World Class Beverages Indiana

March 10, 2010

Less is More? Are There Too Many Beers?

(Left to right: Harry Schumacher - Beer Business Daily, Dale Katechis - Oskar Blues Brewery, Steve Hindy - Brooklyn Brewery, Jim Schembre - World Class Beverages)

Plenty of great discussion took place at last week’s “Beer Industry Summit 2010” in Phoenix. One of the surprising topics that has reared itself repeatedly at the Beer Summit is the proliferation of brewers and products in the beer industry as a whole, including and especially in the craft beer category.

Are there too many brewers in the US? Are there too many beers? It sounds a little bit like crazy talk, but there are a fair number of brewers who seem to feel that this may be the case.

Right now, the Brewer’s Association will tell you that there are almost 600 breweries in the United States that bottle, can, keg or otherwise distribute beer. That number doesn’t count the many hundreds of brewpubs that brew beer for sale in their restaurants. In most markets, there are only 2 or 3 beer distributors that will carry and sell craft beer, which leaves a theoretical total of 200 to 300 brewers per distributor in any particular area, not including the wide array of import brands that are currently available.

The problem becomes this: no one really believes that any single distributor can properly handle 100, 75 or even 50 breweries. Even the best salesperson doesn’t have the time or opportunity with their retail customers to make proper presentations for that many breweries. For a distributor with such a large portfolio of brands, the larger volume brands are going to get a lot of attention, but the rest will suffer. In theory, the top 10 breweries out of 50 may flourish and the remaining 40 will get neglected.

World Class Beverages of Indiana handles about 25 different US based craft brewers and even we get criticized by brewers for having too many brands. Many other craft distributors carry even more brands than we do.

One brewer I spoke to this week worries that his brand doesn’t get enough attention and becomes “clutter.” That means he’s concerned that his beer gets stale on the shelf and that shipping and logistics become troublesome and expensive due to small volumes. Yet another brewer has suggested that distributors should focus only on their top 10 (or so) craft brands, thus streamlining their operation and making it possible for them to make more frequent and more in depth presentations for those remaining brands.

Those brewers are absolutely right to be concerned. They need to protect the integrity of their products and help us to maintain freshness and selection, but I know that most of our consumers seem to prefer that we increase our selection and product list.

Are there too many beers?

According to the Brewers Association, the craft beer industry grew 7.2% in 2009 over the previous year. However, the total number of “craft breweries” grew from 1485 in 2008 to 1542 in 2009, representing a 3.8% increase in the number of craft breweries. In addition, many of the existing craft brewers in 2008 expanded their capacities in 2009, some to dramatically higher levels. And while statistics on overall capacity growth are not readily available, it is hard to imagine that the 3.8% increase in the number of craft brewers plus the expansion of production capacities by existing craft brewers couldn’t have accounted for all of the 7.2% growth in the craft category in 2009. Perhaps there was no actual growth in 2009 at all?

Growth in the overall beer market was actually down in 2009 from the previous year, but that drop in overall sales volume is represented entirely by the major, non-craft, brewers who saw significant declines in consumer demand. However, there were no new brewery entries into the major brewer category either and no significant expansion of capacities for the major brewers in 2009.

In the end, most brewers and wholesalers would love to see the market continue to grow and I believe strongly that the craft industry will continue to grow. But might we already be at a point where the industry itself is growing faster than consumer demand, and if so, what does that mean for many established, quality brewers who may find that their share of the craft beer pie is shrinking, even as the pie continues to grow overall.

The Beer Summit is a terrific gathering of brewers and distributors that is organized by Beer Business Daily, one of the pre-eminent trade publications in the beer industry. Visit Beer Business Daily at www.beernet.com.

Advertisements

65 Comments »

  1. The problem isn’t too many breweries or too many beers. The problem is the system in place…three tier nonsense needs a revision, there might be a need for more distributors too. Not automatically contradictory ideas…

    Comment by seth feldman — March 11, 2010 @ 4:06 pm | Reply

  2. Seth – I appreciate your comment, but the three tiered system has increased selection, not decreased it. The opponent of the amount of beers in this case is the actual brewers themselves, not the distributors.

    In fact, there are more beers in Indiana today than there have ever been, primarily because it is profitable for a distributor to sell beer in the craft category. And if the distributors are taken out of the equation guess who controls the beer selection? Bud, Miller and Coors.

    Comment by worldclassbev — March 11, 2010 @ 4:17 pm | Reply

  3. Is competition bad?

    The current system is dumb, and instead of asking if we have too many brewers, we should be increasing the number of distributors.

    Comment by PS — March 11, 2010 @ 4:21 pm | Reply

  4. PS – thanks for your comment. I’m all for competition and anyone who is interested in becoming a distributor is welcome to join the battle!

    I don’t think the current system is dumb, however. Every type of business that deals with goods has a distribution system – that’s the economic reality.

    Comment by worldclassbev — March 11, 2010 @ 4:31 pm | Reply

  5. so long as the beer is good, there is no such thing as too many beers. as long as quality, consistancy, variety, and demand is there, brew on America, brew on.

    on the other hand, the three tier system is far too antiquated and not currently set up to handle, and fairly so, the growing diversity of beers and the free men and women of America (and beyond) who enjoy drinking them.

    the real question behind the politics is if/when/how the currently out-of-date distribution system (and beyond) will be able to smartly adjust to benefit all brewers of all sizes who have beer they would like to sell within their county and/or beyond.

    kristyn

    Comment by kristyn lier — March 11, 2010 @ 4:31 pm | Reply

    • Kristyn – thanks for your comment! I have to say that the beer selection in the United States is far better than I have seen in other countries where there are no independent distributors. I think that speaks well of the system we have as far as selection goes.

      And the argument presented here is that distributors actually have too many beers represented, not too few. Several years ago many distributors shied away from craft brands because they were viewed as a nuisance. Today things are quite different. Good craft brewers are being approached by distributors asking to carry their products all the time, because the distributors have begun to realize that there is money to be made in craft beer.

      Comment by worldclassbev — March 11, 2010 @ 4:58 pm | Reply

  6. If there are too many brands for the distributors to handle, then that means that there are Too Few Distributors.

    Proliferation of brands, and which ones succeed, should be in the hands of consumers. Anything less is restraint of trade. Of course, in the beer business this is known as “business as usual.” Strong words? Perhaps. But the idea of restricting brands from consumers sparks my ire. If a wholesaler can’t handle how many brands they’ve got, then They Should Let My People Go (craft brewers) so that they can move to another wholesaler…perhaps to a fledgling craft beer wholesaler. Oh wait, those are the ones that the big wholesalers have been assimilating. Fair enough…as long as we don’t then turn around and hear this “too many brands” nonsense.

    This is all coming from a brewery (my brewery is called Stone) that might arguably benefit from fewer brands in the marketplace as we’d likely be one of the ones that wouldn’t end up buried. However, I am a vigorous proponent of a true free-market system that is responsibly executed, and fairly played. I believe in a level playing field in which new, young brands have a chance to grow and thrive…and benefit beer-loving consumers with variety and choice along the way!

    I’d dare say that there are more wine SKUs that beer SKUs in the US. How about spirits? There’s a dizzying array of those. Is a large brewer, or Harry, suggesting that beer distributors are less talented than wine & spirits wholesalers? If I was a beer wholesaler, I’d be insulted by that!

    Oh, wait, I AM a beer wholesaler…and I AM insulted by that!

    Wow…I got a little fired up there, didn’t I! You hearin’ me Harry? I love you brother…but I think you and I may need to have some words….

    Cheers,

    Greg Koch, CEO
    Stone Brewing (& Distributing) Co.

    Comment by Greg Koch — March 11, 2010 @ 4:34 pm | Reply

    • Way to say it Greg! When I read the headline for this article I knew I was not going to agree with it and would probably write something in response but Greg said it better than I could have!

      My 2 cents, it is definitely the distributors problem, not the producers! The three tiered system could definitely use some updating to work with modern market dynamics and prevent abuse of “the system” as a protection from those who have very large comfortable positions in the market.

      I have seen some appalling examples of ineptitude at the distributor level by large distributors who will go unnamed.
      Things like an entire brand being handled in ordering, the warehouse, shipping, etc under a single SKU number for the whole brand which needless to say caused many problems.

      In my opinion the reason guys like this stay in business is because the competition is fairly thin and with their sizable market presence in enough markets they can get away with it as the small distributors have a hard time getting accounts from them.

      I think Greg speaks the truth and his heart is where his mouth is. Stone Distributing has not been shy to carry “competitors” products and they hit the collaboration scene pretty hard, the results of which I think give a notable marketing and cred boost to their (usually smaller) partners in brew. I think more people like Greg in the brewing industry would benefit all.

      Comment by AB — March 12, 2010 @ 2:41 am | Reply

      • AB – I appreciate your comments. But what about the distributors out there who are trying to carry more craft brands, but hearing from brewers that they should not carry more? Yes, there are bad distributors and distributors who don’t care about craft beers, but there are an increasing number who do. Greg Koch got into the distribution business because he had to in order to get his brand represented (kudos to him for that), but I would guess that today he gets calls, emails and visits from potential new distributors all the time, eager to have his brand.

        Comment by worldclassbev — March 12, 2010 @ 9:51 am

  7. the problem is that because it’s alcohol the rules are different than other distribution systems. are state laws regarding bread , chips, etc as wildly different state to state?

    where _is_ the free market for beer? the competition “landscape” isn’t as level as it is for wine.

    some brewers can self-distribute, some brewers can own distributorships, etc. look at UPS’s recent decision to not ship beer from a retailer (but they still ship wine from producers!).

    there’s no way you can really believe that the three tier system has increased selection… it’s just that the total number of breweries has increased since 21st amendment passed. were there consistent/national laws that were more brewer friendly there’d be hundreds of more breweries.

    the fact that a distributor can’t handle more than a few brands just means that there should be more distributors not fewer breweries!

    thoughts?

    Comment by Tim — March 11, 2010 @ 4:47 pm | Reply

    • Tim – thanks for your comments. You do make some good points. But absolutely, the three tiered system has increased selection in this country. I’d invite you to visit a country that does not have independent distributors to see what I mean. The total number of breweries in this country has only recently increased as consumers have started to enjoy craft beer, it is not a trend since the passage of the 21st amendment. Independent distributors will follow the consumer while distribution tied to the big brewers will decrease selection.

      Perhaps a timely example of the lack of selection and craft beer in Ireland would help illustrate this: http://www.seriouseats.com/2010/03/serious-beer-st-patricks-day-craft-breweries-in-ireland.html

      Comment by worldclassbev — March 12, 2010 @ 9:58 am | Reply

  8. Greg – thanks for your comment. For those of you who don’t know, Greg is not only a brewer of great beers (Stone Brewing, CA), but Stone is also a wholesaler in southern CA, so he sees both sides of this business.

    As both a consumer and a distributor, I love craft beer and and am happy that I can get Stone in my market, even though it comes from a competitor distributor.

    As a distributor, we are open and often eager to get new brands, but I do worry that we may not always be doing justice to our existing brands by taking on new ones. I expect that very same concern may lie at the heart of some brewery concerns about distributors having too many brands.

    Great to see you in Phoenix, by the way. You are obviously getting in some serious frequent flier miles of late!

    Comment by worldclassbev — March 11, 2010 @ 4:52 pm | Reply

    • You’ve certainly sparked a good discussion here Jim! Well done.

      I’d like to ask for clarification. When it’s suggested, at a few different times in this conversation thread, that (I’ll paraphrase) “brewers/breweries want wholesalers to have fewer brands,” what TYPE of brewery are you talking about? Is it one of the 1500+ craft brewers that are saying that, or one of the small handful of the major international brewers that are saying it?

      Of course, I sure think I know that answer, but because there is such a significant chasm of size and philosophy difference between the two types — “craft” and “mega-international” — I think it might clarify the conversation to identify who’s ‘voice’ is being referenced with the comment.

      Comment by Greg Koch — March 12, 2010 @ 11:49 am | Reply

      • Greg,

        To name names, here’s a quote from Jim late last year:
        “Brewers like Magic Hat even suggest that as wholesalers we do not need to even carry anything but the top four, as they currently represent over 70% of the grand total.”

        Having met Alan, I’m a little surprised by this being represented as a mindset for their brewery. If the “top four” refers to Sam, Sierra, New Belgium and (surprise) Magic Hat/Pyramid I can see where the motivation for such a statement would originate. Hopefully this was taken out of context.

        As a brewer at a small Indiana brewery, whose entire team aspires to reach bigger and better things on down the road, I hope this type of mentality is not shared (or existing at all) by other larger out of state craft breweries. I always took away from the arrival of New Belgium and Magic Hat in Indiana that it would be positive in growing craft beer awareness, and all craft beer would benefit big and small. I’m pretty dang sure the majority of craft brewers share the opinion that we want consumers to switch from the macro lagers and not cannibalize each other.

        Jim, sorry to tattle, and I hope you don’t ever take a statement like that seriously, what a boring beer world it would be with less variety! WCB has been excellent at helping Hoosiers find great beers both from home and afar, and it never felt like we got lost in the mix during our era of distribution. I say add more and keep up the good work.

        Caleb Staton
        Upland Brewing Co.

        Comment by Caleb — March 12, 2010 @ 1:55 pm

      • Thanks to Caleb for responding. It is nice to get some Indiana perspective here.

        To try and help clarify who is saying what, without trying to out anyone, I’ve heard from several large, US craft brewers that have expressed either the opinion that distributors are getting to have too many craft brands or that distributors should focus on fewer, larger craft brands. I respect all of them and value them and don’t want to offend them. Rather, I think we need to invite this dialog between brewers and distributors so that we can get the consumer what they want.

        Comment by Bob Mack — March 12, 2010 @ 2:03 pm

  9. There are almost 6000 wineries in the US:

    http://www.winebusiness.com/news/?go=getArticle&dataId=45971

    Many more than there are breweries. Those manage just fine, thanks largely to lobbying to have out of date laws changed. Time for the beer industry to cast off the decades of “Taste Great, Less Filling” imagery and do the same. The problem is that there are too many individuals sitting on their hands in the craft beer industry instead of raising awareness.

    Comment by James M — March 11, 2010 @ 5:13 pm | Reply

    • James – this is an excellent point and one that has come up in the same discussions that originated this posting. I will say that many brewers don’t feel that the wine system has done very well for wineries and sometimes refer negatively to what they see as the “wine-ification” of beer being a bad thing. I’d like to go into more detail about “wine-ification” of beer, but that’s probably a whole new topic.

      Comment by worldclassbev — March 12, 2010 @ 10:07 am | Reply

      • How many wineries are really seeking to secure national attention, though? Outside of a few conglomerates that sell basic jug, box and table wine, I can’t think of any that are selling a top shelf product at a national level. I’m in CT where locally there are new wineries popping up every year as opposed to breweries; of whom 1 new brewery has opened in the past few years and they only lasted a few months. Most wineries I’ve visited seem content offering tastings, hosting culinary events, selling on premises and/or through mail order where legal, offering killer views, hosting weddings, and selling local produce and cheeses.

        It seems that the local brewery, on the other hand, is basically a factory setting with little to no hours open to the public and much more distribution driven (obviously I’m not including brewpubs which are a completely different phenomenon here). There are a handful, like Captain Lawrence and Pioneer, that currently focus on and are more concerned about the local consumer than regional expansion into new markets, but they are few and far between. When I inquire at a lot of these breweries as to why they seek to expand to far away markets instead of focusing on local markets, I’m usually given a reply of extreme frustration over the laws for wine vs. beer distribution, competition from high end out of market brewers, and a necessity to expand in order to remain viable.

        Comment by James M — March 12, 2010 @ 7:41 pm

      • James M – thanks again for more good comments.

        I got to visit Captain Lawrence recently and outside of being very impressed with the beer, I was also happy to see how focused they were on selling “deep” in their local market. They weren’t even giving a thought to going outside of the immediate area. But being a craft beer lover myself, I couldn’t help but ask when Captain Lawrence was coming to Indiana (not for good while, they tell me) and therein lies the dilemma.

        Consumers, including myself, naturally want all the good beer to be available to them. Distributors, including myself, naturally want to sell whatever the consumer wants to buy. But is that a healthy, productive situation for the craft industry as a whole? Perhaps not and perhaps that’s when there really are too many beers.

        Erik at Top Fermented probably talks better than I can about selling “deep” versus “wide” at http://www.topfermented.com/2010/03/12/the-peculiar-possibility-of-too-many-breweries/.

        Comment by Bob Mack — March 13, 2010 @ 10:45 am

  10. There are more beers now *despite* the current 3-tier system. The 3-tier system does not encourage more breweries. I live in Texas where there are different Mexican restaurants on every street. No one complains there are too many. The market decides. It does make it harder to become a standout Mexican restaurant. But you want someone to become a stand out provider because they beat other competition, but because they just happen to be the only one in town. In the northern USA, where they just have Taco Bell, does that make Taco Bell a good Mexican restaurant? No. But anyone who wants to, can start up a restaurant by following the basic FDA food preparation rules. They don’t have to talk with a government agency to find out who they can their tortilla chips from, or who they can serve.

    Having too many beers really just hurts the people who have associations or magazine reviews or other such things set up based on only a few players. If the little guys can teach each other how to make beer, and if little guys can support each other, then the Beer Summit is less desirable and speakers don’t get paid as much if there is less attendance.

    Any one traditional retail store can’t support thousands of vendors. That never stopped people from making crafts at home. Thus craft fairs were born, and farmer’s markets, and then eBay and webpages.

    Comment by Mike B — March 11, 2010 @ 5:33 pm | Reply

    • Mike – you make great comments. But is it complete coincidence that we have more breweries than ever before competing for shelf space on a national level “despite” the three tiered system? I’d argue that it is distributors scrambling to get craft brands to their consumers (distributors only make money with products that sell!) that is the cause of this argument.

      Comment by worldclassbev — March 12, 2010 @ 8:08 am | Reply

      • ahhh, but distributors have only been “scrambling” for a very short time… i.e. the time that craft beer has gained market share over the big boys.

        Comment by Tim — March 12, 2010 @ 4:22 pm

      • So distributors should stop scrambling and not worry about the craft category? Distributors are only trying to follow the consumer and frankly, the consumer hasn’t been scrambling for craft beer all that long either.

        Comment by Bob Mack — March 12, 2010 @ 4:29 pm

  11. Social comments and analytics for this post…

    This post was mentioned on Twitter by beersage: Too many breweries in the U.S.? “A fair number” of breweries think so according to @WorldClass #craftbeer http://ff.im/-hlvkg

    Trackback by uberVU - social comments — March 11, 2010 @ 5:40 pm | Reply

  12. […] say never!  But after reading WorldClassBeer.com’s article I may have to […]

    Pingback by Too many beers? | Beer & Sandals — March 11, 2010 @ 6:37 pm | Reply

  13. As it currently stands, the three-tier system is a blessing to the consumer and established brewer, and an impediment to new entries into the marketplace. On one hand, I can sit here in Rochester, New York and drink my fill of San Diego’s Stone (did that last night. Greg, you’re western NY man Dennis is good people), but on the other hand, if I want to start a brewery in Rochester, New York, I gotta immediately compete against San Diego-based Stone. And Dogfish Head. And Victory etc.

    This means new brewers with a production/external sales model need favorable distribution deals out of the gate to survive, and that means they have to start big, with tons of financing and capacity, and well-funded sales and marketing to rapidly expand.

    If this is truly the case (I could be an idiot), we should start seeing fewer breweries opening as the barrier to entry is higher, and more closing as the competition gets more fierce.

    Personally, I long for the days when craft brewers were microbrewers, but industries mature and evolve, and had it not been for the success of some now quite large indie brewers, I might not have that deliciously difficult decision to make each time I look at the beer list.

    -Mark

    Comment by Mark Tichenor — March 11, 2010 @ 6:38 pm | Reply

    • Mark – I think your comments are very much on target. Thank you!

      Comment by worldclassbev — March 12, 2010 @ 8:01 am | Reply

  14. I think Greg has a great point when he mentions wine. At any given grocery store I go to, I see probably 100 different varieties of wine from all over the place.

    Myself and many of the craft brew fans I know are excited to see new, unfamiliar labels on the shelves, as it’s something that we haven’t tried. If a brewer’s big concern is that there is too much competition, perhaps he should work on making his beer better than the next guy’s.

    Comment by Jason Harris — March 11, 2010 @ 6:40 pm | Reply

    • Jason – good point on the number of wine brands and labels. In the alcohol industry, there are definitely many more wines than beers. However, I think that some craft brewers would say that it is wine that they are trying to avoid being like – as many wine brands struggle to build and maintain a brand identity due to the large volume of brands. Cheers!

      Comment by worldclassbev — March 12, 2010 @ 8:03 am | Reply

      • Yes, larger craft brewers would say that, because obviously if you have less competition (less brands) you (an established brewer) can make more money!

        I think the verdict would still be out on what would be best for the craft beer consumer and the craft industry as a whole, though.

        Comment by steve f. — March 12, 2010 @ 3:34 pm

  15. The more important question is, Does the market NEED another marginal IPA or uninspired Nut Brown?

    Craft beer drinkers have shown their allegiance to the exceptional and unique beers. The truly good beers will certainly get the proper “buzz” in the beer drinking community and will ultimately get their shelf space. The average beers will stay where they should, at the local brew pub or beer club.

    Comment by David Landes — March 11, 2010 @ 7:15 pm | Reply

  16. As with any industry consolidation has resulted in a virtual or effective oligopoly or in some cases monopoly.

    In this environment “true” free market, supply and demand driven natural selection becomes mute. i.e. Quality doesn’t matter.

    Market power does. What the Oligarchs choose to promote or feature does.

    Therefore the consumer loses – through biased (distributor Driven) preference, brand suppression and limited competition… i.e. the front line selections are chosen and dictated by the distributors, not the market.

    Therefore Greg Koch is absolutely right in his suggestion that more distributors, controlling fewer brands results in a free market dominated by awesome high quality selections of delectable craft beer with a long tail and less exclusionary focus…

    Comment by Eric Anthony — March 11, 2010 @ 7:23 pm | Reply

    • Eric – great comments. But I might suggest that the explosion of craft brands is occurring, in part, because smart distributors see that the consumer wants to purchase craft beer. An important element here is that the distributor only makes a profit when products sell – and it takes the consumer to buy them. Ergo, consumers ultimately dictate which products the distributor wants to carry. Is that a perfect system? No, but it is the reality of running a business.

      Another point here – distributors are not tied into one specific brand or product and can change their own product lineup to meet consumer demands. Brewers cannot do that.

      Comment by worldclassbev — March 12, 2010 @ 8:06 am | Reply

  17. I agree with Greg. Let the market decide which brewery will survive and which will not.

    Comment by Milos kral — March 11, 2010 @ 8:26 pm | Reply

  18. Mr Koch’s argument regarding SKUs is a bit disingenuous. What is the shelf life of beer versus wine and spirits?

    That being said, I’ll wholeheartedly agree that there are too few distributors. Will that change soon? Doubtful. It seems monthly (or weekly or daily, depending on where you live) the numbers are diminished.

    I find it odd that the new breed of brewers feel the need to establish nationwide distribution. Isn’t that what led us down the path to begin with?

    The rally cry of the Craft Brewer’s Association used to be “Support Your Local Brewery.” Somewhere along the line, either the message changed, or someone missed the original memo.

    Comment by jj — March 11, 2010 @ 10:34 pm | Reply

    • Great comments. Is this a battle for national ground by local brewers? Perhaps, but having said that, as a consumer I love to get all the beers I can!

      Comment by worldclassbev — March 12, 2010 @ 8:07 am | Reply

  19. […] little news item just flitted across my desktop that really caught my eye. It was an item titled, “Less is More? Are There Too Many Breweries?” Since I’m working on starting my own brewery, this article gave me a pause. I had to read it. […]

    Pingback by The Peculiar Possibility of Too Many Breweries. | Top Fermented — March 12, 2010 @ 8:06 am | Reply

  20. I agree with others that have issues with the three tier system, however, I also acknowledge that the the three tier system is a huge benefit to craft beer too.

    There are many products that would not get distributed beyond their home market if it were not for the wholesalers. The reality is that most small breweries do not have the infrastructure in place to get their products out to every nook and cranny across the US. So in that sense, Wholesalers are a necessity.

    The problem with the system is that it is not a voluntary system. Brewers are FORCED to go through a wholesaler. In some states such as my home state of WV, it is damn near impossible for a brewer to part ways with a wholesaler once they agree to assign a franchise to said wholesaler. This allows the wholesaler to provide less focus on a particular brand (the lower volume brands) with out recourse for the brewer because of this lack of focus.

    I too am a huge proponent of the free market system and I feel that it should be part of the three tier system. In other words if a Brewer feels they are not getting the attention they deserve from Wholesaler A, they should be free to go to Wholesaler B who will provide them what they want. Could you imagine if the state government forced you to pick an auto mechanic and from the time you picked them till the end of days you HAD to have your car repaired at this place, regardless of the quality of the service they provided?

    At this point, starting a new business as a wholesaler is a very unattractive idea in most areas simply because most brands of beer already have nearly unbreakable deals with existing wholesalers. Why start a business when all your potential clients are already locked into contracts with your competitors

    So, I guess what I am saying is that NO there are not too many beers out there. I can even say with some authority that in West Virginia, there is not nearly Enough beer (you reading this Greg? Bring Stone to WV!). The problem is with the distribution system, not necessarily the existence of the three tier system, but some of the details of how it works. More distributors and the freedom for brewers to discontinue business with a distributor who is not providing the service they feel they deserve would go a long way to solving the issues mentioned in this post.

    Travis Carrow
    Founder
    WV Craft Beer Appreciation Society
    http://www.WVCraftBeer.org

    Comment by Travis Carrow — March 12, 2010 @ 8:10 am | Reply

    • Travis, I will fall on my distribution sword and agree with almost everything you said. And for folks who don’t know, WV has some of the toughest laws in the country where beer is concerned, which has often dissuaded brands from coming into the state. I think that’s just plain wrong myself.

      Comment by worldclassbev — March 12, 2010 @ 10:05 am | Reply

    • Travis, I think this is the best response on here. The three tiered system isn’t the enemy. In most cases, it keeps prices down and increases selection as it would be MUCH more expensive for each brewery to run their own distribution network to however many states they sell in then to have the distributors take care of it. Distributors specialize in this aspect of the business and have streamlined the process and consolidated shipping.

      I want to second your talk about franchise laws and how it’s nearly impossible to leave a distributor once you sign on. It’s not just West Virginia. Bell’s saw it in Illinois as well. And franchise law issues are alive and well in many states. WV may have some of the toughest, but there are plenty of other states with tough laws as well that make it so a brewer has almost no recourse if a distributor isn’t doing well with their brand.

      As others have said, we do need some updating to these laws. They were originally written when distributors were small and brewers were huge. It was to protect the little guy (the distro). Now, with craft brands, the tables are turned but the laws remain. The three tiered system is a necessary part of the beer industry that gives a lot of value added service. We shouldn’t abolish that… we just need to update the laws so brewers can change distributors if need be, even just periodically (i.e. brewers sign a 2 year contract with a distributor or something similar). If this was done it would open the industry for more distributors, which many have said they’d like to see. It would also mean that brewers could change distro if they didn’t like how their brand was being represented in a specific state.

      As of now, a brewer can enter a market (like Illinois, as the Bell’s case illustrated). Their distributor can sell the rights to distribute to another, who decides they only want to carry a few flagship brands rather than the whole portfolio. There is no recourse here, despite the brewer having interest from other distributors. We need a system where the brewer could switch distributors so that there is recourse if a distributor is not doing the optimal job. With no ability to switch ever, the distributor can do almost whatever they wish and the brewer has two choices: leave the state or sell on that distributor’s terms. Let’s add a third option: switch distributors.

      I understand that a distributor does do a good bit of work building a brand in a state, so there should be some sort of contractually agreed upon time span where the brewer is tied to a distributor.

      Comment by Jeff From DrinkCraftBeer.com — March 12, 2010 @ 1:07 pm | Reply

    • WV is just a hard state to break into. I lived there for 10 years. I used to work for MK, with whom I believe you have collaborated recently (@Travis).

      With regard to distributorship in WV, from my experience as a chef, our wine vendors were always more knowledgeable of their product than our beer distributors. There is not a lot of young blood there, and the interest in expansion to new brands seems to be driven solely by retailers and bars/restaurants pushing to have new bottles brought into the state. It didnt seem to me that distributors within my market were too concerned with bringing in new brands unless it was an already well known national craft brand, such as Rogue, Sierra, Magic Hat, etc. WV is an uphill battle for all involved.

      I live in Colorado now. I hear bartalk now of craft brewers not being concerned with expanding to Colorado because the market here is already very competitive and there is a healthy “support your local scene” attitude among Colorado drinkers. Not to mention that we have some world-class brewers in the state. But this doesnt stop people from trying to open new breweries/brewpubs in the state, currently there are at least 5 that Im aware of that are intent upon opening their doors to the public in 2010. It has got to be weekly that I hear someone say: “I heard from such-and-such that 3Floyds is coming to Colorado.” “I heard that Founders is coming to Colorado.” “I read online that Bell’s was coming to Colorado!” And its not a few seconds later that someone counters: “They’ll never come to Colorado, theres already too much beer here, theyre afraid that they wont sell over local bottles, our market is saturated, distributors are already overloaded, the local brewers dont want it, yadda yadda yadda.”

      I dont believe that the CO market is saturated. Im sure there are brands that sit on the shelf longer than others, but is that a reflection of the market or the product? Small brewpubs who brew a quality product and can still gain notoriety quickly in Colorado (Dry Dock in Aurora for instance). I have no reason not to believe that out-of-state brands of similar quality would do well, too. In any event, you wont find me discouraging any out-of-state breweries expanding into Colorado. As a craft beer lover, I welcome any brew that will tempt my palate.

      Its quite the juxtaposition to WV where I was salivating for any new national brand that they could get through the red tape. It seemed like besides Starr Hill, most regional brands (PA brands, for instance) didnt even bother to try to expand into WV.

      Comment by JAD — March 13, 2010 @ 3:35 am | Reply

      • We have a similar situation here in Indiana where at least several new breweries are opening this year, and in a state where the % of beer sales in the craft category is much lower than Colorado. The problem is that the percentages suggest that 50% of new breweries that open are going to fail. So while I applaud and appreciate the enthusiasm of new brewers, I know that the market isn’t going to support them all. And it isn’t always bad beer that causes a brewery to fail, finances and poor planning are just as much to blame.

        On the other hand, are new breweries going into new states simply to try and make a little more money to meet financial obligations? (It isn’t cheap to start and run a brewery!) Or is it organic growth that is a natural progression for that brewery?

        Comment by Bob Mack — March 14, 2010 @ 3:59 pm

  21. Greg you got me fired up. Sorry I did not respond yesterday but was on the road. Restraint of trade? Let my people go? Not enough wholesalers? Big wholesalers have been assimilating? Wow!! there is so much here that needs to be talked about I know there is not enough space but will try. First the BA must be confused because the “Build Brands” concept has been a focus by the major craft brewers who have suggested to us, yes an assimilating craft wholesaler, that we need to focus on brands not style. These are your leaders. The issue of restraint of trade is it not the craft brewer that decides where, who, and how there beer is sold not wholesalers. Is that restraint of trade? Also there is another part in the system and that is the retailer there are estimated to be around 20,000 Craft Beer packages there is a limit to what they can carry. On the issue of not enough wholesalers. i believe I am correct in the fact that in all 50 states there are licenses available for distribution. So anybody can start one all they need is a brewery to support them. But then again if we have more wholesalers there is more brand proliferation and now we will not be building brands. Which is what the debated started about in the first place so what is it that the BA wants? Brands or Access? And on the assimilating of wholesalers! That obiously is a reflection on us. We at WCB a division of a big wholesaler have brought to the table many things for the craft brewers and have always been a good partner with any wholesalers big or small that are looking to get into the category. As well as working with several of the craft brewers themselves. Not even ones we carry. Just the testimate of this Blog is part of that. I know you are passionate about what you believe and respect your opinion but I know I can speak for all of us here at WCB we are as passionate as well. We know what we are doing, we do it with passion, and understanding of the category. And it seems from the craft brewers that it is the wholesalers issues about access but when you look at the facts I think it is an issue that we both have created and we are moving forward with lots of progress. Lots more to say but have to go. Going to the Deland Craft fest tomorrow to see if there is ways we can help the Florida craft consumer.

    Comment by jim Schembre — March 12, 2010 @ 9:41 am | Reply

  22. […] controversial blog post by World Class Beverages yesterday sparked quite a bit of discussion. Per the […]

    Pingback by Weekend Reading: Too many breweries, Pennsylvania raids, Craft Beer in Japan | Beernews.org — March 12, 2010 @ 2:39 pm | Reply

  23. […] post headlined “Less is More? Are There Too Many Beers?” has provoked quite a conversation about beer distribution on the World Class Beverages […]

    Pingback by Appellation Beer: Beer From a Good Home » Blog Archive » What happened to the concept of local? — March 12, 2010 @ 4:10 pm | Reply

  24. Can smaller breweries band together as a beer consortium of sorts, where their beers are packaged together, to create one selling point/presentation/client for a distributor?

    Comment by Mindy K. — March 12, 2010 @ 5:02 pm | Reply

  25. There absolutely are NOT too many breweries. That has too be the most ridiculous thing I have ever heard! That’s like saying there are too many musicians. When we all know there is more music to be made in the world. As a brewer, each ingredient I select is like the note on a sheet of music, and it is the infinite combinations that inspire me to create new tunes. And hopefully the consumer will enjoy my liquid music as well.

    The sooner our community realizes that there will always be new breweries; we can move past this discussion and embrace the future with open arms. A look into our history as Americans is very telling. I see the American Entrepreneur’s spirit of invention as a driving force in our economy.

    Comment by Bill Ballinger — March 13, 2010 @ 12:37 pm | Reply

    • Bill – as a consumer and distributor I probably agree with you, but if I was a struggling musician trying to make a living for years on the road with limited success, I might see things in a different light. Truth is, it isn’t easy to make a living in either the music world or the brewing world.

      I also don’t think this is a discussion we need to move past, I think it is a reality we need to figure out. I would love to see new breweries get started and be successful, but the American reality also suggests that the market will deny success to many brewers as well as create some success stories. The better we understand this sort of issue and work together on it, the better the chances for new breweries to succeed, in my opinion.

      Comment by Bob Mack — March 13, 2010 @ 1:27 pm | Reply

  26. Perhaps another angle to be considered is not necessarily that there are TOO many beers, but that some distributors and some retailers do not really manage their supply well at all.

    I know personally I live in a strange black hole for how some craft beer gets on shelves in Albany New York. I’ll use Stone as an example of a brewery, that I both have access to, enjoy and whose beer releases I seek out. When Double Bastard was released this past November, for some reason it did not hit shelves in Albany until early January. No biggie, DB is a huge ale with lots of legs which is excellent fresh and does even better with some time in the cellar. But the same thing that occurs for DB or Old Guardian, happens for the regular lineup, Arrogant Bastard, IPA or Pale Ale. Routinely these beers are hitting shelves at their best by stamp or sometimes past it.

    I am not trying to point a finger and blame the retailer or distributor, but something is amiss, they are either not educated enough on which stock needs to sell when or in the worst case scenario they simply ignore this out right. The worst thing for craft beer is not too much choice it is poorly managed inventory in my opinion. I should say also that this is something brewers need to find a way to keep a better tab on, no easy task at all, because I assume they expect their distributors to manage that.

    Whatever the outcome, this is an interesting and important discussion. Thanks for bringing it out to the masses.

    And a word of thanks to the brewers here chiming in, especially to Greg. You do an outstanding job of representing not only Stone, but the entire community of craft brewers. Thanks each of you for sharing your insight.

    Cheers – Patrick

    Comment by bottleandcellar — March 13, 2010 @ 12:53 pm | Reply

    • Patrick – thanks for your comment. Some of your concerns probably get us into another discussion, but beer is not a cheap or easy item to transport. Seeing Stone Double Bastard on the shelves 6 weeks or so after it is released in San Diego isn’t going to be a rare occurrence, as there are no truckloads of beer coming to New York from Stone every week or two. And not knowing the specifics of this particular situation, I can pretty much guarantee that what I know of Stone Brewing means that they were well aware of when and how shipments of Double Bastard got to New York.

      Comment by Bob Mack — March 13, 2010 @ 1:31 pm | Reply

      • I was really using Double Bastard as an example of a beer that will not be hurt by the time it hits market other than eagerness of geeks like me. I probably should have elaborated a bit to be more clear. With the beer being released on November 2nd, it was in not too distant reaches of my market area if my recollection serves by the following Monday the 9th. I was actually wrong about it being in my hood in early January. I bought my personal stash for the year in early January on a trip to New Jersey. It reached my market the first week in February, that was a mistake on my part first time. So it that instance we are talking about over 12 weeks. I could be poorly informed, but I took it to be true that this particular beer pretty much shipped in the course of the first two weeks of November and that was it. Again, that might by incorrect understanding on my part.

        Still my bigger point was their regular line up of beers almost always is stalled in my market area. It is not specific to Stone either. I’ll give you an even more up to date example. Today I went down to Poughkeepise which is a good 80 mile drive. Why did I do it? Because I knew that Halftime Beverage would have 2009 Smuttynose Barleywine and Wheatwine, which will show up in probably May if that. I was also happy to see the new 12 ounce bottles of Smutty BigA IPA. Again, another one I suspect will arrive on shelves randomly here. Some beers hit like absolute clock work. Sierra Nevada, comes to mind. Brooklyn is another (which I would expect, it would be sad if they did not).

        I dont think this is all that off the path, because for the regular lineup of beers from some of these craft beers, if they hit the shelves near, at or sometimes past their prime they are not giving the right impression to the consumer. Now, I know to read the labels and what to drink and by when, but someone just walking into certain styles and different brands might not.

        Comment by bottleandcellar — March 13, 2010 @ 5:45 pm

      • I appreciate your frustration. Unfortunately, I’m not knowledgeable enough about your retailers or distributors in Albany, especially the Stone or Smuttynose distributor, to be of much help. On the plus side, Sierra, which you cite as a positive example and that also comes from California, is distributed by our World Class Beverages partner in Albany. The only advice I can offer is to ask your retailer if they know why shipments are delayed, then you might even pursue it with the distributor or Stone or Smuttynose.

        This may be a good example of a distributor not being on the ball and I can’t say that they all are. Then again, not all the brewers are great ones, nor are all beer retailers great. But if Sierra is making “like clockwork” to your area, I would probably cite that as a very positive example of the distribution system.

        In the end, the question here is more directed to whether or not beers should be shipped to some markets at all, let alone on any sort of delay. I suppose that the fact that there are delays might suggest that there are too many beers to be handled properly.

        Comment by Bob Mack — March 13, 2010 @ 8:31 pm

      • Bob, sorry I think I have probably misrepresented my thoughts here a little. I am definitely not frustrated, more confused or rather just interested in the process at hand. I am awash in a decent selection of craft beers and near two fantastic brew pubs within a 15 minute car drive each. I don’t exactly have the options of a Seattle or a Philadelphia, but I can get a wide wide selection.

        I absolutely agree with your last assertion regarding whether some beers should be shipped to some markets at all. But I would say to a certain extent it is about the quantity shipped vs there at all. I also think HOW beers get to market and awareness of them being there is critical.

        Comment by bottleandcellar — March 14, 2010 @ 11:16 am

  27. “More distributors” is an easy idea to throw out, but is not as easy as it sounds. Many wine and beer retailers, such as my self, are hard pressed to support a new distributor currently. The economic climate dictates it. My vendors have stood by me and supported me, even bent over backwards when I needed them too. It’s only fair to support them as best as possible when times are tough. It’s a tough business that is heavily regulated, and not a lot of people want to deal with the bureaucracy that goes with whole sale distributorship. But, at the end of the day, distributorship is going to be the best way to put out the new brews. Until then, and after then, the onus is on the retail steward to do the research, find the beer that is hot or interesting, even what the customer wants (gasp!) and dig it out of a distributors book, regardless of how many companies are shifting the beer around the universe.

    Yes it’s true there are a lot of brands out there, and while I can understand the idea of too many breweries, I find the concept preposterous. Look at how many wines are out there. Look how many upstart wineries there are, let alone all the side projects, and second labels wine makers are putting out. The size of distributor beer portfolios pale in comparison to wine portfolios. Hell, look at all the canned soup and cookies there are out there. Toilet paper! Do we need that many TP styles? Let’s regulate that too.

    Healthy competition for consumers’ hard earned money is critical in fostering a creative brewing environment. If there wasn’t a new producer with new and exciting beers coming into the fray, couldn’t that foster an environment of complacency and lack of creativity? Maybe, maybe not, but I don’t want to find out.

    I say not enough breweries, not enough beers!

    Comment by Erik Brown — March 14, 2010 @ 11:59 am | Reply

  28. […] drew my attention to a blog post by World Class Beverages which brought up a point that a lot of people are discussing on the net. Are there to many brewers […]

    Pingback by Equilibrium. — March 15, 2010 @ 7:42 am | Reply

  29. I believe I read somewhere that Germany has over 1300 breweries, which is impressive for a country with 1/4th our population. If Germany can quench the thirst of that many people with twice the number of breweries, then it seems that we should have room for many, many more.

    Erik L. Arneson

    Comment by Erik Arneson — March 15, 2010 @ 10:38 am | Reply

    • Erik – that’s a good observation. One thing I might point out is that with around 1500 breweries, the US produces well over twice what Germany produces as far as overall volume. The average German also consumes more beer than the average US citizen.

      The 600 number for American brewers is for craft brewers that package or bottle beer, not the overall number of breweries. 1500 is just about the total number in the US and your 1300 number for Germany is about the right number.

      Comment by Bob Mack — March 15, 2010 @ 1:03 pm | Reply

  30. […] mentioned can only be appreciated by beer lovers around the world. Yet, in these days, appeared a controversial post on the blog World Class Beverages, which has proposed an interesting question: are there too many […]

    Pingback by Beer Chronicles » In the U.S. craft beer keeps growing, but someone is not happy… — March 18, 2010 @ 5:13 am | Reply

  31. Can you advise how we can get worldclass beveragest o represent us in the USA. we are a Uk based brewery producing real ale at he currnet rate of 120 bbl per week

    Comment by Michael Woodhouse — March 31, 2010 @ 4:00 pm | Reply

    • Michael,

      Thanks for your message. World Class Beverages is not an importer, however, so I’m not sure that we can be of immediate assistance. If you are interested in pursuing a relationship with an importer I would be happy try and help you with some contact info and ideas. You can email me directly at bmack@worldclassbeverages.com.

      Cheers!

      Bob Mack

      Comment by Bob Mack — April 1, 2010 @ 8:22 am | Reply

  32. […] Gee, didn’t this same topic just come up? […]

    Pingback by Appellation Beer: Beer From a Good Home » Blog Archive » More beer links, but first I digress — April 3, 2010 @ 12:27 pm | Reply

  33. […] a major distributor of craft brands, provoked much thought in the beer community with its blog post back in March titled, “Less is More? Are There Too Many Beers?” The post discussed the challenges […]

    Pingback by The Tipping Point: Part I | Beernews.org — August 27, 2010 @ 1:28 pm | Reply

  34. I’ve held on to my link to this thread for some time now just to check back from time to time, keep up with the discussion. Myself, I don’t personally have a dog in this fight other than being a consumer. Of course, the consumer is key to the discussion because ultimately he’s the engine that drives the industry. So from my perspective I say let the free market reign. My belief is that less is more with respect to taxation, goofy and heavy handed laws that do nothing to ‘level the field’ and promote free market capitalism. I say leave you guys alone, let you do your thing. Competition is good. With respect, some of you will make it and others will not – for a host of reasons. I can’t think of a better example of the American spirit than that evident in your industry. Keep it up, folks.

    Comment by Steve M — September 18, 2010 @ 6:37 am | Reply

  35. From what I see in my local area(Northwest Indiana), there is a great demand for good craft beer. I can see some problems with the way distribution needs changing. For example: Great Lakes Brewing was available for a while in Indiana, but due to changes with distributors, I now have to go either to Michigan or Illinois to purchase their beer, which by the way-sucks. That seems to me that improvements need to be made in that regard.

    As for the idea that there are too many breweries; that seems to me that a brewery may have a lack of confidence in their own brands. It may also be fear of large breweries, such as Bud, Miller, and Coors being afraid of lost revenue.

    LeRoy Bowman

    Comment by LeRoy Bowman — October 3, 2010 @ 9:04 am | Reply

    • LeRoy,

      I certainly appreciate your comments and I would certainly agree that demand is there in Northwest Indiana. Yesterday’s Brew Fest in Valparaison certainly made that point pretty clearly.

      I should point out that Great Lakes Brewing left Indiana by choice, not due to any changes in distributors. In this day and age with demand so high for craft beer, many brewers have had to withdraw from some markets in order to keep up with demand in their local markets. After all, it doesn’t make much sense to ship beer into other states if you can’t supply your own state or your own area. Three Floyds is a good example – they withdrew distribution from many states as it became apparent that the demand in their home market (Chicagoland and Indiana) was growing quickly. Today they ship only a small amount of beer to Wisconsin and Kentucky, but not nearly so much as they used to.

      Comment by Bob Mack — October 3, 2010 @ 9:11 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: