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“You know what the motto is for successful craft breweries this year?” asked a friend recently. “Shrink your market.”
A smartass comment, obviously, but it does sum up the end result of moves a number
of our largest and most popular brewers had to make in the first months of 2011. They
pulled out of several smaller markets in order to cope with a demand for their beers that was
exceeding their capacity to produce.
Dogfish Head of Delaware dropped the first shoe, withdrawing from Tennessee, Indiana,
Wisconsin and Rhode Island. Avery Brewing of Colorado stopped shipping to Arizona,
Connecticut, Indiana, Nebraska, New Mexico, Oklahoma, Rhode Island and Tennessee and
pulled out of several partial state markets: Northern California (Bay Area and Sacramento),
Eastern Arkansas, Upstate New York (outside of New York City), Central Florida (Orlando
area) and Wisconsin. Great Divide pulled its beers from the shelves in Michigan, Rhode
Island, Connecticut, Kentucky, New Mexico and Alaska and has significantly reduced its
distribution in parts of Minnesota, Illinois, Pennsylvania, New York, and Virginia.
Allagash of Maine announced it was pulling out of Texas and Washington in early April,
leaving its beers available in 16 states and District of Columbia after a high mark of 24
states just a few years ago. Familiar labels from Colorado’s Left Hand, Ft. Collins and Oscar
Blues are other familiar names also will not be seen in as many places as they once were.
California’s Stone Brewing Co. has been something of an anomaly, leaving some states
while entering others.
When this sort of thing happens, a natural tendency is to suspect poor management or
just plain shortsightedness. In this instance it seems clear that the issue is actually the flip
side of the great craft beer boom which has made it the darling segment of the industry and
is creating an ever- widening customer base.
“Craft is on fire,” says Paul E. Pisano, senior vice president, Industry Affairs and Counsel
for the National Beer Wholesalers Association. “When your growth expectations are 10
percent and the business explodes to 40 percent, that’s a great problem to have. But it is a
problem.”
Market withdrawal always brings with it the potential for a backlash from consumers who
feel jilted or betrayed, but that seems an unlikely result in the world of craft beer where the
bond between customer and brewery is personal and intense. A brewer suggested to me in
jest not long ago that “the best way to make your beer popular is to not have any of it. People
always want what they can’t get.”
Certainly the “next big thing” mindset, which drives the more serious beer geeks to
sometimes incredible lengths to obtain rare beers — and makes driving for hours and then
standing in line for more hours just for the privilege of paying high prices for limited release
products not only acceptable but a badge of honor — would mitigate against that possibility.
Still, wholesalers are where the rubber meets the road as breweries come and go, so I
asked Pisano for their perspective. “Our members are caught in the middle when a brewer
pulls out of a state. They may understand why it had to happen, but they sure wish they’d
pulled out of a state other than their own. On the flip side, distributors know that when there
are increasing out of stocks from a brewery, they will have a lot of upset retailers. When a
popular brand like Dogfish Head goes away, nobody gets mad at Sam Calagione because
he’s such a great guy. It’s much easier to blame the distributor when there’s no Dogfish
Head to be had.”
That said, Pisano believes that distributors will generally be as forgiving as consumers
if these wayward sons come home, although he stresses that “it will be a case by case
situation. If the distributor had a good relationship with the brewery originally and retailers are
eager for the product, I assume they can work together when and if a brand wants to come
back into the market. But Pisano said distributors spend a lot of capital and energy getting a
brand on taps and shelves and convincing retailers it will make them some money. If it then
disappears and there are any bad feelings, they might be less willing to take on the next new
beer or bring back the old one.
“There is both a risk and a benefit here, a risk to the brand pulling out, an opportunity for the
next guy to step up,” he said. “The brands that left were at the head of the line in a growing
craft market and there were a lot of brands waiting to take their place. That real estate it had,
the tap handles and shelf space is gone. It was taken the next day by other brands and one
of them might turn out to be the next big superstar.”
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