New National Beer Wholesalers Association (NBWA) chairman Peter Heimark laid out his vision for what beer (and beverage) wholesalers will be facing over the next year during his remarks at the NBWA’s annual conference Tuesday.
Heimark, the president and CEO of Heimark Distributing in Indio, California, began his one-year term as chair, calling this a “pivotal moment” for the industry, due to the pandemic and the evolving nature of the distribution business. The three-tier system is “constantly under attack,” he said, echoing the theme of a challenged industry shared by other speakers during the conference.
A third-generation distributor, Heimark detailed his family business’s history, connecting the dots between several supplier terminations that forced Heimark Distributing to change course and the threat that state-level franchise law reforms pose for wholesalers.
“There should be no doubt about how important it is to me, to protect our business and grow them as well — businesses that we’ve all worked tirelessly to build sometimes across multiple generations, as is the case for my family,” Heimark said.
Heimark referred to his company’s forced sale of its rights to the Constellation Brands portfolio in 2018 to the Reyes Beer Division, and Falstaff Brewing’s termination of the wholesaler in 1963 when his father and grandfather ran the business as evidence that franchise laws offer necessary protections.
“These not only safeguard our long standing investment in the industry, but they help maintain crucial distributor independence, this independence helps protect the market from the heavy hand of a dominant supplier or retailer,” Heimark said. “It prevents them from blocking competitors or limiting access by restricting distribution.
“Believe me, I’ve been through it. I know from firsthand experience how disruptive force or threatened terminations by suppliers can be to our industry,” he continued. “I’m glad NBWA is working with states to protect the laws that keep that from happening.”
California does not have strict franchise laws that lock suppliers into distributor relationships, allowing the movement of brands such as Constellation from Heimark’s Triangle Beverage.
Constellation’s termination “could have been the end of us,” Heimark said, adding that the company was forced to part ways with 100 employees as a result. Nearly two years later, Heimark and Anheuser-Busch InBev swapped distribution rights in Southern California, adding up to 3.5 million cases to Heimark’s portfolio, facilitating the need to hire about 100 employees.
“Can you imagine that — a brewery saying they needed a distributor?” Heimark said, drawing some laughs from the audience.
The stresses between some breweries and wholesalers have been on display in recent months, including a second round of comments from the Brewers Association to the Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau (TTB) as part of President Joe Biden’s executive order on competition in several industries, including alcohol. NBWA president and CEO Craig Purser yesterday called the comments “an eleventh hour, no-holds-barred criticism of the state regulatory system of the three-tier system.” Heimark pointed out that the middle tier provides “unprecedented growth and competition” within the beer industry, particularly for craft brewers.
“The number of breweries nationwide has grown from less than 50 in the 1980s to more than 10,000 today,” he said. “We should all be proud of the work that we do on behalf of the American consumer and economy. And yet, the attacks and challenges continue.”
Heimark urged NBWA members to remain engaged in the organization’s advocacy efforts, particularly in light of the Biden Administration’s request for more information about the state of competition in the beer industry.
“We have a relatively new administration in Washington, and we must advocate to ensure they understand the important role of beer distributors,” he said.
Other challenges facing the middle tier include “the expansion of e-commerce, the expansion of large chain retailers, efforts to allow direct-to-consumer shipping, including alcohol through the mail, as well as challenges from brewers large and small,” and the expanded legalization of cannabis, Heimark said.
“This is the clear direction our country is moving in, and we all need to be prepared for the benefits and challenges,” he said. “It’s critical that cannabis legalization does not harm alcohol regulation.”
Before being named president of Heimark Distributing in August 2020, Heimark led Triangle Distributing in Santa Fe Springs, a former sister company to Heimark. He has been a member of the NBWA board since 2016, and is a co-founder and board member of the California Family Beer Distributors, an organization formed in 2020 “to protect our family-owned member companies from forced consolidation leading to monopolies in the industry.”