Distributors Don't Need Your Beer

Beer distributors don’t need your craft brewery’s beer. It’s not what you want to hear, I know. Look, it’s not you or your beer, it’s the fact that you’re not local. Distributors already have plenty of out of state breweries and regional brands. In many cases, they are fighting just to keep their out of state breweries at a flat rate of growth. At the end of the day, they will be able to achieve their annual goals without adding more brands. This is a major paradigm shift that’s only just now coming to fruition. Your brewery is simply not relevant outside of your market. Are you going to build a taproom or brewpub in your expansion market? Are you willing to add field sales representatives, a state manager, and hire a national chain key account manager? How sophisticated is your marketing? How is your beer going to stand out in the market and why is it worth a distributor’s time and investment? 

Within a few short years, thousands of breweries have opened across the country and distributors’ books are filled to the brim with exciting local brands. Pale Ales, New England Style IPA’s, Porters, Imperial Peanut Butter Stouts are made just ten miles down the road at ‘Neighborhood Brewing Company’. This is great for a distributor for many reasons. Beer is heavy to transport relative to the price it commands. Logistically, they can ship beer for less than $.50 per case from the local brewery to their warehouse making it more profitable. And the local brewery is sampling hundreds, if not thousands of customers per week at their taproom creating brand awareness and advocates daily. A local brewery can have more interaction with their local distributors and when combined, can lead to very powerful force in the market. Local is where it’s at. And the quality of local beer is getting better and better all the time. How can you compete?

Now more than ever you have to provide so much more than just great beer to expand your distribution footprint. You must offer something that local breweries don’t offer and you should really think long and hard about expanding if you aren’t willing to invest and dedicate significant resources to making it work. I implore you to consider doubling down in your home market. Forget expanding into more states until you fully develop your backyard. Compare your brewery’s market share with that of your local competition and determine if you have room to grow. But hey, I understand if you have to pay for that new 30,000-Barrel brewery. Expanding distribution is a natural way to fill those fermentation tanks. So how are you going to lock-up distributors? Here’s what it takes to make your brewery attractive to distributors:

Bold Branding: You must have a great brand that transcends geography and connects with consumers visually and culturally outside of your home market. You don’t have to be all things to all people but you do need to appeal to a sub-culture that’s large enough to sustain you. I recommend working with a professional graphics designer or a design firm to help you develop branding that will really pop off the shelf. Don’t bother pitching your brand if it has a label with a fish jumping out of a lake and mountains in the background.

A Great Story: One of my favorite breweries right now is Bale Breaker Brewing Company in Yakima, WA. They grow their own hops and their brewery is located in the middle of a hop field. That’s a story you can take to the bank.  Not everyone has the luxury of having a truly remarkable story, but don’t try to fake it either. You have to be true to who you are.  What is unique about your brewery that will differentiate you? Its not enough that you make world class beer and have won a ton of awards. Distributors have plenty of brands with stories about home brewers who won their homebrew club competition and quit their job to start a brewery.

Go High-End: The high-end or super-premium category within craft is still growing very quickly and it’s a great way to set your brand apart. Keep your Ambers, Pale Ales, and Porters in your home market. Ship the barrel aged sours out of state. Think cork-finished 750ml barrel-aged or farmhouse style beers. This could be a better strategy than trying to pit your IPA against a local brewery’s IPA. If your high-end beers develop a following and strong sales, it will be much easier to introduce your core brands down the road.

Feet on the Street: Breweries that aren’t willing to invest in sales representatives are not going to be attractive to distributors. In today’s market, its essentially a non-starter. More and more distributors are turning into logistics companies rather than sales organizations. Their sales representatives have a list of brand priorities and your brewery is at the bottom of the list. That means that your brewery is responsible for selling-in. With so many bars that rotate their draft handles, a distributor is more concerned with maintaining their share of taps than selling your unique brand. Without a brewery rep in the market, your brand will get lost.

Build an Outpost if you can: This is simply not in the cards for the vast majority of breweries, but I think the future of competing with local is becoming local. Melvin Brewing Company which is based in Alpine, WY is currently building a brewpub in Bellingham, WA. They have not yet opened their new location, but they are already creating all kinds of buzz in the local market. In some states, its simply not possible for an out of state brewery to build a taproom due to three-tier laws. But if you have the fortitude to do it, it can be a great strategy and I think it’s the way of the future.

The current environment for craft beer is becoming incredibly saturated, but there is still plenty of room for strategic growth. Make sure you partner with a distributor who understands your vision and is willing to commit time, money, and effort to making your brewery successful.

Matt Thompson is the principal owner of Thompson Craft Beer Consulting based in Seattle, WA.   https://www.linkedin.com/in/mattqthompson/