During the time I spent at Coors Brewing Co., the brewery was buying distributorships to resell as part as certain covenants made to increase the number of minority ownership of Coors operations. Once purchased, the brewery ran it for a short time than sold it. My first assignment was to run the most recent distributorship they purchased, Ogden, Utah.
This particular distributorship had been owned by the same family for about 30 years. The husband, who had been a driver for another small Coors operation in Utah and his wife, got the distributorship in the early 1950s. He was the driver and she ran the office. This was somewhat typical of many early beer operations, family owned and run. In this case, as Coors’ market share grew, the operation expanded, and many of the family members joined the operation. After a number of years, the husband died, the wife remarried, and her new husband also sold Coors. At the time Coors bought the business, the market share had dropped to the mid 30s from a high of well over 50%. Still a very nice business and the brewery sold the operation after owning it for six months.
They are many examples of family operations similar to Ogden, Utah where the husband and wife worked from sun up to sun down, trying to make a living and supporting their family. In addition, there could easily be any number of these small beer operations. Depending on the part of the country you were in, you could see an AB, Schlitz, Pabst, Falstaff, Miller, Coors and a regional or two, all in the same market. Consolidation did, however, finally catch up with these small operations in the late 80s into the 90s.
Today the industry is seeing this similar business model with the craft breweries. Most are family owned, with long hours and a great deal of hard work and most hoping to be another Sierra Nevada or New Belgium.
Just recently, a wholesaler in Florida told me a story about a young man who had decided to build a craft brewery there. He happened to be the son of a close friend who funded his son’s brewery. The brewery was built and the distributor agreed to handle the beer. Within a short period of time, the wholesaler had been able to get this new craft beer into 20% of all the on premise accounts in his market. Not long after the wholesaler had achieved this level of success, the young man called his father and told him that being the owner of this brewery was not what he wanted to do. He had accepted a job in Phoenix and dropped everything and moved to Arizona, leaving this brewery to his father to shut down. It obviously put the distributor in an awkward situation with the retail trade. After a while, both the father and distributor shut down the brewery and the market moved on.
The craft segment has exploded and like the mom and pop distributor operations from years ago many of the startup craft breweries of today know and have experienced what it takes to be successful. But they all must understand that you can’t strike oil without first getting dirty.