Tuesday, July 13, 2010

Distribution: Why does my beer cost so much, and why can't I get my favorite beer here?

Next to missing nearly all broadcasts of New York Mets games, the hardest part of being a transplant is that so many of the beers I love so dearly will never see my current coast. Don't get me wrong - I have no shortage of lovely beer out here. Many other people have, but I would never try to draw a comparison between east coast, west coast and midwestern beers. I live less than two miles from Speakeasy and Anchor, four miles from 21st Amendment, Social Brewery and Magnolia Pub, and if I want to grab a Zipcar for a few hours, I am within range of Russian River and Lagunitas.

This is the part where I expect all of you to pull out your teeny, tiny violins.

I originally come from Kansas City, which is Boulevard territory. Even though my tastes range much darker now, I always grab a Boulevard wheat literally the second I get off the plane in KC. (There is a Boulevard bar at the airport that has every single one of their beers on tap. I have absolutely had a Boulevard wheat at 8:30 in the morning.) I went to college in Cincinnati, which is close enough to Bell's country that my heart aches for Two Hearted. One of my very biggest regrets from 2010 is that when I drove across the country last year, I only brought one six pack of Two Hearted and one four pack of Brooklyn Black with me. I am somewhat serious about my non-west coast beer.

Beer distribution was somewhat of a mystery to me as recently as a few months ago. Not so far as to whine about why I can't get endless supplies of Yuengling out here, because I always understood the basics of some beers being distributed in certain states, rather than others. Boulevard, when I was growing up, took pride in the fact that you can only get their beers in a very small radius of the brewery - enough that I can still picture the roadside billboards advertising it.

The slightly more detailed version of "you can't get that beer here" is that your beer goes through a small chain to get to your lips. Distributors, of which there are many, work with either importers or directly with breweries to make certain beers available in your area. They go through all of the awful legal restrictions that are placed on alcohol in order to bring the best products they possibly can from state to state. This, ultimately, is a very good thing, particularly for smaller breweries. Breweries with smaller production scales would have difficulty competing with the big boys, were it not for the distributors that make their living seeking out new beer and figuring out how to get it to you.

Bars and restaurants will strike up a relationship with the distributors in the area. This is the fun part - when a distributor has a new beer that they're excited about, they will often make the rounds and allow bar and restaurant owners to try new things. They also regularly deliver new catalogs. A beer catalog is kind of a beer nerd's dream, but it can also be sort of a nightmare. It's a whole lot of numbers and a whole lot less descriptions of tasty beer. You think you have trouble choosing a beer? The logistics of the level above it are sort of crazy.

I had been speaking to the owners of Shotwell's about potential new beers for quite some time. I move around quite a bit and do my best to try out things I've never heard of. I got in the habit of texting, emailing, or just casually mentioning new things I had tried and was excited about. When David and Tom invited me to make that process a little more formal, David and I sat down with the great big binder of distributor catalogs, and I started to learn just what it means for a bar owner to get excited about a new beer.

My first step was to make a great big list of things I loved. I avoided the things that I had never, ever seen in San Francisco, because if you've never seen it in your area, that probably means there's no distribution for it. Bar owners are not specifically hiding your favorite beers from you. I chose things that I had seen on tap or in bottle around the Bay Area. From there, there are two considerations: size and price.

Size means a couple of things. At Shotwell's, we have 12 taps. We do not have the space for 12 equal size kegs. The coolers are, let's say, cozy. If you've seen a full-size keg before, you should know that the cozy coolers underneath the Shotwell's taps do not have the space to accommodate 12 of them. On top of that, if you're offering a combination of domestic and imported beer, you're going to be dealing with a range of keg sizes. This beer only comes in 5 liter kegs. This one only comes in 30 liter kegs. This one is a 15.5 gallon keg. And of course, those are a range of tall and skinny to short and squat. So if you're in a confined space, no matter how lovely and beautiful that confined space is, you're going to have to consider these things. If you want to replace one beer with another beer that doesn't come in the correct size keg, you have two options: find another beer that DOES come in the correct size, or change the system with another one of the kegs to balance it out. Size can also mean "does this fit in the bottle cooler at all". Two of my very favorite breweries that are distributed in this area are Lost Abbey and The Bruery - both of whom have 750 mL bottles only (with a couple of very small exceptions), and there is absolutely nowhere for them to fit in the cooler without some serious space reconfiguration. This, at the expense of that.

Then comes price. I won't get as wordy about price as I did about space, but the general rule is double markup for bars, triple for restaurants. The restaurant markup ends up being so much different because you're paying for more staff. You've got more overhead in general. Bars have a fair amount of overhead, but might not have to pay cooks, dishwashers, host staff, etc. Bars get it a little easier.

The 2x markup is fairly standard, with a little variation here or there based on how you want to run things. Shotwell's is a bar only, and keeps a wide range of beer options at about the lowest price they can manage. Our good friend Jen at Pi Bar, a mile or so away, has a slightly different system. She's got a full restaurant, so her markup would naturally be a little higher. She, however, rotates kegs in and out every single day. Every time you walk into Pi Bar, they're going to have a slightly different selection. And rather than pricing per beer and trying to keep all of that straight, it's important to her that all the beers be a flat $5. She keeps this system running by sort of cost-balancing. If she offers Trumer Pils, which she could sell at $4, for $5 instead, it means that she can sell those super special beers that might need to be $6 or $7 for $5 as well. It allows customers to try a wider range of things, and it all ultimately works out in the end.

Shotwell's is the type of bar where you want to keep your prices as low as you can. It's a neighborhood bar where people drink multiple pints. It's not a destination that people flock to. It's also not a huge "scene" that you're paying tons more for the atmosphere. A $10 lager is probably not going to fly here. So there's ultimately a little bit of limitation, mostly with the taps. If you put on a super special beer, there's a small niche that will buy it - but you've got to consider the sales that you might be eliminating at the same time.

Still, there are some surprises. David tried out the Brew Dog Tokio for a week. It was the most expensive beer they've ever sold at $18 for a 12 oz. beer. They could get it from the distributor for $8.60 a bottle, if I remember correctly. $8.60x2, rounded up, goes to $18 a bottle. Did I mention it was an 18% beer and sort of hard to come by? I certainly should have. And while it wasn't a super fast mover, the bar sold out of it pretty quickly. I wasn't sure it would fly, and Shotwell's proved me wrong.

Tomorrow, I'll tell you about some of the very special things that we have in store for you at my upcoming guest bartending spot on Thursday, the 15th. I've done all the tasting, and David has been kind enough to help me with the real logistics. I think we've got some really exciting stuff. I'm just jealous that I'll be waiting until much later in the night to try it with all of you!

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