Microbrew wholesalers, distributors, and supply chains

Discussion in 'Pacific' started by Dfeliciano421, May 16, 2012.

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  1. Dfeliciano421

    Dfeliciano421 Initiate (0) Apr 27, 2012

    My thoughts on all of this is very disorganized. However, despite my confusion on the subject, I thought it would be good to consult with the beeradvocate community to help me better understand the business side of running a craft beer shoppe in California. (I.E. Buying micro brews wholesale and selling them retail)

    Okay so I googled microbrew wholesaler. With out much luck. This website, http://www.micromatic.com/beer-wholesale-distributor-cid-5042.html, was the best that I got. Of course there are no descriptors of the various distributors. So I was wondering if anyone knew of any microbrew wholesalers. Or Wholesalers who will also sell micro brews. Also, what are the advantages of having a distributor? For instance, with feasibility in mind, why not just become your own distributor and keep it a small operation? How do I see what a wholesaler offers?

    I am not a student of business, so how does distribution work? How do all the various beers get from where they are being brewed to the distributing warehouse? How to producers and distributors make contact? What kind of contracts are involved?

    The initial thought was that, if it is feasible to become a distributor, then I could buy strait from the producers and not have to go through a middle man other than myself therefore cutting costs. Since I would be running a small time brewing operation, the distribution would also be small time I would only need 1-5 independent contractors for truckers, and some kind of reasonable storage space.

    Is this absurd? Or can this feasibly and realistically be done?
     
    #1 Dfeliciano421, May 16, 2012
  2. IceAce

    IceAce Pooh-Bah (2,274) Jan 8, 2004 California
    Pooh-Bah

    OK...first things first. Take a deep breath and answer a few questions:


    Once you have a chance to digest this info...c'mon back, give us some additional ideas as to what you want to do and maybe we can assist!

    Cheers!
     
    #2 IceAce, May 17, 2012
  3. Dfeliciano421

    Dfeliciano421 Initiate (0) Apr 27, 2012

    "The average California beer wholesaler has a workforce of 138 employees; some wholesalers have as many as 600 employees while others have as few as 7 employees. Beer wholesalers provide their employees premium wages and compensation packages which include 401K plans, health insurance, and incentive bonuses."

    I read this on the third website listed. The part I am most interested in is, "...others have as few as 7 employees." I am interested in that part because like I said I would keep my operation small.

    Something that I noticed about the three tier system is, "The independence of each tier prevents the formation of vertical monopolies and corrupt sales practices in the beer industry"
    Is this to say that I could not own and operate a small beer wholesaling business while simultaneously operating a retail craft brew shop? Even if I were licensed to do both?


    Like I said the goal, if it is possible is to become a wholesaler for my own shop so I do not have to have a middle man. If it is not legal then essentially I just need to know more about the process of how wholesalers contact brewers or vice versa.( I.E. do they just call them up, are they introduced through an association or mutual friends?) It would be nice to know who draws up the contracts had between them too.

    Thanks Iceace. Do you work for the industry?
     
    #3 Dfeliciano421, May 17, 2012
  4. Enish266

    Enish266 Initiate (0) Nov 11, 2008 California

    #4 Enish266, May 17, 2012
  5. theconductor

    theconductor Zealot (739) Nov 4, 2008 California

    No, you cannot be a distributor and a retailer.
     
    #5 theconductor, May 17, 2012
  6. Rau71

    Rau71 Initiate (0) Dec 12, 2011 California

    You also are not supposed to be a brewer and a distributor, but that has stopped many breweries from doing so.
     
    #6 Rau71, May 17, 2012
  7. IceAce

    IceAce Pooh-Bah (2,274) Jan 8, 2004 California
    Pooh-Bah

    Wholesale operators come in all shapes and sizes. Having a small operation is possible, but not an attractive model for attracting brewers.




    You are correct in that you cannot operate as a Wholesaler and a Retailer simultaneously. The state of California will not extend a license to sell alcoholic beverages to an entity holding a wholesale license. Technically, this applies to all employees of a wholesaler as well...




    Ahhh...now I see. If you are hoping to do all of this just to avoid the middle tier, I'm afraid you're not going to like the answer. Wholesalers are contracted by brewers to sell their product within a specific territory and are given exclusive rights. Trying to become a wholesaler just for your retail operation would mean a seperate contract for every brewer...it's simply not going to happen because wherever you open shop, odds are 99.9/100 that territory is already represented by a wholesaler.




    You're welcome...and yes, I've been on the wholesale side of the biz for 19½ years.
     
    #7 IceAce, May 17, 2012
  8. jesskidden

    jesskidden Grand Pooh-Bah (3,145) Aug 10, 2005 New Jersey
    Society Pooh-Bah Trader

    Contrary to the claims of some of the posts above, California, like more than half the states, allows brewers (in some cases, limited to certain size or license) to self-distribute. The specifics of the Three Tier laws are not universal and will vary from state to state.

    (From The Brewers Association page on Self-Distribution Laws):



    ​
    Altho' your OP is somewhat confusing:

    Are you a potential retailer, as "... I could buy strait from the producers..." suggests, or are you a brewer as stated here "I would be running a small time brewing operation..."?
     
    #8 jesskidden, May 17, 2012
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