Are you taking your brews to the streets? If you’re marketing your great beer and getting it on store shelves, you need to look into beer distribution.
There are many different beverage distribution channels and options, which can be challenging to navigate. Here’s what you need to know to get beer from your brewery to consumers.
The Beer Distribution Market
Americans like beer; the U.S. beer and craft beer industry is huge. In 2021, more than 2.9 billion cases of beer were sold, plus 49 million cases of hard cider and other fermented products. That comes out to 26 gallons of beer and hard cider per person over 21.
Craft beer popularity is at an all-time high. In 2022, overall beer sales were down 3%, while craft beer increased by 5%, rising to $28.4 billion, or 24.6% of the $115 billion U.S. beer market. Experts predict the craft beer market will grow to $221.5 billion by 2028 with a growth rate (CAGR) of 10.8%.
Competition may be fierce—there are more than 9.5k craft breweries currently in operation—but consumers have never been thirstier for new beer experiences.
How Beer Branding and Packaging Plays into Distribution Success
It’s critical to establish a recognizable brand when you take your beer to market. Branding is more than tasty beer and a cool name. To build brand loyalty, you’ll need to establish a personal connection with customers on an emotional level. Your name, packaging, advertising, and social media must be consistent.
Start with a Brand Story
Your origin story should be rich, inventive, and include elements such as:
- Who came up with the idea?
- Why the founders thought a new beer was needed.
- Where and when the brewery was founded.
- Sustainable best practices and sourcing.
Sixpoint Brewery has one of the greatest brand stories on the market. It starts with: “Sixpoint was founded in 2004 (we like to say it was born at the dawn of civilization, though that’s a story for another time…) in the neighborhood of Red Hook, BKLYN. It was essentially a cult brewery—draft-only, mysterious, cryptic…”
And only gets better from there. The story includes creative language around philosophy, (mad) science, culture, history, and quality ingredients. If you’re looking for inspiration, it is well worth the read.
Develop Your Logo
A good beer logo design should be:
- Simple: Simple logos are easier to remember. Ask yourself: will it look good on a hat or tee shirt? Will people know it when they see it?
- Unique and Memorable: Your logo should not resemble other beer or beverage logos. Stay away from symbols related to existing brands.
- Relevant to the Brand: Your logo should be tied to your brand’s story and history and reflect the beer’s personality and advertising.
Daredevil Beer is a great example. The helmet logo is striking and memorable, yet simple enough to use on merchandise. It also makes an eye-catching beer tap! The retro-cool logo references Indianapolis’ racing history, and individual flavors echo the theme with names like Indy, Liftoff, Go for Launch, and Race Day.
Craft Beer Manufacturing and Packaging
When independent breweries and small business owners are ready to expand beyond their local brewery, they have several options. Most craft beer breweries partner with a white-label service to package their products. For example, Big Beverages Contract Manufacturing in North Carolina offers packaging services for craft breweries. They provide branded labels, cans, and bottles in every imaginable size.
Craft Beer Distribution Laws
With your brand and logo established, it’s time to decide how to distribute your product. There are several things to know about beer distribution. The method you choose may depend heavily on the laws in your state. Both state and federal laws govern beer and wine distributors.
The most straightforward delivery system is you—many craft breweries start by delivering their products to retailers, then partner with a traditional distributor company as they grow. But self-distribution is not allowed in every state. Craft beer distribution laws in Alabama, Delaware, Florida, Georgia, Kansas, Kentucky, Mississippi, Missouri, Nevada, Rhode Island, South Carolina, and Vermont prohibit self-distribution.
Even in states that allow self-distribution, the laws vary. California, for example, allows most craft beer manufacturers to sell directly to licensed retailers. Arkansas is a different story. Self-distribution is highly restricted, including allowing only manufacturers who sell at least 35% of their product within the state to self-distribute.
It’s important to note that if you deliver across state lines, you’re subject to applicable laws in each state.
While it can be expensive to get started, self-distribution has several advantages, such as profit margin control and where your products are sold. However, managing sales and supply chain logistics is hard work and may be difficult for small brewers.
Explore Beer and Wine Distributors
There are 3,000 independent local beer distributors serving local areas throughout the United States. Beverage distributors act as the middleman between the manufacturer and the retailers. In most states, there may be hundreds or thousands of beer brands and only a handful of players in the beverage distribution industry.
The Three-Tier Distribution System
In most states, the laws require a three-tier system for the distribution of beer.
- Tier 1 is the manufacturer or packager. In the beer industry, that’s breweries that brew and package beer or companies hired to package beer provided by a brewery. Regardless of size, every brewery that packages its beer for sale is part of the first tier.
- Tier 2 is the distributor or wholesale distributors. Distributors can range from local “mom-and-pop” businesses with a small warehouse and a few trucks to large-scale multi-state operations.
- Tier 3 is the retailer. Retailers include liquor stores, grocery stores, convenience stores, bars, restaurants, hotels, and anywhere else beer is sold to consumers.
Using a distributor means that you have no control over the retail pricing once your beer leaves your hands. In addition, you have no control over the quality of your final product. The distributor assumes responsibility for the freshness of the beer, which depends on age and consistent temperature control. If beer is still on the shelf past its expiration date (out-of-code), the distributor is responsible for removing it from store shelves.
Unfortunately, if your beer is stale, flat, or skunky, customers will blame you.
Not all distributors are equally conscientious. Before you choose a beverage distribution company, do your homework. Start with knowledge from your local craft brewers guild to find the right distributor for you.
Tour the warehouse where your beer will be stored before distribution and inspect the beer delivery trucks delivering your product. Look for cleanliness, efficiency, and proper cold storage temperature. At every stage of the distribution process, beer should be kept at 50° to 55°F for optimal flavor and freshness. Visit retail establishments regularly to ensure the beer on the shelves is not old.
Carefully consider which distributor you choose as a partner. Although terms differ between states, generally, franchise laws make it difficult to cancel a contract with a distributor. Once you sign the distribution agreement, you’re often stuck with the distributor until they decide to end the deal. Hire a lawyer to ensure you fully understand the contract terms.
While expansion to new markets is always risky, distribution is the next logical step to grow your brand. From logo design to ingredient source availability, build your brand with an eye on how you’ll scale up to retail distribution. Ensure you understand the state and local craft beer distribution laws in your home state and the states you want to expand into.
