Two beer distributors vanish into thin air. What does it mean?
It's like deja vu all over again. It's like we keep talking about things that we think might happen, and then they actually happen. I suppose it's a function of having an ear firmly fixed to the ground. Maybe we should be talking about how craft beer sales are going to skyrocket in the coming months. Yeah, that's it. Craft beer sales are about to skyrocket to new, unprecedented heights!
Why two beer distributors suddenly vanished
Two beer distributors in Washington state suddenly, unexpectedly disappeared last week. It’s not a localized phenomenon. Similar things are happening across the nation. Cue the spooky music.
The breweries contracted with those now-closed distributors were blindsided, but they will see some sort of resolution. Right? Because... contracts. We assume that the breweries will not be left out in the cold, with beer wasting away in shuttered warehouses and no one to service existing retail accounts. Other breweries, upon hearing this news, are probably filled with the fear of God: "What if this happened to me?" (Read more about this unfolding story.)
Kendall’s Pioneer Distributing was largely focused on craft beer. Brower Polska Distributing was largely focused on European imports. Together they made up the alcohol-beverage division of a larger company, Corwin Beverage, a soft-drink distributor. Last week PepsiCo acquired Corwin Beverage, a move that apparently caused the immediate closure of the two beer distributors. People lost their jobs. Not good.
But wait, there’s more… In addition to acquiring Corwin Beverage, and shuttering two beer distributors, we’ve learned that PepsiCo recently applied for six alcohol distribution licenses in Washington. PepsiCo has already established alcohol distributorships in other states, a development not at all unrelated to the arrival of Hard MTN Dew, which PepsiCo introduced just over a year ago and is currently only available in 10 states. Presumably, coming soon to Washington.
Phew! 😵 There’s a lot to unpack here, but this one situation is just that. It’s just an example of something that is happening nationwide in the alcohol distribution industry: consolidation, realignment, and acquisition. The big are getting bigger.
It’s something David Walker, co-founder of Firestone Walker Brewing, foretold in The Taster Tray’s 2023 craft beer predictions article. (As we explain below, refer someone to The Taster Tray and you’ll get that article.)
So why does any of this matter? Craft beer industry insiders fear that as the big distributors get even bigger, they will lend more focus to the biggest breweries in their portfolios, leaving some craft breweries in a precarious position: contractually aligned with wholesalers that have less and less interest in selling craft beer. Getting out of a contract with a distributor is not as easy as it sounds.
There's little we can do to stop it, but we should be aware. It is never a bad idea for a brewery to evaluate and shore up its contractual arrangements. It is always a bad idea for retailers to let newly empowered distributors force non-craft and faux-craft beers onto the shelf for their own benefit. Ultimately, this kind of consolidation and realignment could impact consumers by reducing the availability of craft beers and reducing choice.
In a previous issue of The Taster Tray, we wrote about the increasing importance of smaller, independent, craft-focused distributors, as well as the need for new state-level laws allowing breweries to self-distribute beer in states where they currently cannot do so. The situation with PepsiCo and Corwin Beverage drives home the point. If you live in a state where craft breweries are lobbying for new distribution laws, pay attention and get engaged.
Have you been impacted by this kind of realignment or acquisition? We’d love to hear about your experiences as the landscape shifts. Send us some feedback. We read it all.
Athletic On Tap
Athletic Brewing, the undisputed heavyweight champ of non-alcoholic beer, is now a top 25 craft brewery and produces over 100,000 barrels per year. Until now, Athletic has been almost exclusively an off-premise brand, offering 12-ounce cans, with no draft product in the lineup.
Bill Shufelt and John Walker, co-founders of Athletic Brewing.
Last week, a picture showed up in the company's Twitter feed showing Athletic Brewing's co-founders, Bill Shufelt and John Walker, heading out to deliver the first keg to an account in New York. The company reports that it is currently in the very early stages of its draft program, but it's coming. When Athletic on tap fully arrives, we all will surely know about it.
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This week's Taster Tray was composed by Kendall Jones.