Top Menu

What happened to the concept of local?

A post headlined “Less is More? Are There Too Many Beers?” has provoked quite a conversation about beer distribution on the World Class Beverages blog.

But only one of the comments I noticed addressed what jumped out at me.

Right now, the Brewer’s Association will tell you that there are almost 600 breweries in the United States that bottle, can, keg or otherwise distribute beer. That number doesn’t count the many hundreds of brewpubs that brew beer for sale in their restaurants. In most markets, there are only 2 or 3 beer distributors that will carry and sell craft beer, which leaves a theoretical total of 200 to 300 brewers per distributor in any particular area, not including the wide array of import brands that are currently available.

That would imply that every packaged beer should be available in every market.

Why?

7 Responses to What happened to the concept of local?

  1. Bob Mack March 12, 2010 at 3:40 pm #

    When I wrote that comment, it was meant to illustrate an extreme. If you take a more reasoned approach and figure that perhaps 100 craft beer suppliers are available in any given market (which is a low number for many markets), then you are still left with 50 or so brands per distributor, which is still a big number. Much bigger than most distributors are used to handling.

    I am not suggesting the every brand should be available in every market, but I am suggesting that the sheer number of brewers is very large these days versus the number of distributors and that could be a problem for brewers who are looking to get some time and attention from their distributors.

    In the end, consumers and many brewers still approach distributors in my market all the time asking for more brands. Indeed, I’d argue that some of the allure of the craft category is based on the sheer variety of brands.

    I’m not saying that variety is a bad thing, nor am I saying that variety has to ultimately represent every possible choice, but there are brewers and distributors out there who are concerned about brand proliferation and I think that subject merits some consideration.

    Cheers!

    Bob Mack
    World Class Beverages

  2. Alan March 12, 2010 at 6:38 pm #

    Doesn’t it just imply that they could be available with unlimited resources? The practicality of marginal return for most brewers keeps them local. Without the power or celebrity or other faux marketing “premiums” there is no differentiation justifying every beer in every market.

  3. Swordboarder March 14, 2010 at 4:53 pm #

    One might also argue that there aren’t enough distributors. 50 brands per distributor is only 2% of mind share and that’s assuming everyone is equal. It also indicates a lack of focus.

    Local is an achievable goal if that is the goal. Allow self distribution up to a certain volume. The advantage is that the brewer doesn’t have to “pay” the distributor the 30% mark up to deliver the beer, which is all the distributor is really doing at less than 10% of mind share anyway. Instead the brewer is able to hire a sales/delivery person with 100% of mind share. The cap on volume still allows the distributors to exist in a very functional way. But self distribution makes lower volume breweries more profitable and at some level stuck locally distributed because it makes less financial sense to distribute your beers somewhere else. It also doesn’t take foreign beers out of the market because these beers can still be handled by a distributor.

    Average beer consumption per capita in the US was 81.6 L in 2004. That’s 21.54 gallons. In an area of a 1,000,000 people, they would consume almost 700,000 bbls. If half of that goes through a distributor and the cap of self distribution is 15,000 bbls (microbrewery size cap by the BA) then it would allow 23 local microbreweries to exist at a 15,000 bbl size, many more if they’re distributing less. In the US (300 million), it would allow for 7,000 microbreweries. That’s way too many for everyone to be distributed, but it is enough for a significant amount of diversity and over time a level of appellation to a region.

    Think Globally, Drink Locally? :)

  4. Stan Hieronymus March 14, 2010 at 7:14 pm #

    Thanks for doing that math, Dave. Of course I love the idea, but I’m not sure how many brewers you’ll find willing to stop at 15,000 barrels.

  5. Swordboarder March 15, 2010 at 7:27 am #

    I’ve got at least another 40 years in this industry Stan, let me see how far I can get.

  6. Sean Inman March 15, 2010 at 12:20 pm #

    I’m glad this “too much” issue is being brought up now because whether you are pro the current distribution system or con there is going to come a breaking point and it may come sooner than expected.
    There is probably a backlog of craft breweries out there stymied by the economy who will come online when banks start lending again. Then the pressure to sell all brands in your portfolio will only increase.
    I think that all options should be put on the table. Self-distribution being one concept as is an overhaul of the current system.
    The goal is to allow brewers who want large distribution to have access and not end up in a Ticketmaster situation and the ones that want to stay local like New Glarus can do that too.

  7. todd March 19, 2010 at 2:54 pm #

    You rock Dave!,,,,,so do you Mr. Stan!

Powered by WordPress