by Tamara Scully
Brewing is the easy part. Craft brewers who entered the business determined to bring unique flavor profiles to life, often don’t realize the effort involved in simply getting those products onto store shelves or restaurant tables. Distribution can require a lot more time and effort than product development. Craft beer distribution is complicated.
The simplest method of distributing your brew is to sell it yourself. But depending on the laws of your state, you may not be able to do so. Whether licensed as a brewpub, microbrewery, farm brewery or manufacturer craft brewers are all regulated by the laws of their state. Some licenses allow retail or wholesale sales, on or off premises. Others vary in degree of restrictions. It’s prudent to know the limitations of how and where you can sell your beer before embarking on making any.
Get Distributed
Off-premises distribution means the ultimate customer will be purchasing the product and taking it home to consume. Liquor stores, grocery stores and bars selling packaged goods are some examples. On-premises sales are those where the consumer will drink the beverage onsite ‑ think restaurants, bars, event venues where liquor can be served.
Self-distribution is the ability to sell your product directly to stores or restaurants. Self-distribution is illegal in some states. Even in states where it is legal, provisions regulating where and how those who hold licenses to brew beer can sell their product. The Brewers Association has an informational list of state laws regarding brewer licensing and distribution regulations. Visit: www.brewersassociation.org/government-affairs/laws/self-distribution-laws/ .
For those who are permitted to self-distribute, making direct contact with independent restaurants and retail liquor sales venues may provide the simplest way to enter the market. After all, you know your product best, can sell it with the passion it deserves, and can recoup more of the sales price without a middleman. But many outlets will be a hard sell for self-distributors.
Major retail chains – whether on or off-premises venues – have working relationships with distributors, also known as beer wholesalers. If you aren’t represented by the distributor they use, you may just be out of luck. Limited shelf space and contractual agreements means that there may not be any room for self-represented brands or brands from non-preferred wholesalers. But it is more complicated than that.
After prohibition was repealed, a three-tier distribution system for beer was established by the Federal government. The intent was to moderate sales, keep big brewers from monopolizing sales, and raise revenue through liquor taxes. The system, still in place today, requires a middleman with the exception of any state laws allowing self-distribution for craft brewers.
The system, in theory, allows distributors to sell whatever brands they desire. These distributors are responsible for stocking store shelves and restaurant storerooms. The small brands should have just as much opportunity for distribution in large retail outlets as the big guys. The reality, however, has seen large brewers offering incentives to distributors to prevent infiltration by other brands into their shelf space. In some markets, the major commercial brewing industry has played a role in keeping craft brews from “encroaching” ‑ raising complaints.
Having a distributor doesn’t mean that you don’t have to worry about getting your brew to the customer. You have to work with the distributor to insure that your brand is being promoted every step of the way. You’ll want a distributor that is actively seeking new accounts. The more venues into which your product can be placed, the better.
Distributor Selection
Selecting a distributor knowledgeable about craft brewing is a good first step. What other craft brands are they representing? Where are the brands represented, and how are sales? Are the craft brands they represent available at most of their outlets, or just a few? Does the distributor actively market the brands using promotional materials and point-of-purchase displays? Do they give equal footing to small craft labels as well as to the larger, nationally-distributed craft brands? Is your beer is going to stand out as too expensive or get poor shelf space, negatively impacting sales?
Most of all, does your brand fit into their portfolio? If they already have many similar beers, or if they have no real interest in your type of beer, then probably not. Do you fill a space in their product line that isn’t saturated, and which they are excited to grow?
It’s also important to know where your distributor distributes. Are they serving a regional area, or centered in one city? The Brewers Association offers a checklist for working with a distributor at this web address: www.brewersassociation.org/business-tools/selling-your-beer/craft-beer-wholesaler-considerations/ .
Brewing Excitement
Getting your brew into the consumers’ hands via a distributor takes ongoing effort on your part, too. Distributors should be intimately familiar with your brewery, and your beers. It’s up to you not only to select a passionate distributor, but to make them knowledgeable about your brand. After all, they are the ones representing you on a daily basis.
Having promotional materials available for the distributor to utilize, actively discussing your marketing goals, and even being available to make sales and promotional calls with the distribution team can all go a long way to staking your claim and growing your market share. Participating in events and promoting your brand in general also helps the distributor sell your products.
Opportunities to show off your beer range from local tasting events to large, international venues promoting craft beverages. These events can also offer the chance to “shop” for beer distributors, consultants and more, to help your brand grow. At the USA Trade Tasting conference, sponsored by the Beverage Trade Network in March 2016, brewers and distributors can purchase exhibit space, a spot in the tasting event, or a slot in the brand pitch session. Some tickets are already sold out. This B2B event was designed to assist craft beverage makers with getting their brand to market. Workshops offer brewer education, too.
A great brew should sell itself, leaving creative minds free to conjure up more incredible beers. But success in the craft beverage trade is about more than a great brew. With the growth in craft beers, and craft brands going national, there are bound to be similar products, and a lot of competitors. While there is still plenty of room for everybody, making sure your brand has a spot on the shelf starts with a consistent, high-quality product, but it doesn’t end there.