It’s no secret that beer distributors are the primary opposition to expanding direct sales in Alabama to match national norms.
It may seem unlikely that Alabama’s beer distributors will ever support growlers from the brewery, but it is not without precedent. Distributor spokespersons in nearby states, such as Florida and North Carolina, have defended direct sales and credited them as being beneficial to their landscape.
Believe it or not, brewers usually have good working relationships with their distribution partners. So while this political disagreement isn’t quite the epic clash that some imagine, we do think their opposition is short-sighted. Here are 3 reasons why we think supporting direct sales is actually in their best interests.
1. They will make more money in the long-term
[pullquote]There’s a reason North Carolina is widely considered the best beer state south of the Mason-Dixon Line. North Carolina has the most favorable beer laws of any state in the Southeast… Craft brewers may sell their own products at the brewery while…
-Tim Kent, North Carolina Beer & Wine Wholesalers Association[/pullquote]
This may seem counter-intuitive, but keep this in mind: beer distributors make money with volume and Alabama’s craft brewers need to expand to provide more volume. Big beer is declining and craft beer, with its higher margins and surging popularity, is the best long-term strategy to maintain a competitive market share with wine and spirits.
One of the biggest issues preventing brewery expansion is access to capital, and direct sales will provide higher-margin, immediate cash flow for the brewery. This revenue will be reinvested into increasing production, improving quality, and hiring sales staff to reduce the burden on the distributors’ teams.
Direct sales also make it easier to access outside capital sources. Customers today are literally showing up to our doors and asking to buy our product, but we have to turn them away. That’s a hostile legal environment, which understandably concerns potential investors who can look at other states for equity opportunities.
Direct sales at the brewery will improve product quality and increase sales to distributors. That’s a guarantee.
2. It’s good for Alabama
Virtually all beer distributors in the state are independent, family-owned businesses with strong ties to their communities, so they are personally and financially interested in the success of Alabama.
Local breweries revitalize neighborhoods and provide economic development. Although Alabama’s local brewing industry has been exploding recently, we are still ranked near the bottom of states in economic impact of craft beer. We can do better, but our unusual restrictions on direct sales is a contributing factor to lost job opportunities and investment.
3. They should save their energy for the real fight
[pullquote]We support every brewery’s right to have a tasting room and to sell growlers of beer brewed on the premises.
-Mitch Rubin, Florida Beer Wholesalers Association[/pullquote]
Let’s be realistic. The expansion of direct sales we are asking for is practiced by almost every other state. It’s not a threat to the three-tier system. The miniscule volumes that will be moved in growlers are a drop in the bucket and will ultimately benefit the distributor. And we will work with distributors to include reasonable restrictions.
There are real threats coming, but it won’t be from local brewers who want to sell a few growlers to fans and tourists. The real threat is from big suppliers who want to self-distribute millions of cases to big box stores. That would be bad for craft brewers, distributors, and consumers.
The distributors should save their political capital and work with us to pass a direct sales bill that we can all be happy with. When the real threats come, they might even find a political ally in their local craft brewers.