Columbia Distributing Sets Framework for On-Premise Retail Return

Portland, Oregon-headquartered Columbia Distributing has laid out its plan for addressing the voluminous amount of out-of-code beer at bars and restaurants in its three-state footprint that were forced to temporarily close in mid-March in an effort to stop the spread of the COVID-19 outbreak.

In a letter to around 13,000 retail accounts, Columbia said it will exchange all out-of-code untapped full kegs for fresh kegs of the same or similarly priced offerings “in order to reduce the significant financial burden that bars and restaurants are sustaining as a result of the closure.”

Retailers will have 30 days from the date that the three state governments lift orders shutting down the on-premise — which is still to-be-determined in all three states — to get the kegs replaced.

Columbia — which is one of the largest beer wholesalers in the U.S., distributing more than 74 million cases of product across Oregon, Washington and California — also said that starting May 4, it will begin offering a credit for kegs shells. On that date, the wholesaler will begin picking up the keg shells — it’s asking retailers to empty them.

As for out of code packaged beer or non-alcoholic beverages, Columbia said most packaged offerings would “still be in code and acceptable to serve,” with just a few “rare” exceptions, once the on-premise reopens. Still, the company said it would replace the products with similar offerings if the on-premise closure is extended and the products expire.

Columbia noted that although the state liquor control agencies are not requiring it to take these actions, it’s doing so anyway.

“We’re certainly going to take the hit up front, but we believe long-term, whatever we can do to try to keep the business alive, we’re going to do,” Jesse Ferber, Columbia senior vice president of sales for Washington, told Brewbound.

“Certainly, it’s not a charity,” he added. “We’re investing in what this thing’s gonna look like six months, or two or five years down the road. If we can maintain those businesses and help out now, we feel like we’re investing in the future.”

After the first three weeks of the on-premise shutdown, the National Restaurant Association said 3 million jobs were lost and 15% of restaurants had either permanently closed or would soon close.

According to the Wall Street Journal, 10 million gallons of beer is going old in on-premise retailers across the country.

The return of on-premise dining and drinking in Oregon, Washington and California — which have formed a coalition, along with Nevada and Colorado, on how to reopen their respective states — is still undetermined. However, Oregon Gov. Kate Brown has included breweries, tasting rooms, wineries, bars and restaurants in the state’s first phase of reopening, whenever that does happen, according to the Associated Press.

On Wednesday, Washington Gov. Jay Inslee said he plans to extend the state’s stay-at-home order, which was expected to expire on May 4. Inslee is also expected to announce on Friday some plans for a phased-in reopening plan. California Gov. Gavin Newsom has also put together phased reopening plan, and that plan includes restaurants and retail in its second phase.

“We’re going with the assumption that the next couple weeks they’re gonna start to look at loosening some of the some of the restrictions,” Ferber said.

In the letter to retailers, Columbia noted that a limited amount of inventory would be available to retailers initially, as brewers will need time to rebuild draft inventories. Ferber said Columbia will be meeting with its larger regional brewery partners in the coming days to discuss plans for rebuilding inventory, but it will almost assuredly be limited in order to limit risk.

“We don’t want to bring in a whole bunch of a product that may or may not go out of code,” he said. “And, of course, the big question is, is the on-trade going to be down, 30%, 50%, or more? So if we bring in too much product, we’re going to run into this issue again. So it’s a very delicate balance. We’re going to try to bring in enough to get everyone back into business, but not so much that we run the risk of more out-of-code product.”

So who is picking up the tab for the expiring beer? In most cases, Columbia’s suppliers are splitting the cost with the wholesaler, typically offering a 50/50 split, although some are offering 60/40 or 70/30, Ferber said. Some companies have also extended the date codes for products.

Among Columbia’s suppliers across in its three-states footprint are Molson Coors, Constellation Brands (Corona, Modelo, Pacifico), Boston Beer Company (Samuel Adams, Dogfish Head, Truly Hard Seltzer), Deschutes Brewery, Firestone Walker, Georgetown Brewing, Lagunitas, New Belgium, Rogue Ales, Sierra Nevada and Stone Brewing, among others.

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