How does beer distribution in the US Work Exactly?

Look up the three tier system. Now imagine 50 different versions with various archaic and confusing laws that in many cases allow for monopolies and corruption.

 

State laws vary but generally breweries sell their beer to distributors that they contract with in bottles/cans/kegs, and the distributor then sells it to stores, bars and restaurants. Breweries have to make their own contract arrangements with the distributor in the states that they choose to sell their beer. Many states allow very small breweries to self distribute, meaning they sell and deliver to the store, bar or restaurant.

Edit: If you are seeing Six Point in Indiana, it's because that brewery chose to distribute to your state. I used to see stuff in Michigan from that brewery, but none recently. Maybe they decided they can't sell enough beer here and pulled out of Michigan, or lost their contract with their distributor(s).

 

^This

 

This is usually, but not always the case. A few years ago, importers like Shelton and 12% broadened their import-only portfolios and been picking up US-based breweries as well. This allows small breweries like Upright, Anchorage (both Shelton), Stillwater, and Against the Grain (12% Imports) to have essentially nationwide distribution by simply sending their beer to one company who then sells it around the country to all the the distributors they work with in various states.

It's workable, but it adds one more layer of markup to the supply chain, so the beers end up costing 25-30% more in markets that their importer services compared to their home market where they may be self-distributing or working with a traditional distributor.

 

That's not a nationwide thing. Six Point likely just uses the Inbev house in your area.

 

I don't recall exactly what it was specifically (or if it's still in effect) but Indiana once had very unusual Three Tier laws - maybe they didn't allow exclusive regions or allowed out-of-state wholesaler importation w/o brewery approval or something. Lots of brewers didn't care for the rules and avoided the state for that reason.

Pretty sure, despite what would have been logical geographically, Indiana was the last US state to get Coors distribution, only in the 1990s. IIRC, in the late 1970s (during Coorsmania) Indiana was one of the states were their were lawsuits in which Coors tried to stop unauthorized shipments of Coors by local and surrounding state distributors.

US importers acting as "master distributors" for smaller US breweries has been going on for awhile. In the 1980s, Wisdom Imports carried Anchor products (as well as Dixie and Hudepohl's Christian Moerlein) and Merchant du Vin carried some beers from August Schell, Cold Spring and Yuengling (below - with a unique "Sole Agent - Charles Finkel" [MdV's owner] label, not used in Yuengling's own marketing region for what was their standard AAL, now better know as just Yuengling Premium.)



Before that, S&P-owned Falstaff/Pearl used two different multi-state firms (at least one of which, Best Brands, was also an importer) to act as "master distributors" of their brands in certain states.

 

Yeah, store owners have some input about the beers that they carry from a distributor's beer portfolio, but sometimes limited-release beers will not be available from a distributor to a specific store if that store doesn't sell a lot of beer from that brewery, or possibly if the distributor recognizes that the store does not have a large customer base of craft beer drinkers.

 

It works for the benefit of the distributor!

 

I'd first check the date code on that Six Point. But, question you ask has an answer that will be about 7 pages long because it can get ridiculously complex and also because it is a black hole for breweries of a certain size to languish in.

 

In the past I've talked to retail distributors about what they could get for me. There were quite a few beers that they had access to but didn't stock, and that was decades ago. Things have obviously changed now with so many beers available but they should have a list of what they can get from all of their different distributors.

Of course it's never that easy, right?

I once contacted Draai Laag to find out where I could buy their beer. In my area (eastern PA) the Initial distributor was Shangy's, meaning that any beer sold had to go through them to get to a retail outlet (other than their own). I called Shangy's to find out who they sold to and they informed me that they did not handle Draai Laag. OK, I checked back with Draai Laag - nope, Shangy's was definitely their Initial distributor. What??? So I called Shangy's and asked again, seeing if they'd check if they had any in stock. Again, they told me that they did not handle Draai Laag. Damn! I couldn't give these people my money regardless of how bad I wanted to! I wonder how many sales Draai Laag lost because they chose the wrong distributor.

 

Beerfinder shows 3 places that carry Sixpoint in Indiana. So there's not a lot, but it is legal to sell and distribute. I'd chalk that up to distributors and retailers weighing sales and not wanting to end up with dusty cans in a warehouse or on the shelf. Especially in a place where theirs hot competition on hoppy beers. There's a lot of empty shelf space here now, retailers are not carrying a plethora of beers from Cali or Pa that don't sell well. I can't find Hop Devil here anymore, I'm supposing people are turning to Buriel and Wicked Weed etc, and the outside beers are rotting on the shelf, then they're dropped from the rotation. I checked yesterday and the Prima Pils was about to its best by date, there's a ton of hoppy beers that are 8 months old or more. So if a sense we/ me are being pushed to local beers that are not only dated but typically very fresh. If you want 9 month old Alpine I'm sure you can find it, but I can get Buriel that's 10 days old so why bother?

 

Two or three years ago I saw Sixpoint at a liquor store in Indiana. I go there once or twice a year. Haven’t seen it since.

I did learn that any brewer has to pay $1,000 per year if distributing their beer in Michigan. Not significant for some but probably for others. Other states have similar fees but most are smaller.

 

It is not always the evil empire it is portrayed to be and allows some of the larger breweries to get their stuff to areas without having to manage supply chains/trucks/etc.

In NC, folks can self distribute (i.e. no middleman)up to 25K barrels and some larger NC breweries (OMB, NoDa) are fighting for a higher self distributing limit (?200K) but the distributors are fighting it.

Amazing how few breweries actually eclipse or even come close to 25K here.

Although they are maligned (and some should be for poor business practices), the reason you could so easily get Sierra Nevada (before they built Mills River), Founders, Bells and others so in NC was because of distributors so not all bad.

 

According to the TTB's numbers for 2017, less than 3% (168) of the 5,648 US breweries produced over 30k bbl/yr.

 

Craft beer is so much in demand right now that I've heard reports that distributors are approaching new-ish breweries that they have determined produce good beers in an effort to get these breweries into their portfolio. Can anyone confirm that this is happening?

Another quirky thing about the distributors' contracts with breweries that I've read somewhere is that once a contract is in place, the brewery has few options to break it in favor of looking for a better distributor. Any stories about that?

 

They actually track breweries that make less than one barrel. More breweries make less than one barrel than make over 7,500 barrels.