Brewers Association On Three-Tier: Self-Distribution Key

March 22, 2011

Brewers Association On Three-Tier: Self-Distribution Key

Dear Client:

The Brewers Association today issued a new position statement on the “Importance of an Independent Three-Tier Beer Distribution System.” While it hasn’t changed too much, one issue that the BA membership has been more vocal about lately — particularly as it has come up in legislation in several states — is the importance of the right of small brewers to be able to self-distribute, up to a certain barrelage at least. The BA says in the new statement that…

“The American consumer should have access to the widest range of beers made available by licensed breweries. The success or failure of a beer should depend on beer drinker demand, rather than artificial restraints to distribution. BA supports laws that respect and enhance beer drinkers’ choice in the marketplace. State laws should support an independent distribution tier that is unencumbered by undue influence, ownership or control by the largest brewers and ensures access to market for all brewers. For small brewers, the ability to be licensed as a distributor is often an essential element that serves to provide them access to market and increase consumer choice.”

BA chief Charlie Papazian told CBD that the policy statement “intentionally left out specifics, like what the barrelage cap should be, because it varies depending on the state, and we are a national organization…. The barrelage cap for self-distribution in Montana may be very different that what it should be in Massachussettes [home of Boston Beer and Harpoon].” Many small brewers, from Steve Hindy at Brooklyn to Greg Koch at Stone, have said in the past that the ability to self-distribute initially was crucial to being able to get their breweries off the ground. But Steve eventually sold off his distributorship as it got larger to focus on marketing his brands. As Charlie points out, “it’s a natural progression. Trees with two shoots grow more slowly than trees with one” after it’s past the budding stage. On the other hand, Stone still self-distributes in its core markets, along with other craft brands.

ANCHOR WITHOUT FRITZ

Succession plans are a hot topic in the still-burgeoning craft beer industry. But legendary craft brewer Fritz Maytag did it the simple way: He sold it outright, although interestingly not to a competing California brewer. Instead, Fritz sold the company last year to Keith Greggor and Tony Foglio, mostly known as spirits industry gurus of Griffin Group liquor consultancy/investment fame. Could such leadership usher in the iconic brewery’s next golden age?

That’s a big question. One major focus that Fritz pioneered is craft distilling. According to chief John Dannerbeck, Fritz really thought craft distilling could “set the world on fire.” But it’s been a long, hard slog since Fritz fired up his first still in the 1990s. But as usual, Fritz was before his time, because as Keith mentioned when he took the stage at a media event at the brewery yesterday, artisanal products are up across every segment, period. And craft distilling is starting to take hold across the country, and naturally craft brewers have the skill set and some of the equipment to take part. Anecdotally, already being in the San Fran area for CBC, we’ve heard that Sonoma- based Bear Republic is ramping up to do some distilling with local winemakers, involving some hopped liquid; we’ll be visiting 50k capacity Ballast Point later this week to see what they’re doing with bourbon they haven’t sold. So the craft brewery slash distillery is a much bigger – and fragmented – market that can be accurately quantified at the moment. Rogue and Dogfish Head have been doing it for years, among others. It’s a trend to watch

Anchor is no exception. The brewery makes a little less than 1,000 six-barrel cases of three varieties of Old Potrero whiskey, to include a straight rye, 18th century style, and 15-year bourbon barrel aged Hotaling’s, named for the whiskey warehouse and only institution saved after the 1906 fire ravaged San Francisco. Currently they’re only distributed in NYC, Chicago, Boston, and a few one-off markets. John says they can’t keep up with demand for the small-batch products, but when distilling production move across the street, output will ramp up and new markets – or at least deeper forays in existing ones – are likely . (The company’s artisanal Junipero and Genever-style gin products enjoy a much wider range of distribution around the world at around 5,000 cases; that could be bumped up, too.)

PREISS IMPORTS ABSORED BY ANCHOR. Before the Anchor purchase, Griffin Group owned Preiss imports, importer of Scotland’s infamous BrewDog and Australia’s Coopers. As of last month, Anchor got a warehouse for the latter two brands, and is now the official importer. Lots of changes to structure and ownership of the company, per John. Stay tuned.

OH YEAH, BEER: Some talk about Old Potretro barrel-aged ale, a blend of Anchor beers aged in Old Potrero barrels, getting some distribution. Also lots of rumblings about their new seasonal, Brekle’s Brown, an all-malt, single-hop brown ale. We would not be surprised if that became a yearly occurrence for the brewery.

BEER BRIEFS:

ODELL’S WILL START SELLING beer in Idaho come April 4, according to a company statement. It is the 10th state for the brewer. Distributor partners in the region include Stein Distributing, Watkins Distributing and King Beverage.

BUMP WILLIAMS CONSULTING is introducing a new company, Consolidated Beverage Services, which seeks to represent small and mid-sized craft brewers at the retail chain headquarter level. Craft brewers can farm out their category management and representation instead of hiring staff exclusively, by “pooling their resources to minimize the costs associated with hiring a retail chain manager(s).”

GRANITE CITY, AMERICA’S SIXTH LARGEST BREWPUB GROUP with 26 units across the Midwest, has just announced the launch of a bottled beer line. Bottles of its Northern Lager, Brother Benedict’s Bock and Duke of Wellington will reach retail outlets in the Twin Cities, St. Cloud, Sioux Falls, Fargo and various Kansas markets starting in April, according to company statement. Earlier this month we reported on the company’s first foray selling beer off their own premise, at Saint Paul arena Xcel Center.

TAPHANDLES, an on-premise tap handle developer, has just announced the launch of a new marketing services division to include brand development, design and custom products. “Since we are fully integrated from design to production, we offer branding solutions that can scale with the brewer’s business,” said creative chief Oceania Eagan.

Until tomorrow, Jenn

“Everyone thinks of changing the world, but no one thinks of changing himself.”
-Leo Tolstoy

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