NAGBW – Distribution

A week or more back, the NAGBW broached the three-tiered topic of distribution. The speakers were Kimberly Clements of Pints LLC and Lester Jones of the National Beer Wholesalers Association.

Here are my nuggets of wisdom from the Q&A…

  • California is a whole market on its own
  • lots of merger and acquisitions, but the consolidation game isn’t over and despite barriers to entry, smaller, boutique outfits are not to be written off
  • the role of the distributor is essentially the same though the world around is different
  • where beer is being distributed has grown
  • coverage of distributors seems more negative, though most days it works just fine in the background
  • you have to take what the market gives you, if cans get too expensive, then draft may grow
  • on premise and off premise lines are blurring when you can drink a beer at a grocery store

Sweeter California

SweetWater Brewing Company recently announced expansion all across California. The march west includes the opening of SweetWater Colorado in Fort Collins plus the acquisition of passed around San Diego beer brands, Alpine Beer Company and Green Flash Brewing Company.

The Georgia based brewery is the nation’s 11th largest craft brewer and is turning 25th this year, both impressive numbers but I don’t think if you asked California beer fans to name five out of state breweries they would like to see here that SweetWater would make the list except for Marvel movie crew members who shuttle from L.A. to Atlanta.

DuClaw and Who Else?

I wrote a piece for the January edition of Beer Paper LA about a distribution company called Guest Brewer that brings in beers from breweries for short bursts of product and time and it got me to thinking about what other breweries that I think this would work well for and also selfishly, the ones that I want to try.

So far parts of California have seen Surly from Minnesota, Ska from Colorado, Goodlife from Oregon, and DuClaw from Maryland. Captain Lawrence from New York, and Evil Genius from Pennsylvania will also make brief apperances. I haven’t seen any of these yet but they all would be welcome in my ‘fridge.

I would love to see a few Oregon breweries head our way like Upright and their Saisons and wild beers. Cloudburst from Seattle is on my list. Bierstadt Lagerhaus from Colorado and more Fonta Flora from the East Coast would be lovely too.

Either way, operations like Guest Brewer are filling a need that was really only available to traders up until now.

Dusty in L.A.

More NorCal beer is headed to us in Los Angeles as Dust Bowl Brewing Co. will make the trek from Turlock south with both their standard beers as well as some special beers.

Dust Bowl has two Turlock taprooms, the Brewery Taproom and the Downtown Taproom. They are also in the process of adding a third taproom in Monterey, California in early 2019.

A New Version of Distribution

Yesterday, I handed out a reading assignment. Today, I offer up some ideas to fix independent beer distribution (or at least improve it a little).

1. No More 1 Way Street
In too many brewery and distributor agreements, the brewery is at a vast disadvantage. In many states, they can only opt out of a distributor if it can prove that the distributor is a hot trash mess. That needs to change. Any agreement, anywhere, needs to have specific deliverables negotiated by both sides. No laundry list but, for example, four key points (two for both sides) that would allow an amicable split with no payment from either side. Say, distributor must not have more than a certain number of craft breweries or will patrol shelves for old IPA’s. This would make distributors who let brands languish stay on their toes but also slow down distributor hopping.

2. More Interlocked Companies
It would be great to see Distributor A in Santa Barbara have an agreement with Distributor B in Los Angeles to bucket brigade beer from one locale to another via a trusted partner. This may be pie in the capitalist sky but if there were a chain of distributors up and down the state that were coordinated, the flow of California beer might rival the big players.

3. Get Into the Big Box Stores
Maybe there could be a coordinated, #independent section in your local Target or Ralphs. This might be even more of a reach than goal # 2 but instead of fighting for shelf space mano e mano, a push that has one or two beers for a month and then switches to two new ones focusing on local might be a play that could work.

What will come to pass might not be as rosy but hopefully the bottles and cans can keep on moving from brewery to store.

Long Read on Distro

The biggest infrastructure issue facing brewery growth is getting the beer to both the OG customer that regulary shows up at your taproom to fickle beer geeks to restaurant patrons AND to those new to beer.

Doing that requires knowing how your beer is treated once it leaves not only the brewery, but how it is treated at your distrobutor, then how it is taken care of at the retailer. Oh and then you have to go about getting back any old beer that will reflect poorly on your brand.

A maze of laws has certainly hampered distribution. SABInBev through their large network has hampered anything but their distribution. The haircut taken by a distributor also plays into the slow down.

All that is prelude to the piece by Collin McDonnell of HenHouse Brewing that appeared between 900 kajillion “Fervent Few” opinions on Good Beer Hunting. It is a long read, but one you should take the time on.

Tomorrow, I post on what I think new forms of distribution could look like.

Karl is Distributing

Karl Strauss has decided to add another wrinkle to their company. Distributing. They are starting slow with two San Diego breweries, Benchmark and Black Plague for now though if it works they might add a brewery that starts with the letter C.

You can read more about it over at the West Coaster SD.

Fined, Not Dandy

Cheating is usually not spectacular. It is usually nicked at the edges. Slowly rolling through a stop sign in a quiet neighborhood and not speeding through a red light on a busy boulevard.

But you can get dinged by the authorities for either. Especially if you keep going back to the well. Which is what happened here in SoCal recently as Anheuser-Busch, LLC wholesalers settled a case for $400K (plus all the lawyering they had to pay for). In addition, Straub Distributing Company who distributes AB products in Orange County settled for $10K

They and numerous retailers were flagged for “Unfair Business Practices”. The distributors for paying for items and the retailers for accepting said items for either no cost or only partial cost.

The investigation started back in 2015 by the ABC’s Trade Enforcement Unit and resulted in one of the “largest penalty fines imposed in the history of ABC…” They will also have to install training programs for employees and anyone who has been to one of those, know what a time suck they can be as well as costly.

An additional fun fact is that, “In exchange for suspension of $200,000 of the fine, Anheuser-Busch, LLC agreed to extend the conditions of discipline to all Anheuser-Busch, LLC wholesalers in the state.” Why AB would want the $200K and make the disciplinary action statewide? Pre-empting further legal action? They need whatever amount of that $200K to pay the lawyers?

All I know is that this company is better at skirting rules and avoiding punishment. Much better than beer making for sure.

Traveling to Oregon

What happens when a Portland native works the beer industry in SoCal and then moves back to Portland?

Well, in the case of Robby Roda, who spent time at both Monkish Brewing and Beachwood BBQ and Brewing, you open up a distribution company in Portland to bring select beers from L.A. to the NW.
And to make the L.A. connection tighter, name it after the El Segundo Brewing special Day One IPA releases. Day One Distribution has scheduled to get El Segundo Brewing onto Portland taps already with Monkish Brewing, Smog City Brewing and Phantom Carriage planned to roll out too.

Day One will begin weighted to California but will add other breweries in a slow and small fashion. In a move that seems counterintuitive to traditional distribution the amount of beer will be kept purposefully small and will make the effort to sell out within thirty days of delivery.

That is a market that could work if kept small and tightly controlled. Might even be a template for what future distribution can be.

You can read more about the new distributor at The New School. I hope to hear how our beers are received up north.

The Firkin for March 2016

I am not a worrier by nature. Or maybe, I am just saving my worry for the appropriate time. Which is why when the Doom & Gloom club proclaims a craft beer bubble, I usually don’t run out and man the barricades.

Dire warnings have been called when:
– Any brewery closes
– Any brewery gets bought
– The brewery count hits 2K, 3K or 4K
– Some new alcoholic beverage trend explodes (i.e. Hard Soda)
– Someone has a bad beer

What causes me concern about the craft beer industry (though not in the “world is ending” tone that many pundits use) are stories like THIS about pumpkin beer.

The reason why is that it touches on the very sore spot of distribution and of beer freshness but also chasing trends instead of creating them.

Pumpkin beers not selling is not surprising to me. There is a glut of offerings and they hit shelves out of season which plays against the image of craft beer being local and tied to the seasons. To me it looks corporate and marketing driven in a way that Guinness being pushed in February for St. Patrick’s Day doesn’t.

But what it really does is point a neon sign at the shelf and tell consumers that the beer is old in a way that an IPA that is even older (and shouldn’t be sold) can’t do. It tells a consumer that the beer wasn’t popular enough to sell and thusly might be bad. And if one craft beer is bad then how many more? This issue is not contained to pumpkin beers. I have noticed many beer selling outlets with old beer on the shelf. A Whole Foods with Rogue’s Santa’s Private Reserve in March or Vendome Wine & Spirits with a shelf of discounted beers. Reliable and beer friendly places both but holding onto beers that should not be sold.

Breweries, even small ones, can’t be expected to police what happens to the kegs, bottles and cans once they are loaded onto a truck. I certainly don’t want someone pawing through my ‘fridge to make sure that I have drunk their beer at the right time. All I can reasonably ask the brewery is to stamp the bottling date on the bottle or can where I can find it.

Who can make a difference are the distributors and retailers who should be working with the boots on the ground to keep the beers rotating. That isn’t hard for some parts of the shelf but is for others. Pumpkin beers should be off the shelves in December and holiday beers off the shelves in February. IPA’s and other beers that depend on freshness should be marked somehow to make sure that they don’t gather dust.

That type of work will be harder when distribution companies are under pressure from Industrial Water Lager corporate HQ or if there is no craft distribution network. That infrastructure is needed. Think of it as a bridge that needs to be maintained. On one side is the brewery and other side are consumers. If the bridge has a toll (or troll) or is shut down for maintenance, how does the beer get to us?

What breweries can do in these times is twofold: First, is to not pile on. (Grapefruit IPA’s anyone?) Second, is to cement the fact that breweries are local and nimble. It’s one thing to have labels approved well in advance but if you are brewing pumpkin beers in May, you should be asking yourself questions.

Next Pumpkin Ale season will be an interesting time to watch the beer shelves.