The difficulties of beer distribution have long been lamented by small and independent breweries across the nation, who are faced with two choices when setting out to sell their beer: self-distribution, which limits geographical reach and retail influence (this is what many do in the early days, to save money and assure quality control); or sell through a third-party distributor, whom they must entrust to fairly represent their brand in a crowded beer market.
Although beer distributors are, by both principal and law, expected to treat each beer brand they carry with equal merit, this tends not to be the case. In fact, just this month, the latest in an ongoing “pay-to-play” scandal saw Massachusetts-based independent beer importer Shelton Brothers file a lawsuit against Craft Brewers Guild of Boston (a distributor owned by Sheehan Family Companies), alleging that the wholesaler’s “unfair and illegal” practices cost its company $1.7 million in sales, according to the Boston Globe.
Just this week, on Tuesday, November 16, The Alcohol and Tobacco Tax and Trade Bureau (TTB) announced it accepted a $750,000 offer in compromise from Craft Beer Guild, LLC “for violations of the trade practice provisions of the Federal Alcohol Administration (FAA) Act,” elaborating that the fee is “the largest offer in compromise that TTB has recovered from a single industry member for trade practice violations.”
The offense, according to the TTB, was that Craft Beer Guild had been paying off retailers in exchange for favorable product placement and shelf space. The case had been under investigation since 2014, when Pretty Things Beer & Ale Project (now defunct) owner Dan Paquette publicly criticized Boston bar owners for illegally participating in the practice, according to beer industry news website Brewbound.
And in another instance, Brewbound also reported that New York–based Shmaltz Brewing, whose products are sold by 40 distributors across 35 states, “has quietly been reworking its distribution network,” shifting from bigger wholesalers to family-owned brands.
But for most small breweries, changing distributorships is extremely challenging, if not impossible. One small brewery in Massachusetts has decided to take matters into their own hands — or rather, keep matters in their hands, and invite other craft brewing start-ups to join.
Night Shift Brewing, an Everett, Massachusetts–based brewery founded by three friends in 2012, announced last month that they planned not only to continue self-distributing their beer, but start their own distribution company. Night Shift Distributing, as it is now called, plans to not only officially distribute the beers of Night Shift Brewing, but the brands of other like-minded craft brewing upstarts in the area, as well as from other states.
Owners Mike O’Mara, Rob Burns, and Michael Oxton describe their new venture as an approach that will avoid the controversial business practices running the show in the Massachusetts beer scene right now, as well as avoid legislative and contractual hurdles, like antiquated franchise laws that prevent breweries from pulling out of a distributorship they are not happy with.
Oxton told BostInno that Night Shift Distributing is a “for us, by us” approach, vowing to keep the interests of small craft brewers at heart by never taking part in pay-to-play and always giving each brand equal representation.
Night Shift hasn’t taken on any other brands quite yet, but according to CraftBeer.com, they’ve invested close to $1 million in the project and plan to carry as many as 25 brands once they’re up and running.
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