Evolving Three-Tier Dynamics Discussed at Brew Talks CBC 2017 (Video)

Do not upset the restaurateurs, warned Left Hand Brewing Company COO Chris Lennert during a wide-ranging Brew Talks panel discussion that examined an evolving three-tier system.

Acknowledging that brewery owners have shown a keen ability to build brand awareness via direct-to-consumer sales, Lennert cautioned that higher margins and multiple taproom outposts might not always be the best approach to growth.

“Piss off the restaurant associations, and now we’re in a fight,” Lennert said, noting that Left Hand operates just one taproom.

His argument? For years, bar and restaurant owners helped build awareness for small and local craft brands, only to watch many of those breweries begin competing for the very same on-premise drinking occasions.

“Guess what we’re doing right now? We’re pissing off restaurant associations around the country, and that’s not a good thing,” he said.

However, the proliferation of craft brewery taprooms wasn’t the only topic of discussion last Tuesday. Questions about a consolidating middle tier, e-commerce and the emergence of virtual distributors also emerged.

Dogfish Head vice president of sales Todd Bolig had his own warning: “Be aware of the Amazon threat.”

The e-commerce giant is testing out alcohol delivery in several markets and Bolig, who also said he lived within 100 miles of seven Amazon distribution centers scattered throughout coastal Delaware, raised fears that it could pose real issues within the three-tier system.

“If we don’t figure out how to operate more efficiently and get the beer our consumers are demanding, they will figure out a way to do that,” Bolig said. “We have to get better because we can’t hide behind the laws forever.”

“I’m not sure they can do it better, but they can convince people that they can,” he added.

Lennert recounted a conversation with one of Left Hand’s field quality managers who mentioned having difficulty getting into the company’s existing wholesaler partners’ warehouses to inspect the coolers, take the temperature and check date codes. How would that work with Amazon, he asked?

Massachusetts Beverage Alliance general manager Brian Murphy added that his company had recently hired a person specifically to enter information like alcohol by volume and pricing for new SKUs into the company’s system. The employee has logged more than 1,000 items since starting in December, despite Massachusetts Beverage Alliance only rostering 32 breweries in its portfolio.

Watch the entire discussion in the video, above.

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