On occasion, the Aleheads will have off-line conversations that end up being worthy of posting on our venerable blog. Well…maybe “worthy” is a strong word. But it’s a beautiful summer Saturday and we’re all too damn hot to come up with new content today. Instead, here’s a discussion we had yesterday about why Magnus can’t find a sixer of Fat Tire at his local package store:
On Fri, Jul 23, 2010 at 11:59 AM, Sir Magnus Skullsplitter wrote:
Can someone explain this?
Why do some breweries insist on refusing to ship to the most populated part of the country? Do they actively hate money? I’m honestly confused about this. Why is there not a single bar in NYC with Russian River on tap? And now New Belgium is adamantly refusing to sell beer to a bar in NYC? What gives?
On Fri, Jul 23, 2010 at 1:42 PM, Dr. Ripped Van Drinkale, III wrote:
Not that I have all the details on this, but it appears that the author of the post you linked to has been extremely misinformed. Breweries, by law, aren’t allowed to sell beer directly to a retail outlet on their own. Something to do with taxes, lots more to do with shipping, even more to do with laws that I don’t understand. At the end of the day EVERY beer that you drink in a bar will be brought to said bar from a distributor. Now, throw all this out the window if the brewery actually has a distribution license to ship their own beer (locally). I worked sales for a brewery in MA and they shipped all their own beer because they had the licensing to do so (Also had an import license so we brought in a ton of beer from Europe). They could only ship in MA though as anything that crossed state lines had to go through that state’s taxation system and distribution channels. They chose to work with 2 distributors in CT and 1 in RI to get further distribution, but that’s extremely costly and the relationship is very difficult to manage without having local teams in place.
New Belgium chooses not to use Northeast distribution, it’s just always been that way. It’s not really that they’re refusing to ship their beer, it’s simply a matter of volume/cost/distance and many other details that go into national distribution. If they don’t have a distributor willing to send a truck out to Fort Collins, pick up the beer, and drive it 2/3 of the way across the country to sit in a warehouse then it’s not going to happen. One thing they could do is get a company like Goose Island or Saranac and contract their beer to them for further distribution. Those two breweries brew a shit-ton of beer for other people (Goose used to brew all of Otter Creek’s beer for the Midwest). I can’t imagine a brewery of New Belgium’s character is going to contract out their beer though.
And, I’m done.
On Fri, Jul 23, 2010 at 2:47 PM, Sir Magnus Skullsplitter wrote:
I understand all of that, I guess I’m just confused as to why you can get Fat Tire in, say, Pittsburgh but not in NYC. Not from a “is it legal” perspective but purely from a business perspective. I understand why I can’t get, say, Sweetwater, but New Belgium is a relatively large brewery that does distribute all over the country. Just seems like it would be worth the extra cost to gain access to the most heavily populated market.
Then again, I don’t run a brewery. Yet.
On Fri, Jul 23, 2010 at 3:49 PM, Brother Barley McHops wrote:
The most heavily populated market…but also a market with fierce competition and some of the most ungainly taxation laws in the country. A lot of West Coast breweries prefer not selling on the East Coast because of major obstacles in gaining market share. There are just so many damn breweries up and down the East Coast and because the geography is so compact, the borders are relatively fluid in terms of regional brews (think Dogfish Head, Brooklyn, and Sam…everyone up and down the 95 corridor drinks those brews).
During a tour of Sweetwater with regular Aleheads reader Abba’s Brew last weekend, the guide actually talked to us about distribution concerns. One MAJOR issue is that good craft brewers don’t pasteurize their beers. This means that unless the brew has a high enough ABV, it will spoil fairly rapidly. The Sweetwater girl said that after 60 days from bottling, their beer would be noticeably less flavorful, and after 90 days, it would taste like Heineken (her words). Now obviously shipping beer from Colorado to NYC would not take 60 days, but the farther afield you go, the less “quality” time the beer has on the shelf. Furthermore, Sweetwater is a fairly large regional brewery (about 60,000 BBLs a year) and they’re always brewing at max levels and selling out their capacity just by distributing in the area (‘Bama, Florida, Georgia, Tennessee). Bumping up capacity is an enormous expense. That’s why a lot of breweries stay at the 10-15,000 BBL a year capacity for so long (and even when they expand, it’s generally to the 30K-60K range).
So yes, Fat Tire would probably do very well selling in NYC. But they’re already at capacity NOT selling there and increasing their capacity in any meaningful way is probably an expense they’re not willing to take on yet. Add to that the stigma in the craft brewing world of growing “too big” (look at the way Sam Adams is looked down upon by most Aleheads), and it may be awhile before you see La Folie in your neighborhood bodega.
That being said, I’m still absolutely infuriated that I can’t buy Oskar Blues here. They sell it in Atlanta…which is 100 miles farther East from Lyons, Colorado AND the brewer grew up in ‘Bama! WTF!