Exclusive Taps in Exchange for Discounts/Limited Stock?

Discussion in 'Beer Talk' started by Japancakes, Mar 3, 2015.

?

Do you agree with locked-in taps for discounts + limited beer?

  1. Yes

    47.4%
  2. No

    52.6%
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  1. Japancakes

    Japancakes Initiate (29) Jan 1, 2010 California

    Want to know what everybody thinks about breweries offering discounts on their stock and only receiving access to their limited release beers if you agree to lock in a tap with one of their core range products.

    Personally, it feels a bit weird to only get limited releases by agreeing to have a constant core range beer on. First, that's what I see Budweiser and Coors doing in exchange for discounts. Second, that's a fraction of the taps that I can't rotate out. I understand that everybody wants to buy rare stuff all the time and that the quantities are limited though.

    Maybe it's more normal than I realize?

    Dealing with this right now in multiple instances. Just wanted to get some other opinions.
     
  2. tmbgnicu

    tmbgnicu Zealot (507) Mar 15, 2014 Pennsylvania
    Trader

    I don't know about taps, but it's certainly true for limited stuff in cases at distributors/bottle shops. There's a reason no stores within 60 miles of me got any BC vanilla or coffee- they didn't sell enough GI throughout the course of the year(the quota was insanely high from what I understand). And there's a reason that my normal shop didn't get any KBS last year- they didn't sell enough Founders stuff throughout the year. Craft brewers sort of have to limit a limited beer to their best accounts, I've always understood that. It's the nature of the beast right now, and it's definitely not changing.
     
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  3. Akerstache

    Akerstache Initiate (0) Feb 20, 2015 Germany

    While I'm not too familiar with the practice (given that craft breweries haven't had an easy time getting their stuff on tap outside of their own pubs here afaik) I'd say it may be smart business sense. I mean, why give distributors/bottleshops or anyone for that matter limited releases (that likely require more resources, i.e. more investment) when you can't be certain whether they'll be sold? In addition to the fact that you'll make more solely due to the fact that your stuff sells well/better. So my hypothesis would be that it just makes more financial sense to do so.

    Can't say it bothers me, either. So far I've not really been too intrigued by limited - particularly BA - releases given their price point.
     
  4. fredmugs

    fredmugs Initiate (0) Aug 11, 2012 Indiana
    Deactivated

    I have no problem with it. Smells like capitalism to me.
     
  5. Alpha309

    Alpha309 Initiate (0) Nov 13, 2014 California

    So if I make widget X and store V sells more of widget X than anyone else, they do not deserve more of widget Y when I make it? I should just send it to store G who has never carried any of my product and I don't know if they could move it? I mean it just makes sense. The store moves more of my product, so I know if I send it there it will get sold and distributed. It is bad for business to send the product to places that are not going to move it, because then the perception becomes that my product just sits on the shelf and no one likes it. While if I would have sent it to the store that moves my product, the fact that people are buying it creates a desirability to others buying it.

    Same applies with beer.

    So yes, it is 100% fair.
     
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  6. Japancakes

    Japancakes Initiate (29) Jan 1, 2010 California

    Thanks for the input. I totally agree that stores who are already successful in selling product would likely sell limited releases more dependably. However, a lot of the limited releases like BCBS and KBS would sell anywhere they were stocked so that's not necessarily the issue.

    There's 4 sensible responses here in favor of the practice (yes), but the votes are currently 61% "No". Would love to hear an objection since people clearly aren't all in favor of it.
     
  7. scottakelly

    scottakelly Zealot (526) May 9, 2007 Ohio

    Reward a loyal business partner - I see no problem with it.
     
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  8. dennis3951

    dennis3951 Initiate (0) Mar 6, 2008 New Jersey

    Depending on the state you live in it can be illegal.
     
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  9. largadeer

    largadeer Poo-Bah (3,905) Sep 24, 2006 California
    Society

    Generally no. It's somewhat complicated.

    As someone that runs a bar with a rotating selection that leans strongly toward more cutting edge beer, it can be pretty tough for me to move core beers from some breweries. And frankly, a lot of breweries have core product that's uninteresting, dated or just mediocre. On top of that, when a brewery is pumping out weekly batches of the same beer, freshness becomes a major issue as distributors are sitting on large quantities.

    Sierra Nevada Pale Ale, for example, while certainly a good beer, is an impossible sell for me because my customers are looking for something less commonplace. On the other hand, I can sell the hell out of a beer like Barrel Aged Narwhal. You could quite easily have the complete opposite situation at a different bar with a different group of customers. I'm willing to be that most bars that sell a ton of Sierra Pale Ale would struggle to move a more niche product like BA Narwhal. So should Sierra only sell BA Narwhal to places that move a lot of Pale Ale, or does it make more sense to send BA Narwhal to a place that's more likely to appreciate it?

    I can say this: if I had to sell a ton of SNPA to get that occasional keg of BA Narwhal, I wouldn't bother. Not worth it to me to struggle through a bunch of core product that I'm not stoked on and my customers aren't stoked on just to get a few kegs per year I do care about.
     
  10. tjensen3618

    tjensen3618 Disciple (396) Mar 23, 2008 California

    As a distributor, it makes most sense to send my only keg of BA Narwhal to my best customer that requests it.
     
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  11. Auror

    Auror Defender (623) Jan 1, 2010 Massachusetts

    Just another form of pay 2 play. If your policy is limited products go to places that sell the most, fine. But agreements and locked-in tap = no.
     
    Andrew3366 likes this.
  12. Alpha309

    Alpha309 Initiate (0) Nov 13, 2014 California

    But I am sure you order other Sierra Nevada products. From the sound of your bar there are quite a few of their brews that you would be happy to order, it is just their flagship beers that wouldn't move. And you would be very interested in those products that you could move, possibly something like Hop Hunter when it first was released. In my eyes that keeps you as a good customer to the brand.

    Now if your establishment had 10 lines and it was Bud, Bud Light, MGD, Miller Light, Coors Light, Sam Adams, Blue Moon, Sam Adams Seasonal, Stella, and Heineken and you were requesting something, then the answer should be no, because you are not a good customer at this point.
     
  13. Giantspace

    Giantspace Savant (967) Dec 22, 2011 Pennsylvania

    is this not illegal?

    Enjoy
     
  14. yemenmocha

    yemenmocha Poo-Bah (2,902) Jun 18, 2002 Arizona
    Society

    I like it because of the alternative that can exist sometimes. Distributors can engage in various shenanigans such as giving the limited releases only to certain employee preferred retailers, and those preferred retailers are NOT necessarily the ones that sell the most of their beers (or other suitable justified reason for giving that retailer the beer).
     
  15. mwa423

    mwa423 Initiate (0) Nov 7, 2007 Ohio

    Here's the problem with this entire discussion, in many states pay to play is very illegal. That being said, it's impossible to get rid of. I know many states, a distributor has to offer product at the same price to all customers, but allows for the reality of capacity constraints. So, let's say I want to do a special six pack for ONLY Wal-mart. So, what I do is I find out how many Wal-mart is willing to buy and put that many into my production planning schedule. Then, my first call is to Wal-mart who buys exactly how many I will have sitting in my warehouse. Why did I call Wal-mart first? There's no law saying I have to call Joe's liquor before Wal-mart and so Wal-mart gets it's "exclusive package" (which would be available to everybody...if I had any to sell them).

    More relevant to this example, if a distributor has 5 kegs of Hopslam, that's all he is going to get, ain't no more, he has to sell it to anybody at the same price (in most states). Well, his first call will probably be to the guy who has Two Hearted and Best Brown 365 days a year. Why would it be to the local yuppie craft joint which only features rarities and singles? After all, if he does that, Jim Koch will probably be wandering around the keg room screaming at bartenders about freshness dates.

    None of this is put in writing of course, because in many states it's not legal, but hey, if you want to be the first guy who gets the call, be a great customer...

    This sounds like the bar owner who doesn't get the call about (insert limited release here) playing the role of the customer who is mad that he never has access to (limited release stored in back) at beer stores because he buys most of his beer at the gas station.
     
  16. Rback

    Rback Initiate (127) Feb 26, 2012 New York

    No
     
  17. dennis3951

    dennis3951 Initiate (0) Mar 6, 2008 New Jersey

  18. WhoKnew23

    WhoKnew23 Initiate (0) Oct 20, 2014 Michigan

    Why should places, who don't support the brand, get limited beers and people who support the brand, not get them?

    The limited beers are going to be sold regardless. They won't sit on them. It is a 'Thank You' for supporting certain brands.
     
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  19. Boomer4ES

    Boomer4ES Initiate (0) Jan 31, 2012 North Carolina

    I would just like to be clear that this is not something the breweries are doing. This is very common practice for distributors however. When you have 500 or more accounts and you get 5 sixtels of a limited run beer, you give them to the accounts that support that brand the most. It's not that they are being forced to hold a core-brand tap in most cases, but being rewarded for supporting the brand with limited beer. I work for a distributor and this is my experience at least. The breweries have absolutely no say in this in most cases.
     
    drtth likes this.
  20. GregJ

    GregJ Initiate (0) Sep 24, 2014 Louisiana

    Lets say as a business I am the most loyal customer of your products but when it comes time for a special release with very limited quantities it is offered to the general public and I am not able to obtain any......... that would be terrible. You reward your best customers, that is how you keep them coming back to you. This is not politicians and special interest groups (although we know they do the same thing i.e. campaign contributions) where money is NOT supposed to influence their decisions, this is capitalism as it should be.

    No one is forcing you to keep their beer on tap, you need calculate the difference in profit between having fresh and interesting rotating taps but no special release VS locking in that tap and having access to limited releases. Basic business principals and a basic fact of capitalism. Good luck
     
  21. GregJ

    GregJ Initiate (0) Sep 24, 2014 Louisiana

    I agree, it is the distributor, but if breweries were in charge of their own sales they would do the same thing, or similar. It is just smart business practices.
     
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  22. MikeTheVine

    MikeTheVine Initiate (0) Dec 4, 2014 Massachusetts

    Posting in a great thead.

    While I totally am all for "pay to play"... I see a few bars (in the Boston area) get constant limited release stuff... like they have 40 taps... and 20 of them are really great "random" beers... I was at Armsby Abbey in Worcester and literally over 50% of their taps are top notch stuff... That being said... if a distributor knows you're in a "niche market" then they may hook you up.
     
  23. frazbri

    frazbri Initiate (0) Oct 29, 2003 Ohio

    It's not a simple Yes/No for me. As a couple others noted, it is illegal in many places to do this. That said enforcement is lacking, so it happens all the time.

    I don't mind when a bar that doesn't normally carry a brewer's standard fare gets shutout on special releases. Where its bothersome is when a distributor pushes some unwanted product as a package deal. Its a thin line.
     
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  24. deford

    deford Initiate (0) Nov 11, 2013 California

    All this talk about beer is making me thirsty....
     
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  25. thedivebar

    thedivebar Initiate (28) Feb 26, 2007 Massachusetts

    We do not pay to play. Our tap list is the results of years of building relationships with brewers and working our fucking asses off.
     
  26. billandsuz

    billandsuz Zealot (502) Sep 1, 2004 New York

    The American three tiered system is seriously flawed and outright broken in most states.

    Paying for real estate is just bad business. Any bar owner that agrees to sleep with the mob should not be too surprised when he or she ends up sleeping with the fish. As a business owner that is in competition with some distributors and by extension their corporate masters, I see the lousy and outright illegal practices frequently. It is good for nobody except corporate suits who would may be selling liquid detergent tomorrow.

    Quite simply, the big brewers are more interested in keeping the competition out than they are in seeing the bar succeed.

    Cheers.
     
  27. SensorySupernova

    SensorySupernova Initiate (0) Mar 21, 2014 California

    I do not like the lock-in part for completely selfish reasons. If a restaurant has 5 taps available, which is pretty common, I would like the available options to be good. If a brewery has one tap locked there is no way for something better to displace it. And for all you capitalists, it is anti-competitive to allow the restriction of access to markets (even if it is by a private entity).

    I don't care about the limited release stuff, though.
     
  28. billandsuz

    billandsuz Zealot (502) Sep 1, 2004 New York

    Wrong!
    The practice of providing any favors, access to business, money or anything is 100% illegal in New York, and the law is quite clear.
    Anything that is offered by a distributor to one account must be offered to every single licensed holder in their distribution area.
    Breweries are forbidden to interfere with the business of the distro.
    This is 3 Tiered Distribution 101.
    Cheers.
     
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  29. surfcaster

    surfcaster Zealot (526) Apr 20, 2013 North Carolina
    Trader

    I said no because of the "locked in" concept but feel strongly that allocation should have some relationship to volume/loyalty. Why shouldn't it?
     
  30. evilcatfish

    evilcatfish Defender (619) May 11, 2012 Missouri
    Trader

    I see a difference between "pay to play" and a business relationship between a establishment and brewery/distributor where the retailer is offered certain incentives. From what I know, its fairly common for a distributor to set up and maintain a draft system at a place in exchange for guarunteed lines. I've spoken with a distributor friend of mine and he said their lucky if they get half the taps when installing a new system and its usually like one fourth.

    Also, bars/restaurants often take "bids" of sorts from their distributors promising more business to the one who will install the fanciest equipment, supply the nicest marketing materials, etc. I don't consider either case unethical, as business relationships like these are common in many industries.
     
  31. sgulner

    sgulner Initiate (161) Apr 16, 2011 Massachusetts
    Trader

  32. WillWillows

    WillWillows Initiate (0) Feb 2, 2013 Ohio

    Want to drive past 5 spots just to get a draft beer different than Scud or Filler? Think watery stadium beer.
     
  33. MikeTheVine

    MikeTheVine Initiate (0) Dec 4, 2014 Massachusetts

    Awesome man... good for you guys :grinning:
     
  34. mwa423

    mwa423 Initiate (0) Nov 7, 2007 Ohio

    You apparently missed common sense 100 and skipped to 3 tier distribution 101. I look forward to your explanation of how a distributor with limited stock offers it to everybody.

    Another curious thing I have seen in the thread is the suggestion that any brewery who has an amazing limited release doesn't have at least one solid full time beer know their lineup. Want kbs? Put centennial ipa on tap. Want Hopslam? Devote a handle to two hearted. Want zombie dust? Give a tap to pride and joy. While I understand if you own a small craft spot, you want every limited release dedicated to you alone so you can bring yourself a ton of business with no effort, it's a terrible business move for the distributor to humor you.
     
  35. billandsuz

    billandsuz Zealot (502) Sep 1, 2004 New York


    you are missing the point. intentionally it seems. and more to the subject at hand, it is still illegal for any distributor to offer favors. limited release or not, the law is clear.

    but i will entertain your you for the sake of argument.
    gaining access to a limited release beer is not predicated on keeping another brand from the distributor. again, it is illegal.

    i think i understand your logic, that a retailer who "supports" one brand should be "rewarded" with something. this is absolutely illegal, in NY and most everywhere else. it goes against the entire premise of the 3 tier system. look it up.

    consider that the vast majority the distro sells is macro. if you want my zombie dust, i want to see Bud Light and Stella... then we will talk. this arrangement hurts small brewers. and craft brewers are tiny in comparison to the macros.

    I don't like the 3 tier system any more than the next craft guy, but your argument is not valid. the system is broken and needs to be fixed. you are still incorrect about the current law, been that way for a long time now. my aggressive response is due to the fact that you do not know the basic fact but throw your hat into the ring. twice.

    Cheers.
     
  36. maltmaster420

    maltmaster420 Initiate (0) Aug 17, 2005 Oregon

    Those two examples are the very definition of pay to play. They're also highliy illegal in many states.

    I've never been tolkd, "You have to buy X amount of one brand in order to have access to rare beer from another brand", but it's incredibly commons for the distributors to allocate the limited supply of something like Parabola based on YTD sales of the rest of the Friestone line up.
     
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  37. Alpha309

    Alpha309 Initiate (0) Nov 13, 2014 California

    But this argument is missing the view of the distributor.

    When they are making their sales calls, they are probably going to call the places that move their "less popular" craft brews first to serif they can move the even rarer "limited release" beers.

    A bud/miller/stella/sam Adams is viewed as easy to move, so the bars selling them are not really demonstrating the skill to move them.

    My job is selling. If I know a particular person's taste, and what I am selling meets that persons taste I am going to push them in a certain direction for my product. Same if I know the product will not suit someone else's taste. I am probably not even going to bring it up. It is different if the person says they are looking for something different than what they normally want, I may push whatever I have left from my previous calls. And honestly, someone that buys mostly macro are easy sells, so they are going to be my last calls. It is just having them refill previous orders.

    The limited beers are still offered to everyone, it is just that they are limited, and my first calls on them are going to be to the people I think are going to buy them, or be more interested in buying them, so the chances of them being gone once I get past a few of those bars is very high.
     
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  38. mwa423

    mwa423 Initiate (0) Nov 7, 2007 Ohio

    Sigh. OK, maybe I have to be more clear because you're not considering the big picture. Distributors don't make an absolute quid pro quo, because yes, that's illegal in many states. They don't say "sell x kegs of y beer or you don't get any limited release z." instead, distributors know who their best accounts are and they get the first call on the limited release stuff. Is that a favor? Yes. Does any bar owner who has an IQ above 6 understand this? Yes. It might not even be a brewery specific thing. Maybe the bar which gets Hopslam sells a truckload of Founders every week (this assumes it's the same distributor).

    I assure you, as a guy who works with distributors from coast to coast and Alaska to Texas, I understand the realities of the beer business, whereas you seem content to cry about what "should happen". I addressed what I am describing is legal about ten posts up, apparently while typing up your whiny rant, couldn't be bothered to read it. I'll type slowly and use small words and maybe you'll understand: It's simple, there is no law that doesn't allow a distributor to make sales in any order he wants. If he has 6 kegs, he can add it to his price list, but when it's gone it's gone. So, who does he call first? The people who he wants to keep a strong business relationship with. Who are those people? Generally, the guys who have bought tons of beer from him in the past.

    So, yes. Distributors "reward" accounts for prior business with "favors". This isn't illegal in any state because it isn't an absolute quid pro quo.
     
  39. bubseymour

    bubseymour Poo-Bah (3,435) Oct 30, 2010 Maryland
    Society Trader

    Its been well documented that the brewer doesn't really profit directly from the sale of their whalez/limited release stuff. Probalby not the distributor either nor the large store owners (Total Wine etc) or large craft bars either that pack em in every night because they already get a multitude of high end stuff all the time. On the flipside, if a smaller craft bar can actually get the opportunity to acquire from the distributor a rare limited release keg sent to them, then their customer volume would boost significantly for the day(s) that keg is tapped, especially if they post online their current taps. This current day and age with social media ensures that a rare sighting of BCBS coffee etc. will be found quickly and that establishement will be flooded with beer nerds until the keg is killed. There is no need for the big volume places to get the rare stuff only. That must be a mindset from past decades.
     
  40. billandsuz

    billandsuz Zealot (502) Sep 1, 2004 New York

    Interesting.
    The question is "Do you agree with locked in taps for discounts and limited beer?"

    My answer is no. It is illegal.
    The broken three tiered system is a debate for another day.

    Thanks.

    Well, no. Favoritism is in fact illegal. Even if we pretend that it is not. That is the system we have, not the system you may want. "Absolute" quid pro quo is your invention.

    This debate is going nowhere. I know it to be. Your ad-hominem attacks gave it away.

    Cheers.
     
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