A discussion on brewery distribution took place during Portland Beer Week in June. Panelists included (from left to right) Derek Hass from Columbia Distributing, Eric Banzer-Lausberg from Migration Brewing, Marty Ochs from E3 Craft Strategies and Bob Repp from General Distributors. Photo by Patty Mamula
By Patty Mamula
For the Oregon Beer Growler
Any brewer who’s considering distribution needs a solid plan, said Derek Hass, director of craft and import at Columbia Distributing. Hass was one of four panelists at the “Distribution: The Struggle is Real!” workshop, held at The Labrewatory in Portland during Portland Beer Week in June.
More than 40 people crowded into the brewery testing lab and bar to get the inside story on distribution. About half the brewers there were self-distributing, while others had a distributor or didn’t distribute at all. Several were in the planning stage of a brewery and four of them were anywhere from a few months to a year away from opening.
Panel moderator Marty Ochs was the vice president of sales at Ninkasi Brewing Company and now heads up E3 Craft Strategies to help startups with marketing and distribution.
Ochs works with 10-15 breweries a year. “Not one has an operating budget,” he said. “You can’t go to market if you don’t know what you’re going to spend when you go to market.” He emphasized that brewers should conduct a thorough market survey when considering entry into a new market. “Spend weeks, months figuring where you want to sell, what the competitions looks like, determining a budget.”
Bob Repp, vice president of craft/specialty beverage for General Distributors, also stressed the importance of planning. “What’s your budget? Capacity? How will you differentiate your brand? When looking at opening a new market, vet the distributor there. Go out and talk to buyers at bars and retailers,” he said.
Eric Banzer-Lausberg, co-owner of Migration Brewing, represented the small, independent brewer and self-distributor. “We opened in 2010 without a budget when the economy was shit. We did all the buildout ourselves. We knew we could succeed and our beer got better and better. After a year or so, we started to distribute kegs in an old 1983 Mercedes with a door that didn’t work. It was an exciting time because it was our own beer and our own investment in distribution,” he said.
Ochs asked Hass and Repp, “How do you walk new breweries through the process, step by step?”
They said there was no formula, no handbook.
Hass said, “Every brewery we talk to is a different situation. You might have good beer, but shitty packaging or vice versa. We help you navigate the waters of the beer business.”
Repp said, “Know what your distribution and volume goals are. Do you want to be mainstream or entry level? What does success look like for you?”
Migration’s Banzer-Lausberg said, “Know who you are and where you want to go. Everyone was chasing IPA when we started. We decided to make pale ale our niche. That was our starting point. We focused internally and worked on the pub first and self-distribution second.”
Ochs said there’s a perception you’ll make tons of money self-distributing. There are, of course, advantages but also some disadvantages. Pros to self-distributing are close control of product and message, said Repp. “You can control all aspects, including when and where you will grow. And you retain your margins.” Cons are trucks, storage, cash, accounts receivable, liability, kegs and the labor to move them around. “When you’re brewing and distributing, you’re running two breweries. Still, if your goal is hyper-local, go for it,” he said.
Hass agreed and said that the mechanics, the delivery and the labor all cost money. With distribution you lose some — around 30 percent — but that’s the cost of doing business.
The watchword for the group was planning.
Ochs said, “Come to a distributor with a plan, a vision. Be honest about it. What support tools do you have? Ask what you might be missing? Tell me what you’re looking for in a brand.”
Repp said, “Know what your pricing will be. Know how much your beer costs to make. Take that pricing and build a calendar of brands with several seasonals and one-offs. Communicate to the distributor what the release calendar looks like. What incentives will you use to get the sales reps to sell your beer?”
“Know your business. We won’t be experts on your business,” said Columbia’s Hass.
Migration’s co-owner told participants the beer has to be good when building your brand. “Do not send out mediocre beer. Make sure you have ingredients. Hops. Everyone wants Northwest hops. You have to secure them now. We have ours contracted for five years. Yes, it’s scary to think this is what we’re going to make for the next five years. Cooler space is crucial. If we have a bad week of sales and don’t have cooler space, we’re in trouble. If we brew and keg it, we have to sell it.”
Sales and distribution is connected to everything, said Ochs. “Know what success is to you. Oakshire Brewing was going down a rabbit hole for eight years. Then they realized they didn’t want to be Ninkasi. Get to the level that’s right for you. Volume is not the metric. It’s about the gross profits that you bring in on the beer.”
The final tip, and maybe the best in keeping with the adage of saving the best for last, was to invest in your brand. Hass said, “Invest like you want your distributor to invest in you. Put some feet on the street.”
Ochs elaborated on this idea. “The brewery’s job is to create customers at two levels, the end consumer and the retailers.” He advised hiring someone to make marketing calls.
Hass described this as a partnership. “We need you, the brewer, to educate — to tell the story. That way you can tell the distributor that the bars want your beer. The customers want it.”
As the craft beer field becomes saturated with more and more choices, it’s increasingly important to find ways to stand out in a crowded field. Working with your distributor to market your beer will help you both sell more beer.
Q: As a brewer in Portland, why would I make another double IPA?
Migration: Because they sell. IPAs sell 4 to 1. That’s why we do it.
Columbia: Do we want more IPAs? Not necessarily. We don’t want to sell an IPA-only brewery. We can’t predict the future and it’s tricky to know. Not a lot of breweries have a flagship beer that’s an imperial expensive IPA.
General: Find your niche. Everybody comes to us with IPAs. We’re a small distributor. We work with 50 breweries now. Bar owners now are looking for sessionable beers.
Moderator: Don’t follow the market. If you’re following the market, you’re too late.
Q: Can you do some self-distribution if you have a distributor?
Moderator: Yes. Your agreement with a distributor might define an area that you want to self distribute and the area you want them to distribute. Ninkasi self-distributes in Eugene. You can have distribution by county.
Organizers of the Selfie Fest Road Show gathered with brewers at Untapped in Portland in June. The series of events is being held to highlight smaller breweries who self-distribute. Pictured, from left to right: Rik Hall, Baerlic Brewing; David Lederfine, Awesome Ales; Jim Parker, Selfie Fest organizer; Ben Parsons, Baerlic; Alex Kraft, Feckin Irish Brewing. Photo by Jim McLaren
By Jim McLaren
For the Oregon Beer Growler
Traffic on North Interstate Avenue in Portland was crawling through a light drizzle when a guy on a Vespa motor scooter jumped the curb and squeaked to a stop on the sidewalk in front of Untapped, a self-described “craft beer fill house.” Sliding off the scooter, he pried the helmet from his head and headed for the door. Once inside he stood back from the bar and began scanning the big board menu hovering over 38 tap handles. He wasn’t paying any attention to the two guys sitting at a high-top table talking to a writer. And he wasn’t there for the Selfie Fest either.
Ben Parsons and Rik Hall are both wearing short-billed, black bicycle caps with Baerlic Brewing Co. logos. They’re the owners and they know something most people ignore: Oregon’s craft beer explosion is not just about making beer. It’s also about DISTRIBUTING beer.
“It’s a really big story,” Hall says, “but it’s one people don’t really focus on. They see a beer, they like it, they drink it, regardless of who distributes it.” While Parsons nods in agreement, Hall continues, “to us, self-distributing is part of the craft of beer.”
Self-distributing? Part of the craft of beer? Get comfortable and let me explain. Once Oregon craft brewers learned how to make good beer, their next problem was how to get it to you. Under the old three-tier distribution system, beer went from brewery to distributor to retailer and then you. Like most economically productive systems, this one was efficient, but also stifling.
Distributors often tried to influence what a brewer made because, they claimed, they knew best what would sell. The brewers listened because the law did not allow them to go out and fight for the limited space on store shelves or in taverns with limited tap handles.
In 2001 things began to change with a strong lobbying push for a series of bills defining who could distribute beer. Jim Parker, former executive director of the Oregon Brewers Guild explains, “The first nod went to breweries with very small production, up 500 barrels a year. The next session the limit was pushed to 1,000 barrels. The law now allows self-distribution for breweries making up to 7,500 barrels per year.”
The self-distribution law has democratized the beer industry. Big distributors still sell the most beer, but smaller breweries with hustle can work their way into places like Untapped. Owner Lisa McArthur says the benefit is that “their beer doesn’t get lost in the portfolio of the big distributor reps. It’s nice that they [small brewers] come in and tell me about their beer. And it’s nice dealing directly with the breweries. You get to know them, you kind of get to know the brewery’s personality … so yeah I like getting to know them.”
This past March, the Imperial Bottle Shop & Taproom took a chance on something else coming from a small brewery — the Selfie Fest Road Show. It was Jim Parker’s idea to draw attention to small beermakers who build their business on a foundation of self-distribution. Parker works for Baerlic Brewing, a five-person operation.
“They make the beer, they sell the beer, they pick up the empties,” Parker says by way of explaining long hours and a weak social life, “in that way people will begin to think about the small, independent breweries doing everything by themselves.”
The Selfie Fest, which went to the Uptown Market in April but was canceled in May before resurfacing in June at Untapped, is designed as a tap takeover by several breweries at the same time. Alex Kraft of Feckin Irish Brewing Company favors the concept.
“It’s cool to have these beers together. It’s not the easiest way to go, but in the long run it can help small brewers who want to go their own way. In the long run it can help a brewery — being self-distributed, you don’t have to brew a specific thing because the distributors told you we want you to make this particular style. Half of the fun of brewing is just trying something out.” Kraft doubts a large distributor would have taken a chance on Feckin’s Top o’ the Feckin Mornin’ porter. Now it’s a mainstay of what the 3-year-old brewery sells.
About that point during the interview, a few people wandered into Untapped. They’d gotten off work, survived traffic jams and were looking to relax. But because this was not a standard meet-the-brewer event or tap takeover, they didn’t seem aware of what was going on — the Selfie Fest.
Ben Parsons says social media hasn’t caught up with a selfie that isn’t about taking a picture. “This is an uphill battle because most people just don’t understand distribution. It is a very complicated thing. But I would argue that the beer industry is more about distribution, about power and quantity. We’re trying to celebrate the revolution”.
“I listen to my customers” says Lisa McArthur. And while those customers might not be ready for a Selfie Fest or understand distribution systems, they unwittingly appreciate what it’s done for beer. Lisa continues, “Being a small neighborhood bar, we get a lot of repeat customers, so customer recommendations I take very seriously. I’ll throw a keg on and see how it goes.”
The sun has followed the afternoon drizzle and more people are stopping in on their way home from work. Walking away from the bar, the motor scooter jockey tucks a small growler into his messenger bag, pushes his way through the door, squeezes his head into his helmet, climbs onto his scooter and fires up the hidden engine that powers him down the street.
The next Selfie Fest stops will be at McMenamins 23rd Avenue Bottle Shop in Portland in July and then Oregon City Brewing Company in August.
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