A word on "Pay-to-Play" in Craft Beer

We had to throw in our .02 here.

In a perfect craft world, where all things are held constant, bribing a bar owner or retailer to carry your beer would be an exercise in futility. In this world, the consumers are all aware of what their drinking and will go out of their way for a particulars brewery's offerings. They will judge the beer on its quality and righteous flavor, and that will be an end of it. This craft world is simple and understandable and excellent. 

We don't live remotely close to that world, and this pay-to-play business that Mr. Dann Paquette, of Pretty Things Beer, has recently highlighted for us is the unfortunate foamy head on an industry that I love very dearly. I have worked in the craft beer industry, and I have seen the game played exactly as Mr. Paquette has described. I have seen, first-hand and often, distributors and breweries buying real estate on the draft tower for entire seasons at ski mountains, seasonal resorts, and thousands of bars. I have also seen the owners of these establishments accepting the bribes without batting an eyelash. It is unethical, illegal, economically nonsensical, and most importantly, it ruins the fun and takes advantage of the all-important consumers of craft beer...the people that support the current growth we're seeing right now.

Logic dictates that if you make a great beer, then people will notice that you have a great beer and will drink lots of it. This is, for the most part, a true statement. If your entire brewery is known for great beer, and you've worked hard to build the brand in that manner, then people will drink your beer based on the brewery itself, rather than just one particular beer that you make. This is also, mostly, a true statement.

People can drink your beer because it's available at your brewery, and at retails shops, and at bars, restaurants, and all sorts of awesome, interesting venues.

This is ground-breaking information, I know. Bear with me. 

Most breweries have a staff of people that sell their beer to these bars, restaurants, retailers, and so forth. Some have no sales staff at all. This staff, whatever the size, works hard with the relatively modest resources their given to get their product noticed in a relatively crowded market. These breweries, focused on making great beer, do not have a lot of cash to spend. In fact, and this is a general statement, cash flow is such an important factor for these breweries that it stays top-of-mind for years while these breweries grow. By in large, it can be a tenuous operation.

Some distributors and craft breweries have become large enough to throw their weight, and their finances, around a bit, and in their world, this means they've got an advantage on the competition. These breweries, which were once focused on an ideal and a mission around brewing amazing craft beer and competing fairly in the marketplace, have shifted to a numbers game and myopic focus on the bottom line. Not to say that the quality of their product has gone downhill in any way, but rather they've decided that the ends justify the means, and they need to sell at all costs in order to hit the proverbial target. The distributors of these beers will also pay-to-play, and they tie their financial incentives into this complicated, unscrupulous game in a way that will quickly turn a craft brewery into a hedge fund,  more focused on quarterly statements and less interested in playing the game on equal footing. 

Financial rigor, quarterly goals, depletions, and all the other metrics that govern a brewery's relationship and performance in the market are important and critical to their growth and success. I don't want anyone to think that this part of "the system" is broken. It's logical and rewards hard work in a highly competitive industry. These people work hard and deserve their success. 

I know this topic is a rabbit hole of ethics, economics, and entrenched business practices. But it boils down to a very simple result. Unfair practices like buying draftlines and package placements (for both distributors and breweries), are a terrible way of doing business. The consumer doesn't get the variety they would, and should, normally get at their local pub or restaurant; the distributors and breweries can't compete with the traditional tools of a dedicated sales staff and some great marketing; and the breweries themselves can't sell their beer based on sound market principles of quality and trust. Mr. Paquette's late night diatribe was a trumpet-in-the-morning way of waking up the world to this situation, a situation that can be phased out of the craft industry with a simple choice to sell a product because it's good, and not because it came with a wad of cash. Earn your piece of the pie because you deserve it and keep the craft beer flowing.

- Chris

 

 

Chris McClellanComment