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Misconceptions about beer distribution

Discussion in 'Beer Talk' started by Misrahi, Jan 27, 2013.

  1. Misrahi

    Misrahi Zealot (75) Florida Feb 11, 2011

    Just noticed a lot of misguided posts on the forums due to ignorance of how beer distribution actually functions, especially within specific markets and for specific breweries. Rather than me go around pointing them out, figured this would be an educational way for people to understand the process.

    First misconception I have seen: Just because a store orders 10 cases of a craft beer, doesn't mean they will receive 10 cases. Quantity ordered, quantity available, and quantity shipped are all different numbers typically.
     
    Hermthegerm likes this.
  2. I agree! Example: the local dist gets 28 cases of bourbon county cherry rye( it is all they that goose island can send them) if the company has 7 salesman each sales rep gets 4 cases to sell. The sales rep is going to send the beer to the custermer that has helped him in the past with new placements, and displays. Sales reps worked on commission and bonuses for new placement on new beer. It is not just the big brewers who do this ( bud,miller,coors). Long trail may have a new beer coming out that will pay the sales rep 5 bucks per placement. Why would the sales rep give cherry rye to a guy who would not let him bring in the long trail that he is getting 5 bucks on.
     
    ThePorterSorter and bifrost17 like this.
  3. DelMontiac

    DelMontiac Advocate (620) Oklahoma Oct 22, 2010

    My favorite local store owner has explained to me much about how distribution works. It's all business. Sales reps will ignore her requests for most seasonals (like Celebration, Tumbler, etc) every time because she is not moving tons of beer in a major city. She has a much easier time getting requested wines though.
     
  4. When i open my micro only beer store, ill get whatever you gents want.
     
  5. Every state is a little different. I live and sell beer in ct. When we get seasonal beers in we can't wait to sell them to who ever wants them. We get a list every week of what is left for winter beers that we have to get rid of so we can start selling spring beers. Cheers
     
  6. So if a store is in a state that isn't distributed to by "Brewery A".... say the owner of said store goes to a state that brewery A does distribute to, buys however much of beer they can get, brings it back to the state the shop is in and sells that beer. That is illegal right? just wondering. I heard a shop owner around here has gotten in trouble for something like that or similar.
     
  7. kzoobrew

    kzoobrew Champion (840) Michigan May 8, 2006

    Yes, very illegal. Not only do you put license in jeopardy but the government does not look to kindly when someone avoids paying the appropriate taxes.
     
  8. I work for a distributor and I am not bonused on new placements.
     
    aasher likes this.
  9. It's illegal in every state, since it's the wholesaler or the brewery that pays the state excise tax - if a retailer buys beers either wholesale or retail in another state, the excise tax was not collected by his state. Most state ABC laws are going to specify that a licensed retailer can only buy beer from an in-state licensed wholesaler. (The District of Columbia is the one notably exception).
     
    tectactoe likes this.
  10. Misrahi

    Misrahi Zealot (75) Florida Feb 11, 2011

    Misconception #2 : Just because a distributor carries a brewery, does not mean they carry all of the breweries beers. (Yes, its basic, but trust me it's not as common knowledge as one would think)
     
  11. wow mind blowing cant wait for #3
     
  12. One huge issue I see on these boards is people assuming that every sales person and every distributor in every state operate in exactly the same way.
     
    beerinmaine, semibaked, Errto and 2 others like this.
  13. BeastLU

    BeastLU Advocate (520) Virginia Dec 20, 2012

    We are offered bonuses for placements both by our company and the brewers themselves.
     
  14. They fucking need too
     
    Bnoise11 and DelMontiac like this.
  15. BeastLU

    BeastLU Advocate (520) Virginia Dec 20, 2012

    Most of the time they are not offered. They make you sell a bunch of thier shitty skus to "earn" they limited good stuff.
     
  16. Makes sense.
     
  17. GennyCreamAle

    GennyCreamAle Initiate (0) New York Feb 25, 2009

    I have also spoken to several retailers about how distribution works around these parts and every one says its one of the biggest pains in the ass. One in particular is fairly new to the scene so getting the rarer stuff is difficult and often tied to purchasing X amount of cases of something else, usually something the distributor has too much of and is rather old.
     

  18. Great thread!
     
    DelMontiac likes this.
  19. you need to work for another distributor, i worked in the food industry and was paid on commission on every new placement shelf space, displays,and product placement along with merchandising are where wars are won and lost in the field
     
    AlTrombley and GennyCreamAle like this.
  20. Nah she already works for the best craft beer and fine wine distributor in the state. They worry more about putting things in the "right" accounts (ie places where they will actually sell through quickly) rather than trying to cram $10+ 6packs (which most of theirs are) or expensive kegs into every mom and pop gas station and dive bar. It's the best run distributor I've ever worked with. Maybe they don't do bonus commissions because they pay fairly to begin with? Just some food for thought.
     
  21. I can dig that..and its esoteric for you, but shelf space and placement and overall merchandising comes from knowledge and rapore with accounts which is earned not given and should be compensated
     
  22. kdb150

    kdb150 Savant (490) Pennsylvania Mar 8, 2012

    Not in DC. An enterprising bar owner there tapped a keg of Pliny the Younger a couple of years ago. This is illegal everywhere else as far as I know.

    I don't know if everyone knows this already, but stores do not typically know if or when they get an allocation of limited special releases until the delivery comes in. I was very surprised to learn how little store owners actually know about what product they will be getting in a given delivery. Most good beer stores will typically order the entire order sheet of limited release beers every week and hope they show up when they are actually released.
     
  23. Every state must be a little different. I work in ct and we work with salary, commission, and bonuses.
     
  24. I can't speak for your how your state runs but most beer companies work that way. If a new beer comes into your house let say joe blow ale. Joe blow wants his beer out in the trade and will pay the sales force x amount for a placement x amount for a display ( with photo). I did work fora dist many years ago that never told the sales reps about incentives and the sales supervisors got the cash. I found that out from a supervisor of that dist after I left there. If you get a new beer in your house and they are really pushing you to get it out there someone is getting some extra Ching in there pocket. Cheers
     
  25. Distributor misconception: Every distributor is run by shady people who do shady things.
     
    Theniz, LMT, crushedvol and 2 others like this.
  26. I have worked for the same one for about 15 years. I love working for them! The two i worked at before this were both shady.
     
  27. TMoney2591

    TMoney2591 Champion (895) Illinois Apr 21, 2009

    This only goes for, well, crappy beer stores/managers. When I ran my department, I personally ordered everything, item by item, based on need/desire. Now, sometimes, the distributor would have issues, there might be some breakage along the way, or some mistakes might be made, but I always had a damn good idea of what I was to receive the next day. If something was missing, I'd know, and the distributor was likely to hear about it. I mean, that was my experience, but I know for a fact I wasn't one of the best in the business, so, yeah, shop somewhere other than where you were told the nonsense above.

    Here's another misconception: Just because a distributor carries a beer, or has the right to do so, doesn't mean it has the beer on hand at any given time. I think people innately know this, but they always seem surprised when certain beers are unavailable at certain times.
     
  28. rlcoffey

    rlcoffey Savant (490) Kentucky Apr 20, 2004

    Except in DC, yes that is illegal.

    In no big surprise, jess beat me to the DC exception.
     
  29. kdb150

    kdb150 Savant (490) Pennsylvania Mar 8, 2012

    As a customer, I don't really see what difference it makes. This only goes for special limited releases, obviously anything that is regularly or seasonally available is ordered on an as-needed basis. But even then, if things are in short supply, an allocation is never guaranteed, although the stores I shop in typically sell enough craft and specialty beers to get allocations pretty much whenever they need to.

    It's more like, whenever the order sheet comes with, say, all of the Bourbon County varieties on it, the owner will check them all, knowing full well that the beer isn't in the distributor's possession at that time, and that he isn't guaranteed to ever see any of it.
     
  30. So, does that mean that two out of three distributors may be shady? ;)
     
    Mgm54 likes this.
  31. This is true- we don't stock every year round SKU from every brewery. Sometimes the brewery doesn't have enough capacity to support the demand for that SKU. Sometimes we bring them in and they don't turn so well so we discontinue them. Sometimes, if we get enough requests for a beer I can presell a layer of beer (14 cases) and get that beer in for my customers that way.
     
  32. Yes, I am happy with my compensation for what I do. Since I'm not bonused on new placements I am empowered to get the right beer to the right places, not just beg for shelf or cooler space. Not saying that everyone who is bonused does that, but it definitely changes the game when compensation is tweaked like that, and I think it affects your integrity a little. I'm paid commission, a car allowance and a phone allowance.

    Also, with some of our 90 day beers, like Stone, it's up to me to make sure if I sell a case stack that the retailer will be able to move through it quickly. There is nothing more that my boss hates than expired beer, so it's up to me to make the right decisions.
     
    TastyIsBeer, IceAce, craigo19 and 2 others like this.
  33. Dolemike

    Dolemike Aspirant (45) Kentucky Apr 7, 2012

    I was in a discussion with a individual in the business who said some distributors will sign distribution contracts with craft brewers to actaully control the competition from what they are already distributing, often without the actual intent to find any shelf space. With a well worded contract, the distributor then handcuffs the brewers.
     
  34. TMoney2591

    TMoney2591 Champion (895) Illinois Apr 21, 2009

    Even for limited releases, I (and, in truth, I can really only speak confidently about my own experiences, so others' mileages may vary somewhat) still was only able to order what my distributors had on hand. Granted, there were times when certain releases were delayed for whatever reason, but this was relatively rare in the grand scheme of things.

    I will say, though, that there were times when the distributor had X number of cases (a very small number) for their territory and had to thus split it up to the best accounts, so in those instances there was a chance I wouldn't get any, depending on how the numbers worked out at that given time, so I would just ask for whatever could be done, but not only was this incredibly rare, there was always a full understanding between both myself and the distro rep that those cases were optional on the invoice (for lack of a better word). Still, I always had a 99.99% knowledge of what was coming in every single week, limited release or otherwise. I'm sure crappy reps exist, and they might give vague notions of availability and whatnot, but, again, I can really only speak from my own experience. (Case in point: I have no idea what an "order sheet" is. I spoke to every rep, either in person or on the phone, occasionally via e-mail, for all of my orders. So maybe the "order sheet" method of ordering would indeed create a fog for the beer manager.)
     
    chefkevlar likes this.
  35. We release a preorder sheet 4 times a year with upcoming seasonals, new year round items, etc and the quantities we as a distributor are allocated. I present it to all my accounts and they can decide what they want to reserve to bring in. (except for some crazy allocated items like hopslam) Some of my accounts are amazing at getting back to me quickly and they get what they want for the most part. Some I have to follow up with, and some just ignore it. But everyone gets a shot!
     
  36. I know that the distributor I work for goes to specialty beer stores (with limited shelf space) and gives them free 6-packs of Sam Adams and such, trying to get them to sell it, even though they're adament on offering only things that you couldn't find in three or four convenience stores/gas stations within walking distance. The shelves are literally like: Rogue Dead Guy Ale, Allagash Curieux, Old Rasputin, Rising Tide, Boston Lager, Cadillac Mountain Stout... One of these things is not like the others. And Shipyard Export can take a hike as well.
     
  37. AxesandAnchors

    AxesandAnchors Savant (300) Oregon Nov 21, 2012

    So if someone opens a new bottle shop their pretty much screwed on the chance of getting anything really good, or seasonal/limited unless they're willing to purchase a bunch of junk no one wants? This is one of the reasons the three tiered system is so screwed up.
     
  38. Errto

    Errto Savant (305) Connecticut Oct 20, 2009

    True enough, but some are, and more than you see in some other industries. For example, as far as I can tell, flat-out lying to store employees or consumers about the availability of certain products is considered par for the course in some areas - perhaps not yours.
     
  39. jacob4999

    jacob4999 Savant (310) Michigan Dec 9, 2008

    Great topic and actually something I just experienced about an hour ago. I recently became the owner of a store in SE Michigan. Well one of my first orders of business was to get a craft beer section. I'm starting off small and just offering Michigan craft at the moment. But in the week I've been here I have received a great response from the locals have been selling my stock at a decent rate. Well the first distributor I dealt with (Bud, Bells, Founders) is an awesome guy and because of my passion for beer he is willing to hook me up with special releases. Was able to get a case of Hopslam on my first order. Fantastic as it gave me something nice to market with and has earned me a good start on a craft customer base.

    But then today I had a rep come in for another distributor which is the only way I can get another Michigan based brewery that I really want to support and carry. Well after talking with them they pretty much flat out told me that no matter what happens I have no chance of ever getting any of this breweries special releases. Kind of frustrating as there is a real passion for craft out where my store is! After a week have started to get a decent base of beer geeks that are loving that a person like me is doing this is their area as there is nothing else like this within 20 miles away. Another frustrating thing about this is knowing that there are other stores in this region that get these releases and normally they just sit there and get old because that store does not try to market or push the beer.

    Not sure exactly what I'm going to do yet as I'm completely new to this and "learning on the fly" but guess I just have to keep fighting the good fight. I still made an order to carry this breweries normal offerings and will still support them anyway I can. More than anything I feel bad for my client base out here that is really into craft but will automatically be shut out of this breweries releases no matter how much they support my store. Like I said...kinda frustrating...
     
  40. How does the Three Tier system create/contribute to this? A brewery makes a limited beer - which by it's very definition isn't going to be available to every retailer in quantities they'd want. I imagine most brewers agree with, and encourage their limited releases going to the retailers who support them year 'round on a percentage basis (and probably would also disagree with the description of their regular releases as "a bunch of junk no one wants").
     

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