Beer Grey Markets: What Can Breweries Do?

I suppose any attempts at controls would depend on how active the government authorities might be in the countries involved. I don't know whether a brewery itself can control this type of activity unless they are able to self-distribute the beers. Maybe this question would even be best read if it were in the Asian forum where other BA members who are in the know will see it and provide input.

 

The grey market exists because the customers want the product, but at the same time they're innocent because they're most likely not aware that it's on the grey market.

It's the seller that's to blame but they're just trying to make money. And if they're not bringing the product in, then it's their wholesaler who's the real criminal. But what's the big deal? It's not that much of a crime, is it? And therefore it's not much of an issue. Will they be fined? Will their goods be confiscated? And then they just start up again because there's no jail time.

I've seen beers on the grey market (Westvleteren, The Alchemist) but I had no problem with it. In fact, I might say that I'd be enticed to buy it if I didn't have access to it elsewhere, so isn't it a "service"?

Conclusion, if a brewer sees their product on the grey market they can, and should, report it and get it shut down. They don't want to get in trouble for illegally distributing, and they don't want beer in a market where they have no control over it. What would happen? Probably not much.

A greater concern of mine would be an actual fake product. That's a problem.

 

Not a problem, but a potential blessing. Skunked argument aside, how else are you going to create global demand and grow beyond domestic audiences? While you don't reap direct profits you do reap hard-to-measure brand awareness. Someone is doing it for you and you come in later to officially launch at a much lower investment basis. Of course, that is if your product doesn't stink to begin with; we've reached the point a lot of stuff our there in our shelves is being made by brewers that are going to disappear with the next economic downturn because their product is sub-par for 1 reason or another... they don't have to worry about gray markets.

 

I'm curious how much control a brewery has once they sign on with a distributor. Following the North Carolina/Old Mecklenburg lawsuit regarding self-distribution, I'm assuming not much.

 

I think it certainly is a potential problem, but not the biggest problem in the universe.

The case you've presented isn't one that would upset me. As a consumer, I'd be happy to pay a little more for something out of market or rarely seen in my area. What I do see as a problem though is hoarding of limited products and then selling them by many folks in the US. Then again, I'm not so sure it's a problem so much as how things simply work when we talk about a limited product. To my knowledge, there has never been a case where a small group of resellers have controlled a huge percentage of a limited release's output. If that were to happen relatively often then I'd see it as more of a problem.

OK, but back to your specific case. I really just wish trade laws around alcohol and laws around alcohol distribution in general would catch up and more easily allow these breweries to potentially reach out and grow further. Then again, do they really want to get that available? Doesn't that make them less viable long term?, etc.

 

That is what's happening in many cases. There are news reports of this very thing in foreign countries. It would actually be cheaper and less risk to just have a knock off product manufactured in China. There is hardly any patent law in China.

 

The Craft Beer Industry as a whole needs to start lobbying to be able to distribute their beer to whatever State they want to. Alcohol consumption has been legal in every state for a while.

As far as foreign countries well that's another story. Maybe the "Bigger " craft brewers need to open up shop in S. Korea and Hong Kong, Vietnam, Thailand, and Japan. Sounds like there is a demand for the product.

 

Unfortunately, that’s easily said, but virtually impossible to do. There is an old saying in the business;

Brewers brew

Wholesalers distribute

Retailers sell


The ultimate success comes when all three execute professionally

 

In the U.S. it is entirely legal for any brewery to distribute in any state.

The business side of that is a different thing. How much would it cost to ship your beer from Maine to Hawaii? Would people buy it at the price that was needed to cover that shipping? And how much would it cost to have representatives there to keep an eye on it? Distribution is a whole side of brewing that's far more difficult than most people think because it's a "live" product that has an expiration date.

 

Self distribute? No. Sell to wholesalers in any state? Sure.

 

More than half the states allow some form of self-distribution and/or the permit brewers to own wholesale licenses, but very few do it out-of-state. Anheuser-Busch has a network of Wholly-owned Distributionships made up of about 2 dozen of their 500 or so wholesalers, and account for about 10% of their total sales. Brooklyn owned a Massachusetts distributorship briefly in the late 90s-early 00s and there was a case where Rhinegeist Brewery lost its ability to self-distribute in Kentucky when that state outlawed out of state brewers' self-distribution in a move aimed at AB.

It was more common years ago - in 1940, half the beer sold was distributed to retailers by the brewery or from brewery-owned 'branches" - and, likely, contributed to the demise of some large regionals since they tended to sell them off as they lost market share. Coors sold off most of their company-owned distributors over the past few decades (still own one in Denver) and P. Ballantine & Sons once had a network of company branches on the east coast, and other large NYC brewers, Schaefer and Rheingold also did much self-distribution. Five million barrel Schaefer, as the #6 brewer in the country in the early '70s, sold more beer through their own branches than independent wholesalers.

Likely today it would be even less economically feasible for most small breweries to warehouse beer out of state (granted, not necessary for brewers close to a border) and run around delivering small quantities (often less than ten cases) at a time. I'd think in today's already overcrowded market, where so-called "own premise" sales are the growth segment for "craft" beer, very few brewers are not expanding into new states because they can't self-distribute. And, likely, few retailers would want to deal with 100s of beer vendors rather than the half dozen or so distributors might now use.

 

Have a twelve year old order beer from every single seller on MBC and other sites, and then from the others that will spring up. Videotape and document everything. Complain to authorities and present evidence. Have lawyer on retainer to assist prosecuting the criminals and to protect against relatliatory lawsuits.

 

I was just chuckling at some instagram photos a friend in the industry posted of a few vials of Treehouse product that were obviously flat, and that some douchecanoe was willing to spend serious money on it.
All I can think is that the person is a chode sucker, and it's perfectly in line with cheat you fair. Actually.
I'd hate to deal with them as customers. But. I'd also want the kind of serious money they are willing to piss away on something.
What can breweries do? Laugh at the jerks, I suppose. But, also. Harness the hype these new money fools create somehow and work on stealing from the "promotional" energy it creates. If it is promoting the product. (which it does) Great. Use that.

 

That applies to pretty much any crime that involves money.

 

i can buy Focal Banger in NYC .. on black market lol

why is it a problem? over regulation is a problem

 

I think having an aftermarket is fine as it enables people who cannot get the product to acquire it. The biggest issue I have is the grey market sales entrepreneur has different priorities than the people who truly drink and appreciate the beer. The grey market salesperson is concerned with profitability and running a business whereas the beer drinkers often are concerned with mutual sharing and enjoyment of the product.

The grey market also therefore has it that more often than not someone is buying out and hiring mules to purchase rare and hard to get items and then marking them up by ridiculous sums of money. I think the brewers would be better with a fair resale of their product for purposes of sharing not profit. After all, Cycle didn't sell it's Rare Scooop or Angry Chair it's BA IGCCS for $500 out of the gun. They both sold for $35. Sure, market it up a bit to cover some costs but more than 2x the price is absurd. Plus, let's face it, how many grey markets sales people have a license recognized by the ATF for liquor distribution? (ans...very few to none).

So, if the brewer is truly concerned with grey market over sales or such, then they need to take time to identify people that do it and ban them from buying their beer outside of the same market they want to sell in.

 

So in other words....just like licensed distributors.

 

I'm not sure why people are blaming regulation on the black market. These breweries aren't making enough product to supply other states and the people in them. There's no law that they can't sell to licensed distributors across state lines. They probably wouldn't be able to self distribute on that big of a footprint anyway, so I doubt that is a big issue. Beercation, or drink your own local brews like normal people. Trade even, but why pay big money for beer? It's not going to be worth the price you pay, especially after half assed unrefrigerated shipping.