In states where the three tier system still allows for limited self-distribution, the craft breweries are thriving. Distribution is a complex business though and for the breweries that go into self-distribution there are challenges similar to large distribution entities. These challenges are compounded by the fact that more than likely the smaller breweries have limited funds.
Self-distribution can be a boon though, because:
- The margins are significantly improved
- There is better control on out-of-stock issues
- Keg loss is lower
- There are more touch-points with on-premise accounts
The challenges faced by self-distributing breweries are:
- Off-Premise business: Large chains such as Harris Teeter, Kroger, Walmart, etc. require the distributor sales representative to maintain shelf space almost on a daily basis. The distributor is in-charge of managing and rotating inventory. This increases the requirements for having a sales person in those accounts. With limited number of stores you could certainly do so, but some of these chain stores have over 200 locations in each state. That makes it extremely difficult. For example: In Florida there are approximately a 1000 Publix stores. Consistently taking care of all poses a significant barrier.
- Fuel is expensive: Well, actually, currently the fuel costs are lower. Though, the market fluctuates quite a bit. But, for self-distribution breweries the number of times a truck has to go on the road partially filled is much higher. Distributors on the other hand have significant advantages as they can be much more efficient in their fuel costs.
- Draught Cleaning: The accounts have come to expect that distributors clean the draft lines on a two week basis. In some states this is illegal and accounts have to handle it themselves, but traditionally distributors are responsible for managing quality of draught lines. With an ever-increasing number of accounts and an increase in number of tap handles maintaining a regular cleaning schedule for accounts can quickly become expensive.
Doing all the above and managing order-taking (counting inventory, setting par levels, etc.) continues to be a challenge. Especially in case of remote accounts the costs of simple order-taking climb very quickly. We at BeverageIO can assist with these burdens.