The University of Texas at Dallas, under the direction of Dr. Richard Harrison, is conducting a semester-long graduate study class on the Texas beer industry, with a focus on the state’s craft beers. The class is a continuation of what many universities are providing for their students who are desirous in attaining an education and specific skill sets in the beer industry.
This graduate class is scheduled to have 11 guest speakers, three of whom are graduates of UTD and owners of local breweries. I was honored to be Dr. Harrison’s first speaker and provided the class with the various models currently used in today’s industry, along with a history of beer and a study in how the industry arrived in its current-day state.
Over the years in the beer industry, the most frequently asked question I have receive is: “How big is the craft segment going to get?” Since this was a class of grad students, the last question was: “If I was going into the business, what model would I chose?”
Instead of choosing the “hop-in-the-box” local brewery, I selected the role of a beer distributor. After explaining the responsibility and function of a distributor, the class had a more clear understanding of what is required to run a distributorship.
A part of the discussion dealt with last year’s acquisition of Revolver by MolsonCoors and ABI’s acquisition of Karbach. When comparing the two breweries, Revolver self-distributed and Karbach went with the ABI network. Self-distribution can be very effective as the brewer recaptures the wholesale margin for themselves. Though a self-distribution brewer can usually only go so deep into the market, Karbach, with the ABI network, had total market coverage.
When Revolver sold to MC, the first act of MC was to assign distribution rights to Andrews, the local MC distributor in DFW. As you might expect, Revolver’s distribution and sales increased dramatically with Andrews’ assistance.
Karbach’s distribution was provided by the AB network and the results showed in the speed at which Karback reached 50K bbls. and continued to move upwards. Revolver is now on track to have a similarly dynamic growth with the MC network.
Most of the students grasped the basic function of building a brewery. The roll of the retailer is one that is also easy to understand and discuss, but delving into the middle tier becomes challenging in the explanation of the options a brewer has in getting product to market.
Explaining the different functions of the various distribution systems further compounds the clarification of the middle tier system. For example, AB, MC, W&S, and indie craft function are all quite different. Once the students develop their business model and the components of their brand’s vision, then combining that with the distribution network, will aid the student in achieving their individual goals.
It will be interesting to see how the class finishes the semester and what the students learn from the various speakers. I hope to have the opportunity to learn how they view the industry at that point and compare it to their views at the beginning of the semester.
By getting into distribution and production, I am widening my base…