{"id":1294,"date":"2013-11-05T06:50:20","date_gmt":"2013-11-05T11:50:20","guid":{"rendered":"http:\/\/www.beerbusinessunplugged.com\/?p=1294"},"modified":"2013-11-03T09:48:43","modified_gmt":"2013-11-03T14:48:43","slug":"if-you-see-a-bandwagon-its-too-late","status":"publish","type":"post","link":"https:\/\/www.beerbusinessunplugged.com\/?p=1294","title":{"rendered":"If you see a bandwagon, it’s too late……"},"content":{"rendered":"

\"Dogfish<\/a>In my efforts to build the beer portfolio for Glazer’s, during my time there as the Corporate Director of Malts, I contacted Dogfish Head in Delaware.\u00a0 As this was over 10 years ago, Dogfish had not achieved the status it now holds in the craft world.\u00a0 I flew to the brewery and met with Sam Calagione who was a great host.\u00a0 We visited the restaurant and toured his small brewery.\u00a0 By the time I left, we both agreed that Glazer’s would distribute his products in Texas, rolling them out in the first quarter of the following year.<\/p>\n

That agreement was confirmed at the NBWA later that year when Sam and I met with the Texas Glazer’s beer team.\u00a0 That fall, Dogfish began asking for volume commitments\u00a0and minimum orders.\u00a0 A minimum commitment is difficult for any distributor, especially if a brand has limited consumer awareness, which was the case for Dogfish in Texas at that time.\u00a0 By the first of the year, communication between Glazer\u2019s and Dogfish had disappeared so I contacted Sam only to learn that Dogfish had instead appointed CR Goodman distributor for the state.\u00a0 Goodman had committed to the brewery\u2019s request of minimum orders.\u00a0 Needless to say I was disappointed on how this was handled.<\/p>\n

New Belgium’s recent appointment of an Ohio distributor, and the fact that the distributor agreed to pay NB 3X, or $18 a case, to distribute the brand, has changed how\u00a0the industry works.\u00a0 Industry observers have weighed in on just how NB’s actions will affect the industry going forward, but regardless, distributors have to be concerned.<\/p>\n

The beer industry in the US is contracting; there are some who say that the overall industry volume will be below 200 million barrels in the next year or so.\u00a0 Premiums, sub-premiums, and lights are declining, some at an alarming rate.\u00a0 Imports overall are flat as a category.\u00a0 Crafts, as we all know, are on fire.\u00a0 The craft category is over 7% of the total market and growing.\u00a0 There are thousands of craft breweries and currently one new craft brewery opens every day.\u00a0 Going forward, just how large will the craft industry grow?<\/p>\n

Much has been written about attempts by the craft brewers to change or modify state beer statutes.\u00a0 Craft brewers will become stronger and more influential as the category grows and laws will change.\u00a0 But until that happens crafts will look to ways to manage the franchise protection that distributors currently enjoy.<\/p>\n

If trends continue, crafts could become 40% of the industry volume and over 50% of the dollar volume.\u00a0 Of course, it will be fragmented between many suppliers, not the oligopoly we currently have with domestics.\u00a0 To grow and survive, will distributors with franchise protection wave\u00a0their state franchise rights to forgo upfront payments for brands and sign performance and time bound agreements? Such a movement will resemble spirit contracts.\u00a0 The distributor gets the brands for free and makes money off the brands, while the vendor can measure performance against agreed upon goals.\u00a0 The contract ends and either it is renewed or the brand moves.\u00a0 If the brand moves, and it has some volume, more than\u00a0likely another brewer will leave the acquiring distributor and move to the losing distributor, as is the case for wine and spirits.\u00a0 Brown Foreman and Diageo are always in competing operations.<\/p>\n

This pattern is already beginning in the craft world.\u00a0 Founders and Bell’s compete against each other and avoid the same warehouse.\u00a0 This will happen more often in the coming years especially if more distributors open up and specialize in crafts\/imports.<\/p>\n

There is a paradigm happening in the beer industry at the middle tier and unless distributors work with brewers on these major issues, crafts will find another way to achieve their goals.\u00a0 For distributors, if you see a bandwagon, it’s too late!<\/p>\n","protected":false},"excerpt":{"rendered":"

In my efforts to build the beer portfolio for Glazer’s, during my time there as the Corporate Director of Malts, I contacted Dogfish Head in Delaware.\u00a0 As this was over 10 years ago, Dogfish had not achieved the status it now holds in the craft world.\u00a0 I flew to the brewery and met with Sam […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_s2mail":"yes","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1],"tags":[],"jetpack_publicize_connections":[],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2xRTi-kS","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1294"}],"collection":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1294"}],"version-history":[{"count":15,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1294\/revisions"}],"predecessor-version":[{"id":1331,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1294\/revisions\/1331"}],"wp:attachment":[{"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}