Night Shift Brewing of Everett, Massachusetts launched a distribution business of its own last week, in a direct reproach of the state’s strict franchise laws that afford brewers little leeway out of partnerships with underperforming wholesalers. Under current law, once a brewery partners with a distributor, the two businesses are essentially bound for life. For a brewer to exit a partnership, they must show just cause, which can be difficult and costly to prove, and win a subsequent appeal from the state’s alcohol regulatory body. “This is a direct commentary on the state of the industry right now,” brewery co-founder Michael Oxton told the Boston Globe. “We’ve seen too many brewer friends suffer under poor distributors…[having] to shrink or shift their business model to stay alive.”
WHY IT MATTERS
Brewers have for years been fighting to update distribution laws in the state, with heavyweights like Boston Beer’s Jim Koch on down to smaller players emerging as advocates for change. Wholesalers have countered at every turn, however, and to date have come out on top after every contentious battle. It has certainly been an ugly fight in the Commonwealth, but this particular issue obviously echoes at different decibels throughout the entire beer industry all over the country. Now, it seems, rather than fight the proverbial city hall, some brewers are starting to create their own paths into the distribution game.
Just this week, we reported how a former employee of Maine’s Bissell Brothers Brewing split off to found a wholesale business of his own in response to a state law that dictated the company could no longer self-distribute. I wasn’t able to manage this quote from Sleek Machine Distro founder Josh Schlesinger into that story, but I was reminded of it today when reading about Night Shift’s latest endeavor: “I think we’ve all seen too many movies where people charge the capital and demand change. We knew that unfortunately wasn’t in the cards.”
Rather than engaging in an uphill battle against outdated laws, the company saw fit to create an entirely new business out of thin air as a workaround. I thought of that disillusionment with the legislative process again because in 2015, Night Shift co-founder Rob Burns did, in fact, charge the capital and demand change. At the time, the company was self-distributing its output of 5,000 barrels.
“As we continue to grow, we need the help of distributors, and we look forward to partnering with one. The challenge for us, with a business that’s so rapidly changing day to day, we don’t know what the right distributor is,” he told lawmakers at the time. “The one that might meet our needs today could not be the one that meets our needs tomorrow. So we just ask that we have the option to leave a wholesaler if our needs change, their needs change, if the contract isn’t met.”
Since then, the company has doubled in size and is on pace to produce 10,000 BBLs this year. So it makes sense that Night Shift Distributing would rear its head now.
As for its own wholesale business, the company promises its operation will differ from the entrenched players in a number of ways. For starters, it promises not to show brand favoritism—a charge the establishment would vehemently contest in its own defense, no doubt—or engage in pay-to-play practices, which recently roiled the Commonwealth’s beer industry, sparking criminal investigations in the process. Its biggest selling point, though, is its pledge not to block brewery partners from switching wholesalers with ease, should they choose to do so. That, ultimately, has been the biggest point of contention in the Bay State’s distribution fight.
Massachusetts’ established wholesalers weren’t mum either when asked about the new business in town. Bill Kelley, president of the Beer Distributors of Massachusetts, a trade group the state’s beer wholesalers, told the Globe he welcomes Night Shift Distributing into the marketplace.
“While it’s peculiar to see this announcement being used as a vehicle to attack the very industry they are entering, we are hopeful that one day NSD achieves sufficient growth and success to be considered for membership in this association,” he said.
Night Shift was fed up with distributorships. So they started their own. [The Boston Globe]
Massachusetts Beer Industry Split On Proposed Wholesale Changes [Brewbound]