How do you work with beer stores?

[PanhandleBrew]

Hello there! After a year of so of research and planning to open a brewpub I've recently decided to go another route and open a beer store with tasting bar. Basically similar concept to City Beer Store in San Francisco, if you've ever heard of it. Anyhow, during the planning of the brewpub I never thought much about distribution because I had no interest in distributing...so anyhow now here I am trying to get this beer store going and I know very little about how brewers work with retailers. I have not been able to find much info from the retailers point of view on this, so hoping some of you will be willing to share your experiences. First of all, here is my concept:

The beer store will stock about 300 bottled/canned beers to start with; some chilled and some on the shelf. Customers will be able pick their own mix and match six pack or case. We'll also have a bar with up to 10 constantly rotating taps (served out of two five-keg kegerators). All beer will be served in appropriate glassware, and we will do growler fills. We want to really focus on the smaller breweries with an excellent variety for the serious beer connoisseur who's seen it all (and have them be shocked at all the beers we have that they haven't tried yet). We'll have light snacks; several variations of a ploughman's platter to aid in beer tasting.

Here are my questions:

-Do you have minimums for bottles/cans/kegs? (and what are they)
-Do you provide tap handles or does the retailer pay for those?
-Do you provide or sell glassware? (we want to be able to sell growlers and glassware from all different breweries so people can collect them)
-If you self distribute and you are not local to a retailer who wants your beer, do you ship? How does that work if any of you do this?
-If you go through a distributor, do you still interact with retailers who desire more product knowledge or who want to establish a relationship with you for branded merchandise?
-Any experiences of relationships you have with retailers you would like to share?
-Anything else I need to consider?

Thank you so much--this forum is AWESOME! Thanks for reading this and I look forward to hopefully doing business with some of you soon!

[william.heinric]

Well, here are my answers to your questions (keep in mind that I've done retail/wholesale work in Iowa, your local laws are probably different).

Minimums: There are no minimums, and it is illegal for a distributor to charge different prices to different retailers. This means that if you are out in the boonies, you can order a single case and they'll have to come deliver it to you. There are, however, quantity price breaks to consider. You may pay $30 for case 1, but pay $28/cs for 5 cases, and $25/cs for 25 cases (the distributor who carries Sierra in IA has a structure that resembles this). Keep in mind that you really must balance freshness with price and margin in order to be taken seriously as a retailer.

Tap handles: It is a privilege for a distributor to sell you beer. Therefore, they should be responsible for any POS materials, from tap handles (standard) to glassware (this may be tricky in ID; it is a pain to get glassware to bars in IA) and signs and junk and stuff. Also, if you're taking weird beers that are very expensive, your distributor should be kissing your ass from here to next June. Enjoy it; its a fun thing.

Providing and selling glassware: Yes. Absolutely. I wouldn't go so far as the Belgians do and have a logo-bearing glass for every beer you could possibly find, but find the more popular glasses and styles and make sure you teach people how to properly CLEAN THEM. Most people don't know how to get a glass beer clean (for example: my boss wasting tasting some porter out of a BBT using the bar's glassware instead of the brewery's glassware, and he nearly had a panic attack because the beer tasted like it had lacto-pedio; needless to say, when we used glassware that was cleaned and rinsed, it was right on).

Self-distributing micros: It depends. If they are designed to distribute, then you should just have the loading dock open for them, and treat them like any other distro. If it is a brewpub or something that you want to get beer from that doesn't distribute, then you might have to do some work to get it to you.

Brewery relations through a distro: Yes. If they're not sending you reps, then they don't care enough. They had better have some pretty damn good beer if that's the case, or you shouldn't bother with them.

Important things to consider: Retailers are generally running on much smaller margins than producers, so they tend to be cheapskates. There's nothing wrong with that per se, but, depending on how long you've been doing similar things, that can very quickly lead to greedy and predatory behavior to fix the purchasing mistakes and soothe your own ego. If you want respect, be extremely honest with your customers. Tell them anything that you think will give them info on the quality of the product that they are considering. This includes how long it has been in your inventory, the travel time from the brewery, the progress of staling, the consistency of the product from batch to batch, anything that you might think is negative will help balance out any excessively bubbly description that you might give. You will be surprised how much people will listen to you if you can give them the reasons for your assumptions.

The BA, Radiolab, Freakonomics, and Marketplace have all looked at the Paradox of Choice (Barry Schwartz is the author, I think). Keep in mind that, even though you are catering to nerds, you need to know your product and be able to speak eloquently about it. Lots of choice will overwhelm people, and they are much less likely to purchase unless they have better info. So, if you just want to own it, find somebody to sell the stuff. If not, you'd better make sure to open bottles when they come in to try them, and share with your customers. They will love you.

KEEP BEERS FRESH. KEEP LINES CLEAN. 'Nuff said.

Remember that you are a more influential representative of craft beer to the general public than any brewer is. You will have to answer stupid questions, deal with people who think they know things, and contend with the macrobrew crowd. Just remember, "sampling" helps keep your sanity intact, and show people what they can find awesome flavor and cool things in this industry.

Again, don't forget that the legal bits refer to IA law. The ethical bits should be universal to any boutique industry, and specifically to ours.

Good luck, and cheers,
Bill

[dplittle]

Bill's answer hits most points but I thought I'd jump in on a couple things from a distributor's point of view.

First, know your local laws. They change not only state to state but municipality to municipality. I'll give some examples below based on Georgia law.

Minimums: There are no minimums

In these times of rising fuel costs more and more distributors are instituting minimums. It may be a dollar amount or a case count. We won't send a truck out for less than $100 or three cases. It just isn't cost effective. It costs more to drive the truck than we make in profit on the order. For things like that we rely on our salespeople. If they have a great account (like your place sounds) they are usually willing to go the extra mile and drop off that one case of Dogfish Head Hellhound or De Ranke XX Bitter. However, I'd suggest using that for emergencies and not day to day or you'll lose the good will of a distributor's salesperson who is ultimately responsible for helping you get "the good stuff." Bottom line is that a good distributor takes care of good customers.

it is illegal for a distributor to charge different prices to different retailers.

This is true and in some states it's legal for distributors to build "roundhouse" pricing allowing a retailer to buy 50 cases of beer (any brands) and get the benefit of the 50 case discount on all the brands with it. This means you could buy one case of 50 different brands and get the same discount as if you ordered 50 cases of one brand. This doesn't mean all brands have a discount though. There are breweries that will not allow a distributor to place a discount on their beers. Ask your distributors. They know the laws.

Tap handles: It is a privilege for a distributor to sell you beer.

It is also a cost. More and more breweries are charging their distributors $10, $20, $30 or more for a single tap handle. It is considered "sales material" so I can give it to a retailer but if that retailer only pours one keg and then moves on to another, I take the handle back. If a retailer puts on a beer as a permanent line then they can keep the handle until they stop pouring it.

Therefore, they should be responsible for any POS materials, from tap handles (standard) to glassware (this may be tricky in ID; it is a pain to get glassware to bars in IA) and signs and junk and stuff.

POS is definitely the distributor's responsibility but factor in again the cost. Most breweries charge the distributor for the POS (most times they split the cost) and it all comes out of everyone's marketing budgets. Coasters, posters, tin signs, etc. are easy to come by. Expensive neons are not as available.

Providing and selling glassware: Yes. Absolutely.

In Georgia, it is illegal for a distributor to provide a retailer with glassware or anything "of value." Since an on premise account HAS to have glasses the State does not consider glassware as POS ... even if it's covered in a brewery's logo. We have to charge for glassware (including sales tax since the account is the end user). As a distributor we don't see ourselves as a glass company but we know the importance of having branded glasses available. To this end, we just pass them straight through to the retail side with no markup. If a brewery charges me $1 a glass I sell them to the retailer for the same. Check your local laws.

I wouldn't go so far as the Belgians do and have a logo-bearing glass for every beer you could possibly find, but find the more popular glasses and styles

If you have a large doorman with x-ray vision then I'd say go ahead with all those special glasses. But if not, build in the cost of lots of lost glassware into your business model. I'm not saying your customers will steal them but it's funny how many "accidentally" fall into purses and coat pockets. Even the Delirium Cafe has stopped using their own branded glasses when the daily loss rate hit 400 glasses A DAY!

and make sure you teach people how to properly CLEAN THEM.

Amen. Amen. Amen. The second best thing in which I tell new craft beer bars to invest is a glass rinser. Nothing says "I care" like a beer clean glass.

The number one thing? A chalk board for the rotating beers!

Brewery relations through a distro: Yes. If they're not sending you reps, then they don't care enough. They had better have some pretty damn good beer if that's the case, or you shouldn't bother with them.

A great craft beer distributor can go a long way to helping retailers with the many different beers out there but no one can tell a brewery's story like the brewery itself. Don't exclude your favorite brewery just because they don't have a rep in the market. Go ahead, pour the beer and then invite the brewmaster to come for a visit.

And like Bill said ... Good luck and please let me know when you open. If you are using City Beer as a model then I definitely want to come in for a visit if I'm in your town.