The Impending Train Wreck Over 10 Barrel

Interesting Read. Thanks for posting. It will be interesting to see what happens. I know when I was in the industry disty rights have a huge effect on what goes where.

 

I must be missing something here. If Maletis is an independent AB distributor already, then what is the issue? AB wants Western to distribute 10 Barrel, but Maletis is going to keep distributing the normal AB stuff? What? Why wouldn't they just let Maletis keep distributing 10 Barrel? Sure they could make a little more money by distributing 10 Barrel through an AB distributorship, but we are talking about one area. Either this article was very poorly written and I just didn't understand or this is the most ridiculous fight ever.

 

In my complete personal, non professional opinion, I think that that blog post really discounts the value of other AB products to Maleitis. As much as BA would love to celebrate a Bud distributor dropping Bud to just distribute craft, I don't think we'll see it in the next ten years (if ever). AB products still make so much money, I'd be shocked if a distributor was willing to turn down the money they make in favor of craft.

I suspect AB will either just "get over it" and move on, letting them just distribute the product since it's already an AB distro anyway....or they will go nuclear on Maletis. Not sure which of these are legal options in Oregon, but AB could strip promo dollars (so Maletis' prices will go up several dollars a case, making it uncompetitive against Miller), they could strip packages from Maletis (by only selling them select inventory) and hold back distribution on any other new brands (like the other new Spring product coming out next month and any other new acquisitions that they make).

It would be interesting if 10 Barrel is actually that profitable for Maletis, or if they're doing this hoping for a big payoff to AB. I think AB can put a lot more hurt on Maletis than the other way around...

 

I think there is a lot of background that would be useful for me to understand the issue.

Why does Maletis distribute AB when there is an AB house that serves Portland? Was Western just later to the game, and contracts were not up with Maletis?

Distribution is a sector of the industry I'm just beginning to understand.

 

It is an unusual (but not unheard of) situation - typically a distributor has exclusive rights for a brand/brewery within a specific geographical region. How Portland wound up with 2 AB houses - Maletis and Morgan* - (even before AB bought the latter and merged it into Western) would be an interesting story.

From AB's Wholesaler website:

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I love it!! I like it when the bully has to take it in the shorts, even more so when its in my back yard!!

 

Interesting. Thanks for that. I forgot that Western was Morgan, which was bought a year ago.

I think you answered your own question right? Portland wound up with two AB houses because Morgan was bought by AB. Isn't this where this is all stemmed from?

Edit: I'm not sure if Morgan carried AB products prior to the buyout.

 

And I am the crazy one when I say that buying ANYTHING AB/InBev is bad for craft beer?

 

According to records, Morgan (then in nearby Oregon City) started as a Blitz-Weinhard distributor, and became part of the Anhueser Busch network in 1964. Seems very unlikely that AB would buy a non-AB house.

Do retailers in Portland actually have a choice of which of the two distributors they buy AB products from - or is the city/county divided up in some manner? It is not unusual for a distributor to have a more limited distribution area for some of their brands than for others, based on how the brewery divided up the state for its exclusive distribution rights regions.

 

As much as I like seeing In-Bev get "the business", this demonstrates how much power distributors have at this point. When the most powerful and richest beer company in the world can get screwed by a distributor, imagine how much control they have over your typical small craft brewery. If a distributor wants to "park a brand" and not promote it, it dies and the craft beer manufacturer has little to no recourse without paying through the nose. Hopefully legislation can be crafted and passed that can equalize the playing field to balance the control and power between brewers and distributors. (Yea right, someone is going to get screwed the question is who?)

 

Franchise laws are in great need of reform, and are the main obstacle keeping more 'craft'-oriented small distributors from emerging to better serve the community. It definitely is ironic that one of the bigs is so affected in this case, but I still think they will fight tooth and nail to keep any meaningful change from happening.

 

It is ironic because In-Bev has been arguing for strengthening the distribution laws to protect themselves from craft brewers self-distributing or selling in tap rooms (e.g. Florida).

 

I'd assume Bud Light Mixxtails (out currently) and Oculto, supposed launch date 3/13, though some distributors already have it in stores. As I said in my prior posts, the bigger risk to Maletis (as I see it) is as AB continues to acquire craft brands, that they could be cut out of those. According to beer business daily, AB is going to start cracking down on distributors who aren't towing the line appropriately. If I had to guess, there isn't a single brewer who,can add as much to a distributor bottom line than ab.

As a side nite, the new summer "Rita" coming out is actually pretty good (for what it is) there already is a mango-Rita.

 

I enjoy seeing people stick it to AB...and I will never tire of hearing about it.

 

eh, I'd like to see people stop buying their beer... But in the meantime it's nice to see inbev get into some problems.

 

Don't be naive. AB has the power in this situation. Pulling their products from a small, regional wholesaler would really sting this business. Maletis is hoping for a payoff in my mind. If they piss AB off, AB will hurt them. It's not gonna end well for them if they don't play this very carefully.