Joey Poole is a managing partner at Pekko Beer, a craft beer distributor in Washington, D.C.
[Ed. Note: This is an exciting post for us. We're pleased to debut Joey Poole here at the site. The second tier, distributors, are incredibly important and strongly impact consumers' beer experiences, but many consumers have little awareness of distributors or what they actually do. Here, Joey lays out an FAQ about distribution from his perspective. We're grateful to have him contributing to the site. Enjoy! - BD]
What does a distributor actually do? Is it really just moving things from Point A to Point B?
Well, yes and no. The simplest purpose of the distributor (also known as a wholesaler) is moving the product from the producer to the point of consumption in a reasonable amount of time and without sacrificing integrity. However, representing and safeguarding individual brands is just as important as the movement of product. This manifests as building awareness for a brand via events and advertising through signage and other brewery “swag.” Regarding integrity, the local distributor is responsible for removing out-of-date product from the shelves, overseeing recalls of bad beer (think infected Bourbon County), and sometimes helping to clean draft lines.
Are distributors necessary? Couldn’t a brewery do sales and logistics themselves?
When the 21st Amendment was passed it repealed Prohibition, but also served to indirectly establish a three-tier system dictated by each state or territory. The vast majority of states, eager to regulate and tax the sale of alcohol, passed laws to separate production, movement, and point of sale. So in most states, the answer is yes: distributors are necessary by law. Though some states do allow self-distribution, most breweries still work through distributors for the sake of streamlining their production process. A notable exception in DC is Hellbender.
Oh, and most breweries will take some or all the responsibility for sales in a region. After all, it’s in their interest for the beer to move.
What exactly are the tiers?
- Supplier/Producer/Importer – domestic breweries or importers of foreign brands
- Distributor – that’s what we’re talking about right now
- Retailer – bars, restaurants, bottle shops, grocery stores, etc.
You may sometimes hear of the dreaded 4th tier. This will generally refer to a local wholesaler that purchases from a national wholesaler instead of directly from the producer. My company has done this from time to time to bring in small amounts of beer from breweries like Holy Mountain and Anchorage.
Why are certain brands available in Virginia, but not in DC? Why can I get beer on the West Coast that I can’t get here? And why can I get a beer at one bar in DC, but not at another bar a block away?
The answer to these quandaries is a two-fold one. Firstly, it’s really up to the brewery. If they want to expand nationally and they have the capacity, you may see it all over the place. If they want to stay small and saturate the local market, then you may see it in only one state or even one city. Secondly, the distributor’s portfolio is the starting point, and usually the ending point, for the breadth of choice you as a consumer have. This is where the beer buyer or beverage director comes in; they’ll choose their tap lists based on what is available from the portfolios of distributors. The choices they make answer the last part of the above question. Sometimes, a buyer gets tired of that “staple IPA” on draft and mixes the list up a bit.
Is there anything unique about DC’s laws regarding beer distribution?
Yes! Unlike most other jurisdictions, the District of Columbia does not strictly require purchases solely through licensed wholesalers. You may have heard of people referring to DC’s “gray laws” when it comes to beer and this is what they mean. DC Code 25-119 allows restaurants, bars, and retailers to self-import beer outside of the purview of distributors (e.g. all of the eye-popping events during Craft Brewer’s Conference). What this usually looks like is someone driving up a van full of kegs or a tractor trailer dropping off a few pallets in the middle of 14th Street.
The caveat is that the same code states that this can only be done if the beer is “not obtainable by the licensee from a licensed manufacturer or wholesaler in the District in sufficient quantity to reasonably satisfy the immediate needs of the licensee…” So, even if Bell’s Brewery were on board, you can’t legally start bringing in kegs of Two Hearted to undercut the distributor.
Who are you and why are you telling me this?
I’ve spent the last two years working on a homegrown DC-based distributor known as Pekko Beer Distribution. During my time with Pekko, it has grown from a cocktail napkin pipedream into a respected local wholesaler working with some well-known names in craft beer. Starting a small distributor has been a unique challenge, especially when your approach is beer-focused more than sales-focused. Even given our young age and relatively small size, we are frequently approached by breweries and cideries who are interested in having their brand in DC. Still, we are extremely selective and most of the breweries we represent were pursued by us, not the other way around.
Our philosophy is centered on beer that speaks for itself. If the beer really is THAT good, it’s an easy sell. While hype and quality often coincide, the latter is the first thing we consider.