Tuesday, March 15, 2011

Retail mazes

"Why are you out of....?"

The 3-tier system in America provides benefits, but it also can be a headache for customers and beer managers at retail outlets. This system separates the Brewers (and importers) from the Distributors from the retailers (restaurants). I won't get into the reasons behind this, but just some effects at the retail level. Within any bureaucracy or complex system, communication becomes difficult, if it exists at all. Brewers sell their product to distributors (or importers) and then the distributors sell the product to the retailers...who then sells it to customers. When customers' complaints, suggestions, trends, etc. are voiced to the retailer it rarely gets passed on up to the brewer. Likewise, any news, releases, ideas, etc. that a brewer may have rarely gets to the retailer. Thus, distributors are the gatekeepers of many things...and they have their own systems to deal with: mainly sales personnel, who are pressured to make sales. Consequently, beer (and other beverages) receive little attention as a creative product, and are treated as means to ends.

Now, for the most part that's fine. It's a business, we all understand that. In the world of craft beer, though, it can be harmful. For one, when the big distributors get a hold of craft beer (e.g. Coors Distributing Co. has New Belgium) things can get messy. CDC can now withhold case specials hostage and "persuade" retailers to buy in bulk...which puts the many cases of craft beer in storage conditions that may not be optimal. It could also persuade retailers to order really heavy, not put beer on the shelf, and return out-dated beer out of spite. This can have damaging consequences. Another factor could be the 'pushing out' of place other craft beers to accommodate these heavy orders. Or retailers could drop SKUs from the big distributor as a boycott. Yet, whatever happens, the customer does not understand and they then become at the mercy of large companies who don't know, care, or pay attention to customers' concerns.

Another common problem is the availability of products from smaller brewers. Once a retailer stocks a certain product, it essentially claims that shelf spot. If a retailer's orders are not filled, and the shelf spot becomes vacant, it looks bad for the retailer. As a result, that product may get dropped in favor of something that's more reliable to obtain. The original product then loses its spot, perhaps permanently. In effect, the brewer has over-extended it's supply line (lessons from Napoleon).

With some distributors maintaining a 'minimum order' (retailers must order a certain minimum number of cases to secure shipment, or face additional fees...passed on then to the customer), the sporadic availability becomes a harmful nuisance. Many times I have ordered 18 cases (min. being 10) only to have the distributor say 12 cases are out, resulting in no order placed for that week in addition to lack of products on the shelf. After a while, those spots will be filled with something else. The loser is the brewer and the customer.

There are many things that happen which are unknown to the customers. Still other problems and issues are unknown to the brewers, and vice versa. In the age of instant communication and the Internet, perhaps something can help this. Several beer-oriented websites have helped, but it's not enough.