One Brewer’s Answer to Rising Tension with Retailers Over Taprooms

Dear Client:

One Ohio craft brewer seems to have an answer to the tension that own-premise operations can cause between a brewer and its retail partners.

Cincinnati, Ohio’s 4-year-old Urban Artifact seems the stuff of destination breweries. Their brewery taproom is housed inside a historic church. They also have a full bar and live music. “Our taproom holds several hundred people,” they say on their website, and they have a courtyard that they describe as “one of the best places in the city to sit outside with a beer.”

This seems like the type of brewer that retailers would cite as an example of brewery models that are cutting into their own sales: Why buy beer from these guys, is the reasoning, when they’re literally competing directly with me?

Urban Artifact seems to get that sentiment, because they sent notice to some retailer partners recently that seeks to address just that conundrum.

(The excellent John Lane of Ohio’s popular Winking Lizard Tavern chain alerted us to the program, with the following exposition: “Beer side is rough while spirits and wine continue to gain share in my restaurants.  This was just forwarded to me and I am glad that I do business with these guys. They get it and see what is going on in the market.”)

The brewer’s letter notes that, with 300 breweries now active in Ohio, many with taprooms of their own: “Within the past year we’ve noticed a changing climate in the brewery-retailer relations world,” it said.  

“GROWING TENSION” BETWEEN BREWERS AND RETAILERS. “There are more taprooms than ever, and whether some people, associations, or businesses want to admit it or not, there is a growing tension between brewery taprooms and retailer partners,” it continued.

Urban Artifact defends the brewery taproom as a marketing necessity and a way to combat “razor thin margins inherent in running a small craft brewery” by selling some beer at retail pricing. Taprooms were never meant to take business from retailer partners, Urban Artifact said. But.

The rapid expanse of this brewery type and more volume going through it, as some breweries open multiple taprooms, is “cutting into sales of their retailer partners which they are calling on week after week for sales.”

This isn’t illegal, they say, but to Urban Artifact: “it is not within the spirit of the law and the three tier system.”

RETAILER APPRECIATION PROGRAM OFFERS RETAIL-ONLY BREWS. Now, they’re not going to close down their taproom, of course. But they are starting a “Retailer Appreciation Program” whereby they’ll “periodically release special, limited and rare beers that will only be sold at retail locations. None of these beers will be sold at the Urban Artifact taproom [or to go].”

First up in the series is a Salted Rye Gose. Note says that taproom personnel will direct customers to their neighborhood retailers for the brew.

In the end, says Urban Artifact: “we care about our relationships with our retailer partners… and we hope with this public gesture” they can continue to nurture those.

Will other brewers follow suit? We’ll see.

WHAT’S NEXT FOR SUFFERFEST?

Yesterday, we shared news that Sufferfest Beer had officially moved its brewing operations over to Sierra Nevada’s home base in Chico, California.

Recall that Sufferfest, a three-year-old San Francisco brewer that helped to pioneer the functional brew space, was acquired by Sierra Nevada earlier this year, marking the California brewer’s first-ever acquisition [see CBD 02-04-2019].

CBD caught up with Sufferfest founder Caitlin Landesberg this afternoon to see how the integration is coming along.

Caitlin told CBD that the two officially shook hands on April 1, and they’ve been moving fast and furiously ever since.

Prior to teaming up with Sierra Nevada, Caitlin was renting a pilot brewery at UC Davis, coming up with her recipes there, and then taking them to a co-packer in Denver (Sleeping Giant) for production. “It was a little convoluted, to say the least,” she said.

Now all of Sufferfest’s production is happening in one spot, Chico.

Sufferfest has five beers in its portfolio, but is currently only focusing on the production of three in Chico: Flyby Pilsner, FKT Pale Ale, and Repeat Kolsch. New additions to Sufferfest’s portfolio are in the works, Caitlin said, but she wasn’t ready to give them away just yet.

The brewer is now rolling out this trio of brands aka their “consolidated all-star lineup,” through the distribution partners and footprint inherited from Sierra Nevada in California. Recall that Caitlin and company had mostly self-distributed their brands before linking up with Sierra.

For now, the focus is doubling down on their home turf (California). But Sufferfest is an “occasion brand,” Caitlin said, “we want to be the go-to beer at every finish line and for that reason you’re going to find us at more destinations.” Indeed, Caitlin shared that as they expand over time, they could begin production at Sierra Nevada’s East Coast facility in Mills River, North Carolina, so that suggests that they definitely have their sights set on the stretch of the U.S.

Still, the West Coast is their priority this year, Caitlin said, then branching out from there over time. They hope to hit some of the nearby territories such as the Pacific Northwest and Southwest in meaningful ways here soon, she said. Real soon, they recently signed on with Columbia in Oregon and Washington, and are just now introducing themselves there, Caitlin told CBD. Yep, it sure sounds like Sufferfest will be flowing through Sierra Nevada’s distribution footprint in a state near you here sooner rather than later.

Until Monday,

Jenn, Jordan, and Harry

“In matters of style, swim with the current; in matters of principle, stand like a rock.” – Thomas Jefferson

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