The Enigma of Distribution

From what I understand, there is no simple answer to your question. It gets balled up in federal laws put in place after prohibition to ensure the feds got their cut of the action and the mob didn't, complicated by the web of various state laws with much the same objectives. These days, the laws stick around still due to various self-serving business interests. It can also be affected by the contracts/agreements entered into by the brewery and the distributor.

But, I am far from an expert, having gained most of my "knowledge" of this from these forums and wikipedia!

We do have some people who work for distributors as well as people who work for breweries on this board, so perhaps they can answer you and/or correct me.

 

Shelton Bros. is primarily an importer, but they also act as a "master distributor" for some smaller US breweries. (Not uncommon, several other importers do that - TBS for Shipyard, SeaDog and Southampton, for one other example). Raffa is, I take it, Shelton's local SC wholesaler customer/distributor.

It creates a sort of "fourth tier":

Brewery - importer/master dist. - local wholesale distributor - retailer.​

 

What part of SC are you in, I haven't seen Prairie yet in Greenville

 

Jess beat me to it, but he summed it up pretty well. Wholesale distribution is heavily reliant on volume, because the cost per pound goes up dramatically if you aren't shipping full container loads. Breweries like Prairie, Against the Grain, Stillwater, etc can't produce enough to send full containers everywhere they'd like, so they pick a company like Shelton or 12% Imports, ship everything to them, and they send it to the various local distributors as part of a larger order.

In a similar way, it's the reason small breweries that can self-distribute (in states where that's allowed) choose to sign with a distributor. It's a hell of a lot more cost effective and efficient for them to send one truck to a distributor and let them deal with it than it is to drive around to 50 stores and only drop a couple cases at each store.

For all the (occasionally justified) complaints people hav about distributors, they do serve a vital purpose, and without them most beer would be a lot more expensive.

 

Basically to me it makes absolutely no sense, but maybe I'm stupid.

 

True enough. The rub is having to pass through that next "tier" and absorb the extra mark-up. I found that LTL (less than load) shipping could often still provide a better price from wholesaler to retail- especially if one had a very good relationship with a freight company that worked key regions. Also, I found it easier to control offerings, consistency of availability, and to have a "real" relationship with brewers AND vintners everywhere. But really, economy of scale often dictates well beyond what one would wish to do. The process of providing great products to any area is very complicated, and expensive.

 

It isn't an enigma.

These are the things that exist when there's arguably too much government control and regulation. With less of that, there would still exist middle men and distributors, but it would likely be much less wacko than it is now.

Too much of this topic discussion inevitably falls into distributors vs. no distributors, which is a false dilemma for trying to capture the reasons for why the problems are what they are.

 

+1

 

I am within 30 minutes of 3 different Binny's locations. Each location works with a different distributor, so each one will get beers the other doesn't. Drives me crazy, and puts a lot of miles on my truck.

 

I live in Chicago and that's what I'm starting to figure out. The selection is amazing, but I can see how it would be annoying. The South Loop Binny's had no Evil Twin? What's that all about. And man, Evil Twin is not as easy to come by as I would like.

 

Can you cite a law that made Prairie use Shelton Bros. as a "master distributor" to ship their beer to out-of-state distributors, rather than Prairie dealing directly with those distributors which is typical for larger breweries? As maltmaster420 explained above, that was an economic decision by Prairie made for business reasons. Prairie could have dealt directly with SC's RAFA, just as the majority of breweries contract and ship directly to local and out of state distributors.

As has been pointed out before in such discussions, more than half the US states (including many populous/craft-oriented ones like Pennsylvania, California, New York, New Jersey, North Carolina, Colorado, etc) allow breweries to self-distribute yet the majority of breweries decide to go with a distributor, particularly for non-local markets, because they don't want to be in the trucking and warehousing business, they want to concentrate on brewing.

Blaming three tier laws for every problem with beer availability and distribution - old beer, not enough of a desired beer, a tiny brewery not able to brew enough beer to ship to markets 3000 miles away, expensive beer, etc - ignores the growing pains and realities of an industry that has gone from 50 brewing companies to over 1,500 (i.e., not counting brewpubs) in 40 years, while at the same time the number of wholesalers has shrunk from over 5,000 to about 2-3 thousand - the later a result of the virtual duopoly created by AB and MC brewing close to 90% of the beer in the US. In many markets, hundreds of breweries are now fighting over the tiny 5-10% percent of the beer market that is not "macro" or "import", fighting for retail shelf-space and room in wholesalers' warehouses and trucks.

 

What baffles me is when a brewery like almanac distributes to a state like Colorado which already has a wide variety of sours available on the shelf. Why not distribute to the Midwest where our sour options are more limited. Less competition for them.

/rant

 

And of that remaining 5%-10% of the market I'm sure AB and MC would be more than happy to buy their way into it with faux craft, cut out brewers, or create a distribution systems that practically forces other brewers to distribute through them.

EDIT: AB/In-Bev has already proven they are masters at self-distribution in other countries with less regulations.

 

Are you saying the three-tier system mandated by US/state law can be a way to combat the strong-arm tactics of the large brewers?

 

Man, I came here thinking the thread title was some rediculous new Hill Farmstead beer

 

AB also has some experience with self-distribution in some US areas:

“In addition to working closely with more than 500 independent wholesalers across the country, Anheuser-Busch owns and operates distributors in the following cities:

• Boston, Mass.
• Canton, Ohio
• Denver, Colo.
• Eugene, Ore.
• Los Angeles, Calif.
• Louisville, Ky.
• New York, N.Y.
• Oahu, Hawaii
• Oklahoma City, Okla.
• Pomona, Calif.
• Riverside, Calif.
• San Diego, Calif.
• Tulsa, Okla.”

Cheers!

 

All HF's beer names make sense though considering Shaun Hill's background in and love for philosophy. "The Enigma of Distribution" does have a bit of an HF ring to it, however.

 

If the distribution scheme actually made sense, no one would make any money off of it.

Reminds me of what one great law professor once told me during my naive year as a 1L (and I paraphrase): "If it weren't for stupid clients, you wouldn't have any clients at all, or a job for that matter."

And that, my friends, is the sad truth about how businesses operate these days.