Good Beer Hunting

How Bright Does the Sun Shine? — Florida Distro Laws Encourage Growth, But Brewers Still Worried


During 2012’s Great American Beer Festival, Florida’s Brown Distributing Co. received one of the highest honors such a business can earn when it was named that year’s Craft Beer Distributor of the Year.

The annual award, given in partnership between the National Beer Wholesalers Association and the Brewers Association, recognized the company’s “strategy in promoting the craft segment,” which included focus across social media, digital content, and ongoing interaction between wholesaler employees and the breweries they served. Brown carried 64 craft breweries at the time, seeing a 76% boost in volume sales from 2011 to 2012.

In the years since, that commitment has changed, with Brown outright transfering 44 of those breweries to other wholesalers, mostly in sales that occurred since 2016. Just more than 80 employees were also laid off that year.

At a time when distributor consolidation isn’t out of the ordinary, this particular instance has continued to reverberate for some Sunshine State industry pros who see it as a catalyst for an ongoing fight over distribution law. From their point of view, the aggressiveness of Brown and other distributors to snap up local breweries—and, in Brown’s case, also sell to others—has created overstocked portfolios and few opportunities for Florida breweries looking to grow. Companies can sell beer from their taproom, but can’t self-distribute, leading to questions of free markets and economic growth potential.

“The consolidation of brands ultimately means there are less wholesalers in your area with larger portfolios,” says Khris Johnson, head brewer at St. Petersburg’s Green Bench Brewing Co. “Now we’re in this position where breweries don’t have an option to distribute their beer and wholesalers don’t pick them up. I hear from new breweries, ‘I can’t sign with a distributor’ and that’s their reality now.”

Brown Distributing declined to comment for this story.

The Brewers Association counted 243 breweries in Florida at the end of 2017, but according to the Florida Brewers Guild, that’s only half of what the state can handle. In a 2014 economic impact study, a team of economists, including University of Florida faculty, found the state could support up to 500 such businesses, with potential of around 40,000 jobs and a $2.5 billion impact on the state’s economy.

The number one worry of brewers at the time, according to the study, was an ability to sell growlers, which was made into law in 2015. The second-most cited impediment to growth was distribution regulations. Four years ago, a “majority” of craft breweries were making less than 500 barrels of beer a year, according to the findings, a general size that has become synonymous with self-distribution success stories in states that allow such a thing.

“The survey results indicate that many small craft brewers feel that the ability to self-distribute, at least during their start-up phase, would greatly enhance their prospects for success,” researchers wrote in their report. “Thus, a change in regulations that would permit micro-breweries producing small volumes with limited local outlets to self-distribute might be warranted.”

This belief remains at the center of Craig Birkmaier’s support for updated laws. A former president of the state guild, he worked as head brewer at Swamp Head Brewery in Gainesville before taking on the same role with Ocala's Infinite Ale Works.

“Brown just dumped all these brands over the state,” he says of distributor moves from the last couple years, which has created trouble for himself and others who had hopes to expand their reach. “Some of the people we’re talking to say, ‘We’d love to work with you, but we need to figure out what we’re doing with the five brands we just bought.”

Sales at Infinite’s taproom have grown around 20% year-to-year, but with plans to double annual production from last year’s 700 barrels, the beer has to go somewhere. The brewery already partners with Cone Distributing in Tallahassee and Sunshine State Distributing, just outside Orlando, but wants a third.

“I see potential for smaller distributors to open up, if for no other reason than to absorb brands that others can’t,” he says.

Bobby Bowen, head brewer and co-owner of Casselberry, Florida’s Bowigens Beer Co., says he has a great relationship with his distributor, Progressive Distribution. As much as 30% of the brewery’s production goes through the wholesaler, but is still a limited amount for a brewery aiming to make about 350 barrels in 2018. Bowen says he’s faced no problem with maintaining attention from Progressive, which counts six Florida breweries among its portfolio, but notes the fallout from Brown’s sales may have created a situation where other breweries need to send multiple brands to market in order to successfully partner with a distributor. It could be tough for similarly-sized breweries.

"If we were with a larger distributor demanding a lot more product and all of a sudden our taproom gets busy, we couldn't pull some from distribution to take care of our home base," he says. "If you're not moving a lot of beer, then you're not going to get much in return."

It's an awkward situation where, on a national level, the "small and local" model that includes focus on own-premise sales is preached all over, but in a state where growth via distribution could be a boon to a brewery, business owners worry they'd even be able to make it work in the first place. It's a big reason why Bowen supports self-distribution.

"If a small guy can build up their brand and get accounts and recognition, by the time they're ready to hook up with a distributor, they already have a built-in base," Bowen says.

But what if there are already enough distributors to allow for such a thing to happen? Mitch Rubin, executive director of the Florida Beer Wholesaler Association (FBWA), says that major markets can have as many as a dozen different distributor options. He also says that, while finding an ideal wholesale partner may not be as easy as one meeting, there’s enough variety to handle current needs.

“You have all these different attitudes and different needs and you have to go out there to find your fit,” he says, noting that the idea that stuffed portfolios may not be as much of an issue as finding the best partner for distribution, even if two things sound eerily alike.

He points out that Cavalier Distributing, which calls itself “the craft beer authority,” lists 48 U.S. craft breweries among it’s partners, in addition to 38 international brands, suggesting their portfolio is just as crowded. Other major players in Florida wholesale sales list more than 100 breweries (J.J. Taylor) or more than twice as many as Cavalier (Florida Distributing).

The common sense argument against changing laws is that Florida beer has done just fine without any of the legal changes Johnson, Birkmaier, and others have requested. Already with an ability to sell beer at taprooms, Florida breweries not only were ahead of nearby states like Georgia, but can actually work with a business model so many covet in this new wave of direct-to-consumer sales.

On top of this, there’s something of a small loophole regarding distribution. A statute currently allows for breweries to "financially assist a proposed distributor" as a limited partner for up to eight years. So long as the businesses are separate entities, a brewery owner can theoretically help launch a wholesale operation. Oddly enough, it provides common ground: people on both sides of the argument to change state laws cite it as a benefit.

Florida Brewers Guild counsel Josh Aubuchon noted the law has been a success for Tallahassee's Deep Brewing Co. and Greater Depths Distributing, which are run separately by husband (Ryan LaPete, brewery) and wife (Marsha Mosley LaPete, distributor). Rubin notes the case of M.I.A. Beer Co. In 2013, founder Eddie Leon invested into wholesaler Most Wanted Beverages, which was run by a friend, before selling M.I.A. distribution rights to the larger Cavalier Distributing in 2016 when the brewery wanted to expand across Miami and into Tampa.

“To be out there every day doing what distributors do, in effectively one vehicle and one driver and maybe one salesman is quite a big deal,” Rubin says. “Where distributors in a given market might have 50 sales people and 50 merchandisers and people in a sign shop and cleaning draft lines.”

Aubuchon doesn’t disparage these points, but like Johnson and Birkmaier, sees issues as part of a larger theme of allowing a free market to provide and decide success.

“We are lucky in that, if you open a brewery, you can get a retail license and it’s not prohibitive and has been a huge strength that plays to our industry’s ability to facilitate growth,” Aubuchon says. “But when we look at other states like California or Colorado or Oregon, and they’re dwarfing the amount of breweries we have, we don’t want to plateau and miss the next step to allow us to get to the next level.”

A small version of this has already happened after the Tampa Bay Times reported in June that at least 12 craft breweries had their brands reduced or removed from shelves at some Publix grocery stores, replaced by beers made by, or otherwise owned under, Anheuser-Busch InBev.

Publix spokeswoman Brenda Reid told the Times that shoppers "continue to purchase a higher percentage of traditional beers as opposed to the craft beers," but also noted that sales of craft beer has been growing in Publix stores for almost a decade. According to the Times, in-state brands like Swamp Head and Motorworks Brewing were removed while AB InBev High End brands like Goose Island, Elysian Brewing, Golden Road, and Karbach received additional space.

At a time when in-state breweries are trying to figure out how—or if—they can best get to market, it can come off as a troubling play. The power of distributors, from choosing whether to form partnerships with breweries to influencing shelf space, can be strong.

It’s also felt in the statehouse, where Florida brewers are gearing up for another go at law change. Aubuchon says that after this November’s midterm elections, the state guild hopes to start adding sponsors to bills aiming to allow for self-distribution and updated franchise law, with a timeline that would likely kick off in January and February as committees hold informal meetings. An attempt at self-distribution by state Sens. Dana Young and Jack Latvala was indefinitely postponed and withdrawn from consideration last year.

Green Bench’s Johnson says he and others are hopeful for advancement this time around—not necessarily because things are broke, but because he feels more options should exist.

“It’s more about the fact there are so many ways to run a brewery now and we’re just not allowed to,” he says. “When I visit the capital, I talk to congressmen and senators who are all about small business and entrepreneurship, but these laws don’t really line up with the rhetoric.”

—Bryan Roth