Results 1 to 5 of 5

Thread: Microbrewery distribution alternative

  1. #1
    Join Date
    Dec 2015
    Location
    Cleveland, OH
    Posts
    10

    Microbrewery distribution alternative

    I am looking to get some feedback on exploring a venture in the beer industry. I live in Cleveland Ohio, a self-distribution state. Recently, I have noticed some well funded small breweries started driving around vehicles to self-distribute beer and with the 3-tier system as it is, it become very obvious why this is attractive alternative. However, I can't imagine that a brewer would be excited about having another business process to manage and learn. In most cases the capital just isn't there to self-distribute. It is amazing to me the level of passion you guys have to over come these steep learning and financial hurdles.

    A value proposition I am currently testing is to offer breweries a logistics service that would off load the shipping side of self-distribution, handing the scheduling/picking up/delivering/tracking/communication/cold storage to retailers & restaurants while realizing a 50% - 60% savings over using a distributor for logistics. Additionally, they could avoid selling their distribution rights from the get go. The service would target small breweries (500- 2500 BBL/yr).

    I am looking to gauge the interest level among brewers on this service.

    I am looking into the legal side of this as well (working on finding a qualified lawyer that knows the industry). There is company already doing this called Local Libations in Texas which share some of the same delivery/distribution laws (for example: Both require COD, Fintech supported in both states).

    MI on the other hand has explicitly stated in their self-distribution law that: "The beer is sold and delivered by an employee of the qualified micro brewer, not an agent, and is transported and delivered utilizing a vehicle owned by the qualified micro brewer, not by a third party delivery service." Ohio as well as others do not state such limitation. Also If have legal incite please reference your finding so I have something to go on.


    Cheers!

    Justin

  2. #2
    Join Date
    Oct 2012
    Posts
    83
    Sounds to me like what you're proposing is "Dirt Cheap Distribution". My guess is that there would be a lot of interest in that kind of thing. I also notice, looking around my state of Washington where we are allowed to self-distribute, that this kind of thing doesn't currently exist here. I suppose there is a reason for that.

    Of the services you intend to offer - scheduling/picking up/delivering/tracking/communication/cold storage - "communication" is the bit that stands out the most. If you're picking up an empty keg from my customer and they say "can you bring me a full one?" now you're selling my beer. I doubt most states would recognize the difference between logistics services and beer distribution at that point. If they did, the established distributors would not take that decision lightly. I'm assuming that they have more money and connections than you do.

    I would be very interested in being your fourth or fifth customer. I wouldn't want to be the first.

  3. #3
    Join Date
    Dec 2015
    Location
    Cleveland, OH
    Posts
    10
    I share the same sediment when reaching out to others in the industry. This is a service is pretty much non-existed.

    Whether it is because of economics, market place demand and/or legal (or lack of) framework my desire is to know why. The Microbrew market as it is and were it is going will not fit into the status quo of wholesales and distribution.

    Most brewery's will not hit the 15,000 barrel mark at the same rate you saw before. It will become a crowded space with the Big box distribution player serv. Dirt Cheap Distribution, Craft 3PL/shipping, outsourced self-distribution logistics or whatever you call it will help with reaching the market at a lower price point then signing our rights away to a distributor.

    There is momentum behind craft beer drinkers in search of locally brewed beer. I am looking to bridge the gap.

  4. #4
    Join Date
    Dec 2015
    Location
    Cleveland, OH
    Posts
    10
    Quote Originally Posted by populuxe View Post
    Sounds to me like what you're proposing is "Dirt Cheap Distribution".
    I would like to think it is more of a self-distribution partner. Anything a microbrewery/distillery/meadery would struggle with when it comes to getting their product to their customers. The logistics aspect seems to be the most expensive and time consuming to get off the ground is why I am focusing on it.

    Quote Originally Posted by populuxe View Post
    I would be very interested in being your fourth or fifth customer. I wouldn't want to be the first.
    Populuxe, do you currently do self-distribution?

    If so, how is it working out and where do your frustrations lay?

    If not, are there hurdles you need to overcome to make it a reality?

  5. #5
    Join Date
    Apr 2018
    Location
    Brooklyn, NY
    Posts
    4

    MicroBrewery distribution model if you got anywhere with this

    Quote Originally Posted by hylander0 View Post
    I am looking to get some feedback on exploring a venture in the beer industry. I live in Cleveland Ohio, a self-distribution state. Recently, I have noticed some well funded small breweries started driving around vehicles to self-distribute beer and with the 3-tier system as it is, it become very obvious why this is attractive alternative. However, I can't imagine that a brewer would be excited about having another business process to manage and learn. In most cases the capital just isn't there to self-distribute. It is amazing to me the level of passion you guys have to over come these steep learning and financial hurdles.

    A value proposition I am currently testing is to offer breweries a logistics service that would off load the shipping side of self-distribution, handing the scheduling/picking up/delivering/tracking/communication/cold storage to retailers & restaurants while realizing a 50% - 60% savings over using a distributor for logistics. Additionally, they could avoid selling their distribution rights from the get go. The service would target small breweries (500- 2500 BBL/yr).

    I am looking to gauge the interest level among brewers on this service.

    I am looking into the legal side of this as well (working on finding a qualified lawyer that knows the industry). There is company already doing this called Local Libations in Texas which share some of the same delivery/distribution laws (for example: Both require COD, Fintech supported in both states).

    MI on the other hand has explicitly stated in their self-distribution law that: "The beer is sold and delivered by an employee of the qualified micro brewer, not an agent, and is transported and delivered utilizing a vehicle owned by the qualified micro brewer, not by a third party delivery service." Ohio as well as others do not state such limitation. Also If have legal incite please reference your finding so I have something to go on.


    Cheers!

    Justin
    Just wondering if you got anywhere with this as I've been developing a 3PL distribution model. My main business is exporting US craft beer to Brazil, Europe, & Korea, and I do have the proper TTB & in my case NY state beer wholesalers permits to export/import/wholesale beer. In Europe I work using a hybrid 3PL system and thus looking to see about doing almost the same thing in the US and looking to form a network of small independent distributors. The FinTech is the part that becomes more complicated in the US as each state has their own, filing requirements, distribution laws, excise taxes, etc..., but not insurmountable. Cheers, Ed

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •