Re: Distribution

There has been a lot of activity around the brewery over the last month, although our current work has been very different in nature from our previous work.  We spent months writing a business plan, raising money, spending money, and ultimately putting our vision for the brewery into the hands of very talented builders, architects, equipment manufacturers, and government officials.  Well, now we’re letting these individuals do their thing.  And in most cases, their “thing” involves lots of phone calls, discussions about draft plans, and permitting.  It’s not the sexiest part of opening a brewery, but it’s a necessary step so one day soon we can pour that first beer from our taps.

While all of these important activities are happening behind the scenes, we wanted to quickly touch on another important issue that is being discussed in the craft beer world and in the Massachusetts Legislature: distribution.

As many of you know, craft beer is CRUSHING IT these days.  The industry has been experiencing double digit growth for several years and continues to take market share away from “big” beer.  Today there are over 4,400 breweries operating in the United States, which is more than the pre-Prohibition era. Massachusetts alone has more than 100 breweries currently in operation.  Simply put, it’s an incredibly exciting time to have access to thousands of fresh, innovative, delicious beers – an option that didn’t exist even 10 years ago.

But beer doesn’t magically appear in stores and pubs.  Distribution plays a key role in getting a brewery’s product to the consumer.  Working within the three-tier system, distributors play the role of the middleman, connecting the brewer who makes the beer with the retailer who sells the beer.  Many craft breweries rely on distributors to spread their product across geographic regions that are simply too vast for the brewery to cover itself.  In many cases the distributor is a vital business partner for a brewery’s success.

Now this is where it gets tricky.  When distribution laws were first written, there were a handful of large breweries that made up the bulk of a distributor’s business.  If one of these large breweries decided to terminate its contract, the distributor would instantly lose a huge chunk of business. So, Massachusetts passed laws to protect distributors by making it very difficult for breweries to change distributors.  Fast forward to today and we are in a vastly different craft beer landscape. Small, independently owned breweries now make up the lion’s share of breweries in the state.  If one of these breweries enters into a business relationship with a distributor and it’s not a good fit, the brewery has very little recourse to find a new distributor.  Now, it is the brewery that is having its future success jeopardized.

Massachusetts House Bill 245 is meant to update current distribution laws to level the playing field for breweries and distributors. In simple terms, the bill will allow both breweries and distributors to pick the best partner for their business and if their needs change, they can switch partners without the crippling restrictions that are currently in place.  The Massachusetts Legislature is currently discussing how appropriate compensation should be calculated for a distributor should a brewery decide to end the partnership, but progress is being made and the ultimate goal is to find a middle ground that makes this a win-win for both sides.

Although Untold Brewing doesn’t have a lot at stake in this issue at the moment, some day we might and that is why we think this is important. If we ever sign with a distributor, ideally we will find the perfect partner from the start. However, if some day our needs aren’t being met we want the ability and freedom to do what’s best for our brewery. In our opinion, that’s a fair request.  But we also care about this bill as craft beer drinkers. In fact, all consumers should care because updated distribution laws mean more variety and choice on beer shelves and taps everywhere. And having more access to awesome beer is really all that matters, right?