In part one of this series, numbers showed a changing landscape for distributors. Part two told the story of how Massachusetts’ Night Shift Distributing has succeeded by focusing on small breweries and slow growth.
But there's a middle ground among it all, highlighted by GBH's Cory Smith in his 2017 profile of Bissell Brothers Brewing. The business spun off its own distribution wing in 2016 to create Sleek Machine Distro, run by Josh Schlesinger, who previously oversaw Bissell's in-house distribution.
“Breweries and beer bars have gone through a rapid, massive transformation in the past 15 years, distribution hasn’t really changed, more or less,” Peter Bissell told GBH. “It’s a vital thing—breweries need distributors. But there needs to be smaller players, and we saw this. We didn’t want our beer to be another SKU, and we didn’t want our beer to be used as a tool.”
Sleek Machine represents a small change amongst the middle tier's traditional setup, but that doesn't mean "establishment" distributors aren't changing. One in particular has the same mindset as Bissell, working weekly to make brands more than just an SKU.
Raleigh, North Carolina’s Mims Distributing has been wholesaling since 1964, a family business now run by a trio of Mims family members. It’s a MillerCoors house, but you wouldn’t know it walking through their warehouse, where craft brands like Sierra Nevada, TRVE, and AleSmith fill storage space alongside about 20 other Brewers Association- and IRI-defined craft breweries. Over the past five years, success hasn’t just been measured in sales or new breweries signed, but also downloads.
Three of Mims’ staff, including CEO Chip Mims, co-host a weekly podcast, Tales from the Cask, which highlights the people and beer of the industry with equal interest and opportunity. It’s not a gimmick, either. “Cask” was twice recognized by the North American Guild of Beer Writers in its “Best Beer Podcast” category and, in 2016, was named by Beverage World Magazine as one of beer’s 50 “disruptors.”
“To be a distributor today, it's about much more than getting cases from point A to point B,” the latter wrote in its nod to Mims’ podcast. “They've successfully harnessed one of the most pervasive means of reaching a wide audience in the 21st century.”
Hosting the podcast has been beneficial in many ways, says Tony Walldroff, Mims’ craft brands manager. It gives breweries—and that includes founders, brewers and reps—a platform to tell their story, helps Mims promote an evolving collection of beers, and has even led to signing breweries because they know Mims’ reach isn’t just face-to-face, but across a digital footprint.
“Three or four years ago, we were still trying to sell North Carolina as a state for craft beer, and I think the podcast was a big part of us reaching out,” says Jenn Balik, brand development manager, who hosts alongside Mims and Walldroff.
“When you’ve got large suppliers that are understandably very numbers-driven, a show like this brings home the fact that beer is something that brings people together,” Mims adds. “Because our interview subjects are customers and partners, it’s another way to get to know them and share the love they have for craft beer that you’re not going to get in this kind of medium from other distributors.”
Things are only going to continue to change for distributors, whether through their own internal or outside forces. In recent months, Constellation has worked to shift brands into its own preferred “gold” network of distributors, encouraging the sale of rights in Massachusetts and swapping brands between distributors in Illinois. In the span of about a week in January and February, Oregon’s Columbia Distributing bought both General Distributors and Marine View Beverage, the latter of which was itself created by the merging of distributors.
On top of this, there's growing potential within alcohol delivery services like Drizly, Hopsy, Saucey and more. According to one estimate, just 0.2% of beer sales were placed online in 2017, but that’s expected to increase to 2.4% in the next three years. PicoBrew, the automated homebrew system company, released a new line of systems in February meant for restaurants, with the explicit intent of disrupting the three-tiers by allowing food service establishments to make their own beers.
“Part of the issue in the craft beer industry that we are addressing is distribution,” PicoBrew CEO Bill Mitchell told Brewbound. “I want to be able to access great craft beers that aren’t sold in my local area. So we invented this distribution vehicle for craft beers from around the world.”
Enthusiasts may see an ongoing war between Megabrew and smaller beer makers, but it’s clear for those inside the industry that battles will be waged on more than simply the definition of "craft." It’s a matter of economics and business, and finding opportunities that make the most dollars with the most sense.
In terms of the middle tier, what that is turning into is reflective of a similar path taken so often by the craft brewers distributors serve: innovation. As consolidation becomes a bigger part of business, there remains efficiencies and ideas to exploit as a way to act as a better partner for the ever-growing number of breweries looking to branch out into new locations and accounts in new ways.
More or less, this has been to the credit—or detriment, depending on your point of view—of craft beer’s growth. In the past decade, these brewers have not only created new and more impassioned customers, but helped create an industry that provides additional opportunity and expectation for brands and experiences like never before. An engaged audience has changed the category, and may even force change in those that serve it, too.
“Distributorships need to have point of differentiation other than their brands,” says Kimberly Clements, managing partner at PINTS LLC. “What are they better at than their competitor? That is a question that we ask our distributor clients often. However, they are too busy trying to chase volume and deal with the next SKU that’s coming in—they don’t even know what their competitor is doing better.”
Distress in Delivery, Pt. 1 — Why Distributors Need to Adapt
Distress in Delivery, Pt. 2 — Craft Comes for the Middle Tier
Distress in Delivery, Pt. 3 — The Future of Beer Distribution