January and February were brutal months for industry-wide beer shipments, which declined 6.9 percent, according to the Beer Institute. As harsh winter storms and cold weather ransacked the northeast into early March, DC Brau CEO Brandon Skall stared at tanks full of beer and nowhere to put it.
“I think the biggest concern for a brewery that cares about its product is freshness,” he told Brewbound. “We need to make sure that it (the beer) is getting out fresh and that it is being managed properly, instead of holding on to beer and letting it get old. You have a choice to make.”
DC Brau’s current wholesale and retail partners were fully stocked, leaving Skall with two options: scale back production or open a new market.
For Skall, dealing with the slowdown by decreasing output was not an option. Although the company had opted to throttle back production in previous years, an aggressive 2015 expansion plan and a newly signed lease for additional space justified the need for an alternative approach.
That’s when it clicked: What if an out-of-market wholesaler was willing to purchase fresh product, one time only? Beer Advocate’s Extreme Beer Fest in Boston was approaching, DC Brau would already be in town and it had a relationship with Massachusetts Beverage Alliance (MBA), a distributor that had helped the brewery bring product into the state for the 2014 festival.
So, as the Dropkick Murphys once sang, Skall shipped it up to Boston, and the idea of “burst” distribution was born.
Skall swears he didn’t coin any kind of new phrase or strategy, but did admit that he used the term to explain the idea during a phone call with Brian Murphy, the director of sales and marketing for MBA.
Murphy, on the other hand, describes burst distribution as somewhat of a new tactic for craft brewers looking to seed markets with product before an official launch.
“For breweries, there are so many different possibilities on why they would want to do it,” he said. “It might be cost efficiencies on freight when they are sending beer to a fest or as a reward for a city being a ‘great craft beer town.’ That’s how a lot of breweries want to present it.”
Though it’s not quite industry parlance, yet, burst distribution, as described by both Skall and Murphy, gives fast-growing craft breweries like DC Brau a chance to get familiar with a new marketplace before investing in local sales reps and sending regular shipments.
“Our production is growing rapidly but we are not necessarily ready to open up any new markets with a steady supply of products,” said Skall. “This is a good way to get people talking.”
From a wholesaler’s perspective, it’s somewhat of an olive branch — showing potential long-term craft suppliers that you’re willing and able to move product, even in limited quantities.
DC Brau will test its first so-called “burst” in Boston this month. The company sent 64 kegs and 700 cases of its flagship offerings — The Public Pale Ale, The Corruption IPA and Penn Quarter Porter — to MBA, which has already pre-sold to Boston-area retailers.
“It is a great way for us to build some buzz around the brand before we are ready to launch full-scale,” said Skall.
DC Brau will not immediately look to “burst” distribute in other markets, but Skall said he hasn’t ruled out the possibility of taking this approach in the future.
The obvious risk of a ‘burst,’ however, is the issue of franchise law. In most states, brewers give up their territorial distribution rights once they sign a distributor agreement. Without proper vetting, brewers looking to send small amounts of product into a new market could unknowingly find themselves in a strict and binding wholesale contract.
“I would be very cautionary towards anyone trying to do this,” said Skall. “We were already in a situation (with MBA). We had been in talks with them for a while and worked with them in the past.”
Ryan Sentz, the co-founder of Florida’s Funky Buddha Brewery, which has experimented with temporary distribution outside of its home state for special events, echoed Skall’s words and stressed the importance of understanding how important a market might be to a brewery’s long-term business plans.
“It’s foolish if you don’t want to do your due-diligence,” he said. “Unscrupulous distributors might be saying ‘yeah, come and try it out,’ and you could have just signed your life away.”
Sentz said the company sends “a couple pallets” to Philadelphia each year for the famed “Philly Beer Week,” and, as part of the arrangement, the brewery also signs what he called “expiring contracts” with Bella Vista Beer Distributors.
“The last thing we want to do is start sending beer out and not be able to keep up or run out of supply for Florida because we are sending it somewhere else,” he said, explaining that one-time contracts gives his company the flexibility experiment within a burst model.
Other notable craft brewers have toyed with the model as well. Michigan’s Short’s Brewing has sent one-off shipments to Boston for years and Chicago’s Revolution Brewing also recently partnered with MBA for a shipment of product prior to Extreme Beer Fest.
And although the orders are traditionally much smaller, Skall said it’s still possible to turn a profit.
“There are always profitability issues with remote markets but, in general, I think it is [profitable],” he said. “I still see it more as a nod to a market that has been asking for us to send some beer to it for a long time. That goodwill will hopefully be translated into the market.”
Regardless of whether DC Brau gets paid in greenbacks or goodwill, its beer will flow in Boston for a limited time this month.