Add Karl Strauss Brewing Company to a small but growing list of craft breweries expanding beyond self-distribution and into broader beer wholesaling.
The California-based beer maker, which launched in 1989 and is recognized as the first commercial craft brewery in San Diego since prohibition, has distributed its beer to on-premise retailers throughout San Diego and Orange County since 1991.
Now, in an effort to help smaller craft players gain better access to thousands of bars and restaurants, Karl Strauss is boosting its portfolio to include a “select group” of local beer products, according to Mark Weslar, the company’s vice president of marketing.
“Delivering our own beers on-premise has helped us develop an expertise selling to and servicing local bars & restaurants,” he said via a prepared statement. “We look forward to helping some brewery friends build their business.”
Black Plague Brewing Company and Benchmark Brewing Company are the first two companies to sign with Karl Strauss, for on-premise distribution only, and more brands could be on the way, according to Weslar.
“There are about 130 breweries, or more, in San Diego,” he told Brewbound. “We are being selective and looking at breweries that want to expand their presence, make great beer, have a lot of upside and have complementary portfolios to our line of beers.”
Distribution competency has always been at the core of the Karl Strauss business. Prior to launching the brewery, co-founder Chris Cramer got his start in the beverage industry as an undergraduate at Stanford University, where he built a banquet business that supplied the booze and operated the bars during on-campus events.
Decades later, Karl Strauss — which brewed more than 78,600 barrels of beer in 2016 — has expanded distribution of its beer throughout California and currently operates 10 brewpub locations. But it isn’t the only San Diego craft brewery that distributes on behalf of other craft brands. The much larger Stone Brewing also runs a full-scale Southern California distribution company that sells a number of prominent craft beers to on and off-premise retailers, including products from Russian River, Modern Times, Oskar Blues and Victory, among others.
On its website, Stone – which produced 346,000 barrels of beer last year and was ranked as the ninth largest U.S. craft brewing company by industry trade group the Brewers Association — claims to offer the “best selection of craft beer of any single wholesaler in Southern California.”
But for Karl Strauss, building a large portfolio of brands and creating a full-fledged distribution company isn’t the goal, Weslar said. Instead, the company is simply looking to offer its cold storage space, a fleet of delivery trucks and a team of sales reps to other local producers looking to scale their on-premise businesses.
Karl Strauss’ on-premise business is “nearly all draft,” added Weslar, and the company has no intentions of expanding its distribution division to include deliveries to off-premise retailers. Approximately 15 percent of the company’s beer is sold via its brewpubs, Cramer said at an industry conference earlier this year.
Elsewhere across the country, breweries such as Harpoon and Night Shift in Boston, as well as Crooked Stave in Denver, have built distribution companies that sell other craft brands. Maui Brewing, in a joint venture with Stone Brewing, also operates Maui | Stone Craft Beverages and distributes a variety of products throughout Hawaii.