At times, it seems that only pirates would be comfortable in the world of beer sales. It's a cut-throat, competitive marketplace, in which the major breweries duke it out from the moment a bottle leaves on the delivery truck to the time it arrives on store shelves and in refrigerated cases.
But is the cost of competing distribution networks ultimately hurting beer makers? Yes, says Jim Koch, chairman of Boston Beer Company, the makers of Samuel Adams. Koch talked to The Wall Street Journal recently about how distributors could cut $2.5 billion in costs from the supply chain by removing "deliberate inefficiences."
Koch championed the idea of competitors sharing distribution services, such as warehouse space and delivery routes, in his speech at the National Beer Wholesalers' annual convention. Even if the idea of shared space seems unlikely -- try to imagine Schlafly and Boulevard arriving on the same truck -- something has to give in a marketplace with 3,000 beer distributors.
The current system of distribution has been in place since Prohibition,
requiring manufacturers to sell to wholesalers, who then sell to
retailers. In an effort to reduce costs, mega-retailer Costco successfully sued the state of Washington in 2006, arguing that the distribution system violated antitrust laws.
foresees the changes happening over a 10-year period, in large part to
help breweries service major retailers like Costco and grocery chains,
who have sought to cut out the middleman -- distributors -- and buy
directly from manufacturers. He noted that there would be several key hurdles, including changes to contracts between distributors and manufacturers and concerns over anti-trust violations.
It would seem like now is the right time for a change. In general, the American beer market is on the upswing and craft beers have exploded in popularity. Industries with high infrastructure and transportation costs are having difficulty in the current economy. While beer companies will likely maintain separate shipping platforms, there's room for improvement in the system. And a leaner, cheaper beer distribution network would be good news for all beer drinkers.
[Image via Flickr: stevebott]