Beer distribution

[Beaver]

This article (http://seattlepi.nwsource.com/business/161829_costcobeer24.html) has some interesting info on a Costco lawsuit about beer distribution. Anyone have any clues what effects this could have?

[Sunriver]

Hmmmm.... Interesting.

If this current system is found to be flawed then Distributors would suffer a huge loss. Most would bankrupt.

Costco and other large retailer would be able to sell at much lower prices effetively crushing the local brewerys.

Lower prices on beer but less craft brewers is my thought.

[Beaver]

Although, do we really need distributors? Without distributors it may be easier to sell smaller microbrews (cheaper, less up front costs?).

[Beaver]

Also, (some) mass produced beers are already much cheaper than smaller craft beers, yet the craft beers still sell.

Even if Bud is only $7 a case, there's no way I'm buying it! :)

[brewmonkey]

The lobby power of groups like MADD and SADD will make sure something like this does not happen. Many states are trying to pass laws that will allow them to raise the excise tax on alcohol, they are not about to let the price drop.

This would not hurt small breweries if it did though. You would see them flourish as this would do away with the middleman. At our pub we had some offsite accounts. I HAVE to sell the beer to a distro guy who then sells it to the bar. We sold 1/2bbls for 64.50 to distro who then charged $106 to the bar who then has to sell the pints for $3.50+ to make his margin, Ridiculous! Cut the middleman, I charge $85 per 1/2bbl and deliver myself.

The three tier system is ridiculous.

[Beaver]

Thanks for the insight brewmonkey. That mark-up is insane.

[MeridianFC]

I've always thought the three tier system was stupid. I guess in some way I can see why it might have been put in place. I know there's been talk of trying to avoid problems like the tied house system in the UK, which oddly enough has been replaced by the Pubco problem. But as Brewmonkey points out, distributors are a useless impediment between retailer and manufacturer. The very case he describes came up here recently. The owner of the Reef here does a cask night so we suggested he get a cask from a local brewer, but that brewer has to sell to a distributor who can then resell it to the bar with the attendent mark up.

[Stodbrew]

In CA, as a small brewer, we are allowed to self distribute. Actually, all brewers are allowed to. In SF, Anchor does their own distributing, as does SN in Chico. I do, however, have to post my keg price in each county in which I sell, to the state ABC. That way, I'm not selling kegs to one place at $90 while selling to the place next door at $110.

[Theakston]

Originally posted by MeridianFC
I've always thought the three tier system was stupid. I guess in some way I can see why it might have been put in place. I know there's been talk of trying to avoid problems like the tied house system in the UK, which oddly enough has been replaced by the Pubco problem.

I, for one, never really saw the tied house system as a problem. Without it cask ale would have dissappeared long before CAMRA or anyone else had a chance to save it. As long as there was plenty of competing breweries with their own sets of tied pubs then this was good. You avoid the ones with crap beer and support the ones that do it well. There is only a problem when breweries merge and eliminate the competition.

[MeridianFC]

I was glossing over the whole situation a bit. I was thinking of the complaints of smaller brewers not being able to get their beers into pubs in areas that are all or mostly tied. As with any thing there are good and bad sides to it. I'm quite pleased to drink at Young's pub for instance, but if I was living in a Tetley-fied area my life might not be so good.

[Theakston]

That's true about small brewers having difficulty selling into a tied pub market, but then the brewer with no pubs is a fairly recent phenomena in the UK. The smaller brewers just had fewer pubs usually in a fairly concentrated area. Sadly many of the smaller chains have now gone, and it is probably due to the new pub laws - ironically designed to promote competition - as much as anything else.

I too used to slag off Tetleys. When I was in Manchester it was the god-awful-Warrington brewed Tetleys. Their pubs were deserted unless they had bands or strippers on. But then I moved to Leeds where every other pub was Tetleys but it was brewed in Leeds and it was a pretty decent pint (cask of course, but served with an obscenely huge head)

[chazwicke]

The three tiered system is protected by a strong lobby in Virginia. However breweries can sell growlers and bottles from their brewery and at festivals just as wineries can sell their wine from their winery or fests.