DISTRIBUTOR CONSOLIDATION PRESENTS SOME CHALLENGES
Something else that is finite? The space on a distributor’s truck — which is becoming more valuable as wholesalers consolidate. According to the Beer Institute, there were 168 fewer wholesalers in 2011 than in 2001.
That’s a concern for small brewers, who are already struggling to find routes to market.
“It is more important than ever to professionalize the front end of your brewery,” said Magee. “Distributors are totally motivated to work craft, now, but they have limited bandwidth and they will work best with those who are most prepared for game day.”
And game day is something that distributors will tell you many craft brewers simply aren’t ready for.
“They spend a lot of time tweaking and working on recipes, but how much time do they spend preparing to introduce a go-to market strategy with a distributor,” said Steve Zulanas, the vice president of sales & marketing for Allied Beverages.
Nevertheless, Magee contends that wholesalers are more motivated than ever to sell craft — and they’re proving it with some serious investment in their own businesses. At least three large craft beer distributors said that in addition to investing in more personnel, increasing warehouse space and streamlining trucking efficiencies, they are also actively changing the ways in which craft reaches the retailer’s shelf. Those retailers claimed that adopting new go-to-market strategies are helping them balance an increasing number of stock-keeping units (SKUs).
In other words, distributors are betting on the future success of craft, and they’re not alone.
NEW RETAIL OPPORTUNITIES
A host of new, non-traditional retailers are beginning to pay greater attention to craft as well.
Included on that growing list of new outlets adding craft to the mix are airlines, cruise ships, national restaurant chains and perhaps craft’s most promising new frontier — convenience stores. Many craft brewers at the GABF said they’re excited about the possibilities in those emerging channels.
“We get interest from places we never thought to look every day,” said Ted Whitney, Avery Brewing’s national sales director, citing large national restaurant chains, like T.G.I. Friday’s, that approached him about carrying the Avery brand.
But it’s craft’s emergence in the convenience channel that has many brewers excited about future sales. According to the National Association of Convenience Stores (NACS), sales of craft beer rose by 13.9 percent in C-Stores last year, and many believe that number will grow in 2013.
“Convenience stores are huge, that is where a huge portion of our beer is purchased actually,” said Rob Widmer, Widmer Brothers Brewing co-founder. “We are always looking for a place, maybe non-traditionally that would be an opportunity for somebody to buy a beer.”
As part of the nationally distributed Craft Brew Alliance portfolio, Widmer is one of the few craft brands that have been able to make an early leap into the convenience channel — but more brewers are aiming for that channel, and more C-Stores are aware of the potential that craft holds for them.
Widmer is certainly optimistic and so is the Brewers Association. The non-profit trade organization that represents the interests of craft brewers said it hopes craft beer will make up 10 percent of the all-beer volume in the U.S. by 2017. Craft currently boasts 6 percent market share but in the last four years has added nearly 5 million new barrels.
Editor’s note: This article appeared in December issue of BevNET Magazine.