It’s a Choose Your Own Adventure book sometimes when it comes to distributing beer from outside the safe and comfy home of a brewery or brewpub. Paperwork, phone calls, brand reps, etc. It can add a pile of headaches and heartaches or it can lead to improved brand recognition, increased exposure and more money down the line.
With a plethora of methods, from self distribution among local stores and bars in the local area; using a distributor for regional growth; signing with a major distributor to expand into surrounding states or playing with the big boys of craft beer and going national, it takes resources, time and a connection with customers to get those bottles and cans leaving shelves.
After two years of self-distribution, Paradox Brewing in Woodland Park, Colorado, which specializes in barrel-aged wilds and sours, began signing agreements in 2014 to be distributed within the state. They moved onward with deals in Minnesota, Washington and in 2015, California.
Being specialized meant being selective in marketing their product was important, said Paradox’s Sales and Marketing representative, Carol White. “We try to go into a market with just enough beer, so that the stronger stores have the beer, and the local population gets excited, and gets out and looks for it,” she said. “We don’t want a saturated market. We have found for a higher-end product, this works better.”
Baltimore’s Raven Beer has seen changes in nearly 20 years of distributing his Edgar Allan Poe-themed brewery around the East Coast since opening in 1998.
“[Distributors] are more craft friendly now,” said owner Stephen Demczuk. “They expect more out of us than before,” he added, mentioning that distributors want more interaction and would like breweries to have sales or brand reps working closely with bars and retailers to help push their brand.
Demczuk said Raven Beer currently has nine wholesale distributors, which helps get his product into most of the Washington D.C. area, along with six surrounding states. He figures his Baltimore-Washington Beer Works brand is in more than 2,000 shops. They are in a stage of rapid growth after shutting down beer making for a spell in late 2014.
“[We] must be ready for any request. Each is different — small wholesalers in small or large territories, or large wholesalers covering large territory. Either size [we] just can not short them,” said Demczuk, who is working on expanding the facility after a move into a former bottling facility owned by Beverage Capital, which produced Snapple and Canada Dry.
His 30-barrel system has plenty of room for growth and expansion will be “no problem” according to Raven Beer’s website. Thinking and talking about moving into a new area is the fun part. The headaches come with dealing with paperwork and agreements. The drudgery is the flip-side of the coin.
“Every state is different, and a lot depends on whether the state has strong laws that favor the distributor,” White said. “There are more contract negotiations, and more attorney fees. … We have found some states [are] much easier than others.”
Demczuk said knowing who you are dealing with is a big plus. A distributor with a craft division is a must and a good craft portfolio is nice, but nothing too big either, Demczuk said. “It’s best to go to those who are selective and add on new brands once or twice a year only.”
Laura Lodge wrote the book on expanding into new territory. Her book, “Distribution Insight for the Craft Brewer,” is an informative, step-by-step look at distribution.
Although it’s good to have a solid group of beers and a backbone of experience in self-distribution, Lodge notes that standing out in the new market is key with so many brands available now.
“Someone who is unique in what they do, I feel they have an edge,” she said. “I think the biggest challenge when you want to expand is to have that unique personality and to be distinct. Your story and product can be something that is different in a distributor’s portfolio. If you can’t distinguish yourself from the masses, it’s going to be real hard to sell your story, and sell your beer.”
She says that was not always the case. “Previously, I would have said If you have a high quality product and a solid line of beers, not just one … and you have established your brand and have been successful in self-distributing, then that is really attractive to a distributor.”
One thing that White said she learned from Lodge was looking out for “Brand Collectors.” Brand collecting has been known to happen. A distributor will sign a brand, but the beer never actually will leave the dock. The only reason they signed the brewery was to make sure no one else in the market did.
State-by-state laws can make it a chore as well, which is why White suggests to “lawyer up” before signing anything. “Small craft brewers are running into the problem where things they are getting in their contract are not the laws on the books in that state,” White explained. “We experienced that in Virginia — who has some strong laws — and we choose not to go into that state because we felt it would take an act of Congress to get us out of our deal if we signed with the distributor in that state. There is a lot we have learned in this process.”
Lodge, who has worked in the middle of three-tier distribution for years, said that it should never be just the breweries job to sell their beer in the partnership with a distributor. “You have to learn to protect yourself from being in a house where no one is actively interested in selling your product,” she said. “You need to make sure there are annual goals in the contract and accountability requirements on both sides in order to have a successful partnership.”
A lot of the problems that arise can be because of varying state laws. “Whether the franchise laws are going to trump the contract that you set up with the distributors is a very important point,” she said, noting that even those that are fluent in legalese should have a lawyer on hand. “No matter what you put into your contract, and no matter how much they do or don’t do for you to uphold what they have agreed to in their contract, you’re not going to be able to leave, that’s most definitely the number one thing people should look for when they start their research project.
“It’s important to know if you can get out of a contract that you get into.”
Demczuk, who started in the beer business by starting a Beer of the Month club in Europe, has seen the differences in distributing between the U.S. and in Europe. Raven Beer is brewed in Germany as well as in Maryland. “If you ship over there it’s one thing, but brewing there is a different approach,” he said. “They can do it all: Open a store, sell gifts, have a bar and deliver themselves. In our case, we have a warehouse [in Germany] and we sell directly from there.”
Overall, White says that it’s been a positive experience in learning the landscape of expanding the Paradox brand name. “We are trying to grow slow, so we are being careful,” she said. “We want to go into the right markets and with a distributor that appreciates our product. We aren’t a run-of-the-mill brewery. It’s just one of those things you kind of learn as you go along. Working with new states and getting to talk about our beer with people that are outside Colorado is really fun.”
2 Trackbacks / Pingbacks