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.
By Pete Dunlop
For the Oregon Beer Growler
Chris Ormand got an offer he couldn’t refuse. And it didn’t come in the form of a severed horse head.
After more than a decade of formative fun at Belmont Station, Ormand is moving to General Distributors, where he will be craft brand manager. He’s been the purchasing manager at the Station, responsible for what makes it into the coolers and onto the floor, for many years.
“I’m moving on for a combination of reasons, definitely not just for money,” Ormand said. “I wasn’t unhappy. There have been many offers over the years. This was the first that was strictly craft-oriented. I’m delighted that I’ll be focused on what I know best, which is craft beer. Plus, I’ll be working alongside [VP of Craft/Specialty Beverage] Bob Repp, someone I’ve known and respected for years. ”
General is hoping to tap into Chris’s experience in inventory control and sales trends at the retail level. He’ll help them smooth the gap between distributor and retailers. His collection of industry contacts may also come in handy.
“Chris understands ordering and forecasting,” said Tiny Irwin, general manager at General Distributors. “He’ll help us manage inventory more efficiently and ensure that the freshest product reaches shelves. I also think his relationships will help drive sales for current partners and attract new ones to our portfolio.”
Ormand’s time at Belmont Station dates to 2005, when it was just slightly more than an afterthought next to Horse Brass Pub. They sold novelties, specialty food and off-beat videos, most of it imported from the U.K. There was beer, as well. The Station stocked some 400 beers in those days.
“We displayed a bottle of each beer with a price tag,” Ormand recalls. “All the actual beer was stored in giant walk-ins. Customers would make a list of what they wanted and we would gather it for them. It was horribly inefficient. But you couldn't ask for better product storage conditions.”
Serendipity landed Ormand at Belmont Station. He had moved to Portland from the Midwest in June 2004 and was living in an apartment near the business. Shortly after losing his coffee shop job at the end of the year, he ventured across the street to grab some bottles to celebrate his unemployment.
“Alex Ganum (who went on to found Upright Brewing) was working behind the counter. I mentioned that I was unexpectedly out of work. It turned out he had just accepted a brewing position at BJ's and was giving notice. He told owner Joy Campbell she should hire me. That led to several hours of chatting with Don Younger, who was a partner in the business, over pints. I agreed to start the next day, Jan. 5, 2005.”
He spent his first six months working in the bottle shop. When the buyer left to pursue another opportunity, there was little interest in the position. So it fell into Chris’s lap. Serendipity had struck again.
There have been a lot of changes over the years and Ormand has seen them all.
“Probably the biggest change was the relocation,” he says. “We were a small store with 400 beers and a bunch of novelties. In early 2007, we moved to the current space on Stark Street and became a true bottleshop, with more than 1,300 bottles and an attached beer bar. That was enormous.”
The best part of that story is that Belmont Station’s growth occurred slowly and organically, allowing them to build a customer base and beer selection while maintaining high standards of freshness and quality.
“I see new places opening nowadays with 1,000 beers right off the bat,” Ormand says. “I just shake my head because I know half of those beers will be stale before they sell. Our inventory here was built over time, which allowed us to mostly avoid that issue.”
Things have obviously changed a lot in recent years, during which the local brewery count and number of available beers has exploded.
“Demand for most imports has plummeted in recent years,” Ormand says. “That’s probably because we have local breweries producing great beers that are fresher and less expensive than their imported counterparts. Most people like local.”
The big exception to the import decline is sour and wild beers, which have gotten increasingly popular in recent years. Beers that were once “shelf turds” are now all the rage.
“I loved sour beers when I arrived at the Station,” says Ormand, “But we could hardly give the stuff away for years. We’d get Cantillon or Fantome and cases would sit for months. That flipped around 2011. All of a sudden, everyone was looking for those beers and cases would fly out to door.”
Portland being what it is, another big change is that consumers have gotten more sophisticated.
“Especially as it relates to freshness,” Ormand says. “I see more people checking bottled-on dates than I used to a couple of years ago. People have figured out that freshness matters. They won’t buy old beer, unless it’s something that’s going to be cellared.”
Belmont Station will carry on. With Ormand’s help, it has established itself as a world-class bottleshop and beer bar. Replacing him won’t be easy.
“There’s no way to fill Chris' shoes,” said Lisa Morrison, majority owner. “We aren’t just losing our purchasing manager. We’re losing our institutional memory, our historian, graphic designer, web designer and IT guy. He also has one of the best palates I've known. Fortunately, we have a great staff and we’ll get through this. But we’ll never be quite the same.”
Ormand looks forward to the excitement and challenges of his new role. He’ll be working with fewer products in higher volumes, shaping Portland’s craft beer landscape.
“Being able to choose what goes on the floor at Belmont Station has been awesome,” he says. “Being able to choose what potentially ends up in stores and on tap around the city is a step up. I’m looking forward to the challenge.”
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