The traditional three-tier system for beer distribution is often a challenging and frustrating experience for brewers. Although self-distribution can work for brewers in their local market, for distribution on a wider scale, the three-tier system is the brewers only alternative. The BevPort Distribution Portal aims to change that by offering brewers a three-tier compliant digital distribution portal.
The traditional method of distribution has been fraught with problems since the craft brewing industry came to life 40 years ago. Most beer wholesalers have huge portfolios which dilutes their attention to only the top-tier brands. For all other brands in the house, beer wholesalers provide a warehousing and delivery function – and very little else. The sales function is mostly left up to the brewery. Adding to the pain of using a wholesaler network, politically powerful beer distributors have been able to legislatively implement franchise laws in most states, which locks in a supplier once they sign an agreement contract. On top of that, massive consolidation in the middle-tier over the last two decades has left fewer wholesaler options for craft brewers.
Recently founded by industry veterans Phillip Guana and James Williams, BevPort is looking to break the mold. The code is simple: use e-commerce and digitization for sales and ordering and an in-state wholesaler to make the delivery drop at the retailer. The result is access to retailers at a much-reduced margin to the brewer.
BevPort handles shipping, warehousing, invoicing, and collecting payments. They have partnered with Country Malt to provide shipping from participating breweries to an in-state warehouse. Retailers will use a digital platform as a price book, educational and sales tool and as an ordering system. Once the retailer places the order, the delivery is made via a licensed wholesaler acting as a third-party carrier.
Bevport kicked off this new concept in Florida on February 1st and plans on opening in California and Texas later this year.
“BevPort will revolutionize the beer industry and streamline the entire process,” said Philip Guana, Managing Partner of BevPort. “Using state-of-the-art logistics and warehousing through a digital distribution portal, BevPort will make selling beer faster, easier, and less expensive compared to traditional distribution.”
BevPort will charge brewers roughly a 10% margin compared to a typical margin of 30-40% with a traditional wholesaler. “Our goal is to provide extra margin so they (brewers) can pay for a salesforce,” said Guana.
BevPort will initially only carry cans but has plans to expand into draft market over time. They will also be carrying malt based RTD’s, wine and non-alcoholic beverages.
The craft beer industry has been grasping for an alternative to the traditional beer distribution system for a long time. Although independent, small, craft-only beer distributors have helped fill the void, they don’t exist in all states, often operate only in smaller markets and are getting more selective when taking on new brands.
Time will tell if this new e-commerce, hybrid system of beer distribution will be successful. But no doubt, the craft industry needs a new model that will deliver their products to retailers in a simple, equitable and compliant manner that works for both retailer and brewer.