working at this for 10, 15, 20 years in order to get people to re-understand what cider is, what craft hard cider is," he said. Big brewers "are going to come out and saturate the market with junk."
Cider was once a major portion of the alcohol consumed by Americans, but after Prohibition, the cider market became nearly extinct until a small-scale artisan revival in recent decades. It remains a small market, with the top 20 cider companies posting only about $105 million in sales in 2012, according to a survey by Beverage World magazine, but growth was explosive, up 81 percent from 2011.
Major companies such as Anheuser-Busch InBev, Heineken and MillerCoors have moved into the market with brands such as Strongbow, Fox Barrel and Crispin. Boston Beer Company, maker of Sam Adams beer, jumped in two years ago with the Angry Orchard brand and leapt to number two on the Beverage World list in just a year, with almost $25 million in sales.
The new bill was suggested by Anheuser-Busch, which wants to use its plant in Southern California to make cider, particularly the new "Cidre," a cider associated with the Stella Artois beer brand.