The U.S. beer distribution system provides independent, craft producers a better path to off-premise sales than pretty much any other consumer good. The paths to the shelf for a craft toothpaste or mustard, for example, has much bigger barriers to entry. But the traditional beer distribution model was never intended 1) to support a market of 7,000+ breweries across the country of varying sizes, shapes and quality, 2) to cater to a market that values new beers and experiments over flagship brands.
A big issue on both sides is the risk of the unknown – a distributor selecting a new brewery to bring to market (in an endless sea of options), and a brewery putting its sales fate (and often business fate) in the hands of the distributor. Most craft brewers get locked in to multi-year contracts when working with a distributor. Generally, the contract is exclusive and after the initial “honeymoon phase,” the beer is no longer promoted.
A new startup, Brew Pipeline, is launching a new program that could potentially lessen the risk on both sides while opening up new markets and better serving the demands of today’s customer.
Meet Brew Pipeline
To be clear: This is not a new distributor. Led by three industry veterans, Brew Pipeline was developed to create a number of programs designed to add incremental dollars to both brewers and distributors alike. The first of their programs, Guest Brewer is set to launch in March and will bring exclusive beers from craft breweries to untapped markets for a limited time. More than 70 award-winning breweries are gearing up to participate in the program, and the company is partnered with distributors in 15 states right now. Brew Pipeline told CBB it will quickly expand that number to 20 to 25 states with the goal of reaching the top 100 U.S. markets.
“As consumers continue to support local brands, most craft brewers stay close to home and are left with a small geography that will not sustain their growth,” said Marty Ochs, president of sales at Brew Pipeline. “As a result, distributors are hesitant to bring in more distant brewers, largely due to the effort required to sustain brand momentum. We created Brew Pipeline and Guest Brewer to solve this problem and disrupt the industry. Our goal is to provide greater access to the best craft beer available while boosting the bottom line for brewers and distributors.”
Guest Brewer facilitates these relationships for limited time releases only (ranging from 30 to 60 days in most cases). After that there is no commitment, allowing the brewer and distributor to both test the relationship and see how the product sells in that new market. With limited release schedules designed to drive demand, both brewers and distributors can test new markets with minimal commitment. They have developed a user-friendly online portal that provides a one-stop solution for consolidated ordering for production, marketing, cooperage, transport and state registration.
Can I get into the program?
Key to this Guest Brewer program is its selection process. Brew Pipeline wants its name to stand for quality. The team will be approaching breweries that it would like to promote in new markets, and it will be accepting applications from interested breweries. The rotation of beers will vary as the program continues to grow, but the company estimates that 10 to 14 brands will be rotating at once across multiple states. It’s likely this will mean two brands per month in any given market (no more than six). There will typically be a high end and very rare brand in tandem with a bigger brand sought after by the masses.
Some of its rules for beer selection:
- Guest Brewer does not duplicate styles in its monthly offerings to ensure distributors, retailers and consumers can choose from a wide variety of beers.
- It evaluates the distribution region of each selected brand to ensure as many regions as possible have a great selection each month.
- It considers the seasonality of brands so season-exclusive brands are released ahead of prime season for that particular style.
- Breweries get a say in which new markets they are interested in being sold.
What we like about it
The label “flavor of the month” has a bad connotation, signaling a short run success that fades away, but the Brew Pipeline model gives this concept more power, turning the short-term interest that craft buyers have today into a low risk, high reward distribution strategy, said the company and its clients.
“The Guest Brewer program is a great way for us to strategically seed new markets and connect with some of the best distributors in those regions,” said Robin Clement, owner of Monkless Belgian Ales. “We’re excited to have been selected as one of the first breweries on board and to share our beer with our fans across the country, as well as people that have yet to taste it.”
Distributors gain by having a SKU-managed solution that rotates brands with built-in logistics, delivered pricing and turn-key market support including chain interest. Retailers get to better meet consumer shopping interests. Breweries have the opportunity to reach new consumers with low-risk and minimal commitment. Consumers gain access to new products with limited availability to drive demand.
Brew Pipeline aims to give brewers the freedom to focus on brewing, while they handle all of the complex logistics from dock to market. Some customer-facing initiatives Brew Pipeline has planned as part of the program:
- The beers on tap will all be poured under the Guest Brewer handle, highlighting them for the length of the promotion.
- Each brand will get dedicated videos produced by Guest Brewer to promote their launches via social media.
- Brew Pipeline will have a media portal that distributors will use to print and place POS for participants as well, but there will not be any incentives or distributor programs because they are focused on selected accounts in a narrow channel of the market.
This is a highly focused, craft-centric approach where all participants involved are selected because they are unique and in demand. Look for additional innovative programs in 2019 as Brew Pipeline expands its capabilities to packaging, contract brewing and work within international markets.