One Beer Article You Need To Read And Why, 11/29/16

There are so many stories surrounding brewery mergers and beer distribution that it can be hard to keep up with what is the most important things to remember.  This article does a great job of showing how the two issues are connected and how each exacerbates the problems caused by the other.  The one thing that I think is most clear from this article is that beer franchise laws are one sided screw jobs for most breweries in this country because most breweries are too small to buy their way out of these contracts.

When the brewers who self-distribute bring buy kegs we bought sometimes we’ll talk.  Often, we get around to discussing distribution and distributors.  One thing I’ve found is that many of the small distributors don’t want to self-distribute for too long.  It is hard, even if you hire a driver or two.  Also, at that point, you are running your own distribution wing instead of concentrating on the beer.  Some like doing that and some don’t.  Regardless, it should be up to each brewer to decide.  In other words, there should be no self-distribution cap.

For those that want a distributor, they ask me which distributors do I like dealing with the most.  The answers are easy, but I won’t go into them here.  Suffice it to say, the two or three I always mention are the smaller houses that a small brewery won’t get lost in.  The problem for breweries is this: If you sign a distribution contract and after a period of time it becomes clear the relationship isn’t right for you, you are screwed.  The franchise law was set up at a time when there were more distributors than brewers, so the laws were set up to protect the distributors.  Now, that equation has flipped, but the laws are still built to only protect the distributor.

This is where the breweries fighting the most for a lift of the self-distribution cap and I disagree.  I think it is more beneficial for more of the breweries in North Carolina to have legislation to make distribution contracts fairer for both sides (and cut the excise taxes in NC).

Here is the other advice I give brewers when we talk and they ask: Self-distribute as long as it is fiscally and physically possible.  If you are a brewery with a small distribution footprint, you will probably lose money going with a distributor.  You will pay less than the 30% or whatever the going rate is right now for a distributor’s cut in paying a driver or two and having a couple of trucks.

Another thing I like about his article is that it tried to look at the effects of the mergers and buyouts from the perspective of the smaller breweries.  Many times, the issues in craft beer are seen through the lens of the larger craft brewers that many people know.  However, the vast majority of craft brewers in this country are small.  They majority of breweries in this country are microbreweries meaning they produce 15000 barrels a year or less as defined by the Brewers Association.  These mergers and how they affect distribution won’t disrupt your Boulevard, Stone, or Ballast Point availability, but if a smaller brewery gets lost in the distribution shuffle it can affect whether you get their beer or if they even survive.