By the Brewers Association
For the Oregon Beer Growler
With more big labels snapping up smaller craft beer producers, the Brewers Association is making a move to help educate beer lovers about the origins of their beloved beverage. The not-for-profit trade group dedicated to promoting and protecting America’s small and independent craft brewers launched a new seal in July that’s meant to single out those businesses.
Featuring an iconic beer bottle shape flipped upside down, the seal captures the spirit with which craft brewers have upended beer while informing beer lovers they are choosing a product from a brewery that is independently owned. These breweries run their businesses free of influence from other alcohol beverage companies that are not themselves craft brewers.
Independence is a hallmark of the craft brewing industry, and it matters to the brewers who make the beer and the beer lovers who drink it. A recent study commissioned by Brewbound and conducted by Nielsen found that “independent” and “independently owned” strongly resonated with the majority (81 percent) of craft beer drinkers. Increasingly, they are looking for differentiation between what’s being produced by small and independent craft brewers versus Big Beer and acquired brands. Beer drinkers, especially millennials, expect transparency when it comes to their food and beverages. That transparency and underlying ownership can drive their purchase intent.
“Independent craft brewers continue to turn the beer industry on its head by putting community over corporation and beer before the bottom line. They continue to better beer and our country by going beyond just making the beverage. These small businesses give back to their backyard communities and support thousands of cities and towns across the U.S.,” said Bob Pease, president & CEO, Brewers Association. “As Big Beer acquires former craft brands, beer drinkers have become increasingly confused about which brewers remain independent. Beer lovers are interested in transparency when it comes to brewery ownership. This seal is a simple way to provide that clarity — now they can know what’s been brewed small and certified independent.”
The seal is available for use, free of charge, by any of the more than 5,300 small and independent American craft brewers that have a valid Alcohol and Tobacco Tax and Trade Bureau Brewer’s Notice, meet the BA’s craft brewer definition and sign a license agreement. It is available to both member and non-member breweries of the BA. In the coming weeks, months and years, beer lovers will see it on beer packaging, at retailers and in brewery communications and marketing materials.
“Craft brewers build communities and the spirit of independent ownership matters” said Rob Tod, chair of the Brewers Association board of directors and founder of Allagash Brewing Company in Portland, Maine. “When beer lovers buy independent craft beer, they are supporting American entrepreneurs and the risk takers who have long strived not just to be innovative and make truly great beer, but to also build culture and community in the process.”
While small and independent craft brewers represent 99 percent of the 5,300-plus breweries in the U.S., they make just 12 percent of the beer sold in the country. The rest of U.S. beer sales come from Big Beer along with imported brands. As large brewers continue to have unprecedented influence and acquire millions of barrels of formerly independently brewed beer, the seal differentiates in a crowded and increasingly competitive marketplace.
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.
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