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Beer Distribution Issues: Interview with Stan Hall
by Richard Vang
Great Lakes Brewing News, (East Amherst, NY) 1997, 2:2

Presented by the Upstate Chunk & Paradigm Company

 


GLBN: What was your philosophy on distribution when you first formed the brewery?

Stan: We felt from the very beginning that we needed to work with distributors in order to market our beers. Distributors, if they’re good, have a network that we couldn’t develop, no matter how hard we might have tried. So we thought selling our beer through distributors was a very important plank in our program. I also felt most microbreweries, when they’re getting started, can’t possibly handle distribution the way it should be handled, on their own. Selling out of the brewery is important, and we do a lot of that.

G: Did you have to change that philosophy, based on the way the distributors actually operate?

I guess the thing that we learned very quickly is that distributors depend a lot on the microbrewery to do the marketing, and advertising, and selling, and they, in turn, use their on-premise and off premise accounts to sell our beer, once we had a good product, and once we had helped to pre-sell it. We didn’t realize we’d have to do as much pre-selling as we are now doing. There is a lot of heavy advertising by the national breweries. It’s out there all the time, on radio, and television, and the microbreweries generally don’t have a large enough budget to do that sort of thing. The challenge for us has been to work with distributors who do a good job of handling the beer and getting it to the on-premise and off-premise accounts. There are some distributors that have excellent salesmen that do more than just take orders and have the beer delivered. They actually do some selling. But I think that’s the exception, as opposed to the rule.

G: Are there different types of distributors?

You take the distributor here in central New York that we work closely with, they’re a fine distributor. They tell you what they’re going to do and they do it. They keep track of the product, they keep track of your kegs, they give you advance notice when they want to pick up beer, and they pay their bills on time. They even have a salesman that makes a stop here once or twice a month just to talk with us. So that’s the way you wish every major distributor you work with would operate. I guess in the middle, between that kind of quality distributor, and some really bad ones that we’ve dealt with, are the up and coming, what I’d call microbrew/craft beer distributors, that don’t handle a national beer. A lot of them handle a great variety of beers and don’t spend a lot of time focusing on your beer. Then you have the other class of distributors who are just almost impossible to work with. We have one example, that came here with their trucks, picked up the beer and took it to their warehouse, consummated the contract by making a down payment, and didn’t pay for the rest of it. That’s happened to us twice.

G: From the point of view of a brewer, can a newer, craft beer distributor compete with a larger, older distributor?

S: Yes, I think our craft beer distributor is aggressive, they certainly are very enthusiastic about microbrews and handcrafted beer, and they’re enthusiastic about what we’re doing. What you find in small distributorships like that is that they have a limited staff, and I’m sure most of the guys there are working 12-14 hours a day. They don’t have the resources that a large distributor would have. But our experience has been upbeat with them.

G: What are your experiences in dealing with the larger, national breweries, like Budweiser? Is it more than just not being able to get an extra tap in?

S: I think anytime you say anything that’s going to be in print, you have to have some way to prove it. I don’t have any way you can prove this, but I think there’s an awful lot going on behind the scenes.

G: How about the recent beer distribution bill that passed the New York state assembly and the Governor signed into law? In his approval memo, Gov. Pataki claims that thirty other states have a similar law.

S: Well I think that favors the national breweries. It favors the breweries that pasteurize their beer, or put chemicals in it to preserve it. In that legislation, too much time is given to the distributor to straighten out the problem that a small brewery like ours might be having with that distributor.

G: Your beer could rot on the shelves?

S: Our beer could easily go out of code the way that legislation is written. One of the things that microbreweries have to be very sensitive about is making sure that their beer is fresh when it is delivered to the distributor, and when the distributor gets it to the restaurant or tavern. The same with bottles. We can’t spend a lot of time letting our beer sit in a warehouse. Which brings up another point that we’re very sensitive about: I believe we’ve had at least one distributor that took our beer primarily to bury it in an area. They took us on, marked the price of a case up 58%, and made no effort to sell it. They completely killed our sales in the area, and I think they did that by design. Fortunately, we pulled out of that relationship with that distributor before this law was passed.

G: There’s a distributor you’re not using, whose owner lives here locally. Is it because of his connection to Budweiser?

S: No, it was because of a very positive thing from our first distributor. When we had beer ready to sell, we called several distributors, and our first distributor’s President came here, toured the plant, had a couple of Old Sluggers with us, and thought it was a great product. We started with him basically because of his interest and enthusiasm for the beer. Essentially that’s the same way it worked with our craft beer distributor. We called them and they came down right after we were brewing, and they were very enthusiastic about the beer.

G: Is it easier distributing bottles or kegs?

S: It’s a lot easier to distribute bottles because their shelf life is longer, and cases are easier to handle than kegs. A good distributor tries hard to keep track of how old those kegs are, which is very important to us. Some distributors don’t, and we have spent some time taking our truck out to places that didn’t pay any attention to the freshness dating on our cases or kegs, and picked them up and brought them home. That’s an expensive thing for us to do.

G: I understand you are now doing some self-distribution. Is that going well?

S: Well, I laugh when you talk about self-distribution, because our philosophy, which I started with, was to NOT self-distribute. Distributors do a lot of work to get a keg into a restaurant. But in one area we found that we just had to do it, and we’re working hard. We have now sold more beer in that area in two months than our distributor had done in six, by handling it ourselves.

G: Since you’re a microbrewery, let’s talk about your local area. Has it been easy getting on in some of these places? Would you attribute that to the distributors, or to local attitudes?

S: That’s a good question, and I’m not sure I have an answer for that. First of all, our beer’s more expensive. It’s more expensive because there’s more to it. I think there was a little marketplace resistance because we weren’t selling fifty dollar kegs. Of course it’s very difficult to get two handles anywhere, and we wouldn’t want to replace one beer with the other.

G: But it is cheaper than a Guinness, or a Bass?

S: Right, but there again, they’ve got a lot more advertising. In our local café, which has been a very good customer of ours, there’s much shinier stuff hanging on the walls from Guinness and Bass than there is from the Cooperstown Brewing Company. It’s hard to say. I think by and large the local market has been driven by tourists that come here from bigger cities, and they’re looking for good beer. And we’re it; we’re the local one, and I think that’s been a big thing in our local marketing.

G: I think you’re fortunate with the baseball theme.

S: Well, it’s a two-edged sword. You know that this is not a summer beer, that this is a year-round beer. It’s a beer you drink in the winter time because it’s a hearty Pale Ale. Yet some of our distributors think of us as a seasonal beer, a baseball season beer. So we’re going to try and correct that with more than one beer in bottles—Benchwarmer [Porter] in the winter, and Nine Man Ale real soon—those two different seasonal beers.

G: Even though a distributor is working hard to get you a tap, it doesn’t help sell your beer when the sales reps or bartenders don’t have a clue as to what the beer is all about.

S: That’s very true, and I speak from a couple of real-life instances. A lot of retailers don’t have a clue as to what the beer is all about, and we’re finding that it has to be a combined effort. There’s only a limited number of tap lines out there, and if a distributor gets you into a particular restaurant, and gets you a tap line, and the bartender happens to be British, and he’d rather have Bass on there than your beer, you’re dead, even though the distributor has gotten you in there and gotten you a tap a handle. That’s an actual example of how we got killed in one restaurant. There’s a lot of work that needs to be done by the microbreweries to keep their own tap handles.

G: I’ve noticed that you no longer have a tap handle at an area restaurant that has one of the best beer selections in central New York.

S: (Laughs) Well, it’s all stale. You know why they took us off? It was the best selling beer they had. They took us off because their other beers were going stale. And that is a quote from the salesman that represents us there. Our beer was the best selling beer and when the restaurant went to 18 tap handles, they took ours off, kept us in bottles, because our beer was selling faster across the bar than the others. Which is the stupidest thing I’ve ever seen. Now with 25 tap handles, and the quantity of beer they sell, we wouldn’t want to be there. Some of those kegs have got to be really old.

G: OK, let’s finish with a summary of what separates the good distributors from the bad. What have been the worst problems in working with distributors?

S: I think some distributors have a tendency to over-order, put more of your beer in their warehouse than they should, and not pay as close attention to the dating on your kegs and cases.

That moves me right into the next issue, which is, some distributors that do that don’t seem to have a qualm about putting your beer into the hands of a retailer, so you have beer out there that isn’t as fresh as it should be. And that’s what microbreweries are all about: we’re brewing and selling, and hopefully serving, fresh beer.

Of course, the one that disturbs me greatly is the fact that distributors come here and pick up beer, sign an agreement to pay in 30 days, and then stiff us for the beer. That’s unconscionable. They shouldn’t even be in the business doing the things they do.

I guess my last issue would be the lack of interest some distributors demonstrate in the beer after they’ve been to the brewery, after they’ve shown great enthusiasm for what you’re doing, and once they get it in the house they do nothing.

The thing that worries me about saying all that is that we’ve weeded out the distributors that do those things. We have a "new" list, and it doesn’t include the ones that essentially gave us those problems.

G: What have you liked the best about some of your distributors?

S: Well, I mentioned before that one distributor has a sales representative who’s down here every month, and you like to see that. You like to see that somebody’s on the front line actually here, looking at what’s going on in the brewery. That’s a good thing.

One of the things that our New Jersey distributor did was to run, for the better part of a day, a program featuring the seven microbreweries they were going to represent. We were there to make presentations and to discuss our breweries, our beer, and so forth. It was a "beer education day" for their entire sales staff: a very professional approach, and I was really impressed by that.

There are some distributors, even though their salesmen aren’t really selling your product, that have very good looking presentations from the standpoint of their trucking, their drivers, and their uniforms. But that’s such a minor point I hesitate to even mention it.

One of the things that our craft beer distributor has done that I’m very positive about, is that they’ve worked very hard to get us into a number of microbrew festivals. They really have done an outstanding job of doing that. That’s a real positive thing.

G: Thank you for your time and comments, Stan. Is there anything else you’d like to add?

S: Well, I‘m sure one thing that a microbrewery like Cooperstown Brewing Company has to do is more marketing, more radio advertising, more point-of-sale advertising, than we have money to do. Distributors respond more to you as a brewery if you have more out there to generate the market for your beers. A lot of new businesses have been started and they didn’t have enough working capital. We had enough capital to buy all this equipment, we had enough capital to get going. I guess we didn’t have quite enough working capital for the marketing effort.

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