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How Do Breweries Choose Where to Distribute?

Being a craft beer fan you are very likely to start meeting people that work in the industry.  Some work for breweries while others work at bars, stores and the local distributors.  And the distributors are a key in how craft beer gets to the masses.  Because of three tier laws that prevent breweries to sell directly to retail they must go through a network of distributors in the areas they wish to be carried in.  But how exactly do the breweries choose which states and areas they want to be in?

Some areas just make sense to a brewery.  If you are a California brewery you are likely going to distribute int he home state as well as probably neighboring states like Oregon, Arizona, Nevada, etc.  But when you start branching out to other regions how do you choose?

Let’s take a California for the sake of me already mentioning one, Lost Abbey.  The Southern California brewery is distributed in their home state of California along with other regional states like Arizona, Washington and Colorado.  But once they start heading east it’s a little more spread out.  They distribute in Georgia as well as the Chicago, Philly and Boston metro areas, not the entire states of those cities.

This looks like a very well planned idea to be hitting certain metro points in different regions.  Chicago services the mid west, Philly the Northeast and Mid Atlantic, Boston in New England and Georgia in the South.  This direction can make a lot of sense for a brewery that is not that big but has huge demand for their products all over.  They have tried to make it easy for some people to travel and get their beer more easily than heading out to California.

But there are expansion plans that I don’t quite understand.  They don’t seem logical so I would need some explanation as to why.  Case in point is the recent decision by Ballast Point to start distributing in the state of Texas.  While on the cover that seems awesome, especially for the fine folks of Texas.  They get to enjoy some excellent beers like Sculpin, Sea Monster and Victory at Sea.  But underneath it sort of seems Ballast Point might be missing something.

See Ballast Point is distributed in Central Florida currently but not in South Florida where I reside.  The apparent reason they are not down here is that they can not make enough beer to cover the territory.  Understandable, hitting capacity seems to be the only good problem in brewing.  But the news of hitting the entire state of Texas surprised me a bit.

I know Ballast Point is in the midst of expansions currently to help produce more beer, that’s awesome news.  But why not first finish off distribution in a state you are already in?  You already have all the legal work done in the state for your beers.  And the marketing of your products are a home run in the fishing heavy South Florida.  To me it seems like just finding the distributor for the products and you are done.  I mean I could be completely off and would welcome someone from Ballast Point telling me otherwise.  But it looks like a no brainer.

Sure you can tell me to go back to my point about Lost Abbey hitting key markets in certain regions and I can drive an hour to get some of their stuff.  Sure that could completely be plausible but when you are under the impression that their beer isn’t in your region because of capacity that is something else.  I would imagine supplying the entire state of Texas is much more beer than South Florida.

And look I’m not trying to rag on Ballast Point in the slightest.  I’m sure there is a reason for this and I’m sure it isn’t an easy decision for anyone that has to make these calls.  Texas, you are truly in for a treat with these guys.  Great beers all across the board.  I just hope that Ballast Point soon makes the decision to cover all of the state of Florida soon so I can more regularly enjoy a Big Eye IPA on a hot summer fall day.

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7 Comments

  • Reply dale

    Mike,

    I’ve often wondered the same thing. By the way, Ballast Point distributes in the Tampa area, but not in Orlando. I buy Sculpin at Total Wine in Tampa when I visit Cigar City. It’s a similar situation with Sweetwater Brewing. They’re in Tallahassee, Jacksonville, Ocala, but not in Orlando.

    I suspect a lot of it has to do with what distributors are available and how badly they want to carry the product. At the end of the day the brewery, the distributor and the retailers need to make a profit. As a beer fan, I want to have access to everything! That’s not too much to ask, is it?

    Cheers!

    October 26, 2011 at 10:09 am
    • Reply Mike

      Hey Dale, they are actually distributed on the east coast of Central Florida too. You can find them in Martin and St Lucie counties. This is because of JJ Taylor that they are distributed with. They are in most of Florida except the South and Orlando areas really.

      October 26, 2011 at 10:32 am
  • Reply Josh@LazyMagnolia

    That’s a good question. I don’t deal with distributors myself and don’t work in Florida, but have gotten to talk to people who do both. It would make allot of sense to distribute throwout your own state, essential securing your home territory, but depending upon the type of market and your product it might not be feasible. If customers or distributors have no understanding of your type of product it will take allot of education and time before people will pick it up. The opposite could be true too, the market could be so saturated with your particular nitch/style that you will never get anyone’s attention. Ether situation equals beer going bad in warehouses, and the answer would be making a bigger name or base for yourself elsewhere then trying to move in. Each city and each distributor will have its own personality. Some are very easy to work with others are very hard. Some cities you have options and others you have the one and you go with it or you don’t go. In a lot of ways a small brewery is at the mercy of a distributor and the personality of the market. I havent seen this beer, nor allot of other Florida based beers here in MS, but we are a very hard market to get into with a relatively small pay off.

    Im sure the move is strategic in one way or another. Not every brewery chooses to go statewide or region wide all at once. Some pick receptive markets with high impact and go for them first. It sucks that y’all cant get this beer statewide were you want it, but if Texas works out for them then it could lead to them going statewide in Florida. And just because they are making a move on Texas doesn’t mean they aren’t constantly working on Florida too.

    I hope this is help full. I don’t know all the issues with the brewery and the area. I’m just trying to make some information to light.

    Cheers!

    October 26, 2011 at 10:52 am
  • Reply BW

    If they are hitting capacity at home, I wonder if they found someone to contract out to in TX just to keep up some expansion while they work out expanding their own brewery.

    October 26, 2011 at 11:34 am
  • Reply Mike

    Thanks Josh for you input. I know they have a reason for this. I guess just as a geek I wish I knew what that was.

    BW, I’m not sure if they are going to contract out any of their beers. They don’t seem like the type to want to do that.

    October 27, 2011 at 6:49 am
  • Reply Josh@LazyMagnolia

    Mike
    Id be interested to know too. Im sure it would be informative as to how the Florida market works.

    October 27, 2011 at 9:23 am
  • Reply David

    This modern day prohibition has a lot to do with the start up of Taps from Scratch (tapsfromscratch.com). It’s super frustration hunting for good beer like easter eggs. These craft and micro breweries mentioned above unfortunately need to be on a bud truck to get to the masses, which is bs. We were serving Sweetwater 420 on tap at the beertoberfest in waterford lakes this month. We had an event atlanta the prior weekend and brought a keg down with us. Distributors wont take the keg shell for deposit though, which is ridiculous.

    October 28, 2011 at 8:21 am
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