So I am writing a paper for an independent study class this summer on craft beer as an industry. I am thinking about writing it on the 2nd tier of the system, the distributor. I want to focus on independent craft distributors. I'm excited because there isnt a lot of information out there & nervous for the same reason. In all honesty i have spent a lot of time learining about beer and how to brew it, but spent little time even thinking about distributors. Some things i want to focus on - how an independent distributor can remain economically viable when competing against large consolidated distributors. - start up costs - Trucks, walk in coolers (how big), trucks - How many employees - What profit margin is normal - Economic Outlook - what market factors can contribut to success or failure I'm not looking for someone to do my project, mainly looking for someone to point me in the right direction. Point to any literature, or other resources. Thanks in advance guys. Cheers
It sounds like you need to talk to like-minded folks at some of the craft-friendlier distributors? On the East Coast, Shelton Brothers, 12%, and Remarkable Liquids come to mind. I have to imagine that, with enough follow-through, you'd be able to get some serious interview time with a number of distributors.
Spoken as a brewery sales rep, the biggest downside to working for a craft only distributor is having to make your money solely on high margin, expensive craft beer (which have wildly less popularity than Bud/Miller/Coors). Any distributor that is a Coors house (just for example), and sells the entire Coors portfolio (Coors, Banquet, Blue Moon, Key Stone, etc) makes their money off of that volume. If they also sell Lagunitas, Stone, DFH, etc, that's an added bonus where more money can be made. At the end of the day any all craft house has to be an extremely well oiled machine to be prosperous, with a true functioning hierarchy to be successful, without the aid of Bud/Miller/Coors money coming in...which will always be coming in -- whereas craft beer trends, seasonals, etc are very variable and hard to predict.
Thank you for your response, my thought on the benefits of a all craft distributor is that they could attract a higher quality portfolio than a distributor that may give preferencial attention to Miller/Coors, Inbev.
I've worked for that third distributor in the market for over a dozen years now. I'm not as clear about the situation in franchise states where brands are essentially locked in place, but in my experience there is always room for the "other guy" in a market. Typically there are two or three BMC distributors in a market (Coors/Miller are not always sold by the same distributor) and at least one "all other" distributor. In my estimation the keys to success for them are: 1) flexibility - The company is agile and can respond very quickly, both to situations in the marketplace and trends in the industry 2) knowledge & passion - The beer they are selling is not a commodity to them. Their sales reps are not order takers 3) The company needs to know and understand that as they grow brands, the brands will probably leave at some point for "greener pastures" as they look to expand outside of their home turf. The distributor needs to accept that and plan for the departure of brands they've built and ensure they get equity in the deal. Then the flexibility kicks in and they have another brand to move to the forefront and promote to replace those lost sales. Profit margin isn't a start-up cost, but essentially what you need to remember is that even though the BMC brands are higher volume, they are lower margin for the distributor. Wholesale prices for them are essentially fixed into a structure so that the distributor can sell beer to chains for pre-agreed on prices for ads. These can be as low as 12%-15% for featured items and 20%-25% everyday. Craft/Import/Specialty beer typically offer a slightly higher gross margin at around 30%. Hope that helps.
Capitalization, a real business plan, mixed portfolio, genuine knowledge and passion, understanding customer service, and know how to deliver a keg 100 miles away on Friday PM when the bar owner calls and says he forgot to order an item. The keg side of the business is the toughest, and very important to know in advance.
http://greatbrewers.com/great-brewers-membership Many of the member distributors are 'craft only'. Hope that helps. I've also worked for a BMC distributor and a craft only distributor in sales, so if you'd like some more detailed information about markups or what life is actually like at one vs the other send me a private message.
I believe Stone Brewing works as a distributor for some of the California Craft brewers. Might be able to ping them for some knowledge and research.
Let me know when you are doing a paper on craft beer consumption. I'm somewhat of an experienced resource!
Even the trendiest of retail shops, destination bars, etc, will use all of the distributors. Craft only, Bud houses, Coors houses, etc. Money is money, no craft-only distribution will turn their noses up to an account if they don't think that that account fits into the trendy craft beers they sell. Many Bud and Coors distributors have dedicated craft salesman that focus solely on the craft side of the portfolio, whereas other salesman need to sell the entire portfolio, i.e. their Coors products and their Bell's, Cigar City, Stone, etc.
Just fyi, these are suppliers//importers. They don't drive trucks to stores, but they do get the beer from the brewery to the distributors. The 1.5th tier. Independent distributors are privately owned, so don't expect much information to be available publicly since there aren't any stock holders to 'woo' with volume numbers. You might be able to talk to someone in person, but I wouldn't expect anyone to want their name+company+sales figures all in one place, if you know what I mean.
That is interesting, I have never heard of this type of company. So for most distributors do they go pick up beer from accounts or do the breweries usually send it to the distributor?
