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  • New Distributer Shootout

    I am seriously contemplating craft brew wholesaling. While a three tier system exists, we have to live with it. And as such what are the pitfalls of distributing craft beers? As I am VERY wet behind the ears on the distributer side of things, I am asking for advice on: What would a craft brewer like to see in a good distributer? What would it take for you to sign me up as your franchisee? Also if anyone knows what the deal is with distributor territories if i am specializing in craft brews? I don't see how i can step on another distributors toes if i am not selling the same brands of beers as they are.

    --Mike
    Ancient City Beer, LLC

  • #2
    Small Distributors (Hooray, maybe)

    Mike,

    I'm not sure what the ideal distributor would be for me...probably somebody who is dedicated to my industry segment first and my label second, preferably above beers of lesser quality than mine. The House would have to maintain and enhance consumers' qualitative perceptions about American beer (this isn't an insult towards great beer elsewhere in the world, just one of the realities of the evolving beer market). I also would want a distributor to have enough clout to increase both the total number of accounts and individual sales quantity of each of my accounts to a level greater than I could achieve through self-distribution (self-distribution is, of course, not an option in some states). Dedication and brand focus are goals that I think you'd be able to do easily; gaining substantial clout is less than simple. It's probably one of the reasons that distributor consolidation has been such a successful trend in the industry. Just remember, consumers rarely see the middleman that gets the beer from the brewery to their glass, so don't expect the local support for a distributor in the same way people have local support for a brewery.

    The second part of your question dealing with market share and imposition on other distributors is overly naive. There have been quite a few studies showing that the overall demand for beer doesn't change in the short term (see The US Brewing Industry by Tremblay and Tremblay). That says to me that opening a business anywhere in the three tier system will invariably steal market share from somebody else. Theoretically, you'll provide a better product or service than the one that you're replacing, which is just the way that capitalism works. And if you're replacing some crappy national brand powerhouse beer, whatever it may be, with something fresh, badassed, and hopefully local, then you're giving a big boost to the industry.

    Moral of the story: go for it. Step on other people's toes, and use yours to kick some ass. It'll be a hell of a fight to carve out some space for yourself. Hopefully, more people try it, and more dedicated Houses open up shop. The next step in the craft brewing revolution will have to involve dedicated distribution houses that cooperate with their brewers rather than dictate to them.

    Good luck,
    Bill

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    • #3
      Dedicated to Craft Beers

      William,

      Your comments are encouraging. I myself am not only passionate about craft beers, but it borders on religious fervor. Basically i am a brewer at heart (homebrewer, micro brewer wanna be), and therefore I would be a friend of the brewer.

      I want to carve out a niche market distributing craft brews only, and perhaps some craft wines (my wife can do that), and kick some major brand cheap gut-rot, so-called beer manufacturers out of my little domain. It would make me proud to represent some real beer, real ingrediant, craft beer artison to my vendors. With enthusiasm I would love to extol the benefits of real beer. If I can supplant some amber coloured washed out, water "beer" manufacturer then let's step on some toes!

      Yes, I am still quite naive, but a quick study. I am told by the person at the desk of the NBWA (National Beer Wholesalers Assoc.) to contact some Florida distributors organization. When I call them, they tell me that they only rep the major brands, (not my idea), so....., they give me another number or two, which i still need to call, where i am supposed to come up with an agreement with other distributors, what????, I thought I was an independant? I don't think Florida law makes this step necessary. As long as I have the Federal and State licenses, pay my fees, become bonded, carry insurance, and have a truck and warehousing, should i really need anything else to start? Right now I don't know, and haven't got much out of the NBWA (what good are they?).

      --Mike
      Ancient City Beer, LLC

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      • #4
        Nbwa

        Mike,

        I think that you're probably correct about not needing to consult with other distributors, but you'd have to check with an attorney. My thought is that the NBWA is more concerned about protecting its current membership of large Houses than helping a start-up with no pull in the current membership roster. I have a feeling that they are more than likely to be less receptive to potential start-ups than their counterparts at the Brewer's Association. Again, it's just a matter of visibility; consumers don't really see the middlemen, so they can get away with more.

        Anyway, good luck. Everybody loves a fanatic. At least, everybody in this industry does. And if they don't, who cares?

        Cheers,
        Bill

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        • #5
          Small Distributors

          I got off the phone with a small craft distributor and he gave me a few pointers. For one, the state maintains tight control over distributors and their territories. However, if a distributor carries a brand of beer for a craft brewery, there won't be crossing someone elses territory with the same brand anyway. So no need to fret about it. Apparently in talking with him there are not enough reps for all the beer out there. So I shouldn't have any trouble picking up some brands to carry. But I can't carry too many for me to handle without hiring.

          --Mike.
          Ancient City Beer, LLC

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