UK: Distribution in craft beer ‘broken’ and ‘needs fixing’
The warehouse model employed by most beer distributors in the UK is “broken” and should be “done a completely different way”, according to one of the UK’s leading online retailers and wholesale suppliers, The Morning Advertiser reported on November 20.
In an interview with The Morning Advertiser (MA), Eebria co-founder and CEO David Jackson said the tied pub and warehouse model “makes it very hard for a large distributor to handle any of the craft brewers in the country”, and called on pub companies to work with more distributors to get better beer into UK pubs.
“When we saw how distribution in craft beer worked, we knew it was broken and it needed fixing and should be done a completely different way,” he said. “Fundamentally, the whole warehouse model is messed up because it makes it very hard for a large distributor to handle many of the craft brewers in the country.
“When you take a distributor with 15 to 20 depots around the country, and a craft brewery that is producing 20 to 25 kegs in a batch, if that distributor wants to take it they have to take all of it. How do they then spread it around their depots to ensure that when three pubs want it, they can get it?”
Eebria was founded in 2013 and launched its trade platform in 2015. The company’s business model works on the ethos of picking up beer directly from breweries listed on its website, and delivering the beer to pubs around the country. It currently has more than 6,000 pubs and 400 breweries using the platform.
Explaining the competitive advantage this gave the company over traditional distributors, Jackson said: “It’s a huge logistical problem for them to move beer around, but we have a clever network that picks it up straight from the brewery and moves it straight to the pub. It only ever has one point of collection. We can handle the breadth of range that the big distributors can't handle.
“Some of those distributors, particularly with tied pubs, are the only distributor that can be used, so if a brewery wants to get into that set of pubs they have got to go with them and whatever fees and margin and mark-up that distributor is putting on, which is generally a lot more than it needs to be.”
On the subject of whether the tied pub system in the UK had been to the detriment of the UK beer scene, Jackson said: “It is a difficult one because the tied pub model exists for a reason for the companies that own them. As long as those companies are open to allowing their pubs access to the range the landlord wants, it can work. But if they are restricting them to just the range of macro lagers and common craft beers then that is an issue.
“If they're allowing them to access a platform like us or to buy direct from local brewers then the tied model can work well for some landlords. Obviously it isn't right for everybody but there are some situations in which it can work.”
“When we started, we ignored tied pubs because we knew it was a no-go, but it still gave us 30% of the market in the UK to attack. It certainly makes it difficult, you'd much rather be able to sell to 100% of the pubs than 30%, but 30% is still a lot.”
Jackson also said Eebria would be willing to work with pub companies to help them deliver better beer to their customers.
“Without a doubt, the larger pubcos are finding themselves behind the times,” he said. “They haven't moved very quickly and they are starting to realise that craft beer is not going away and it is going to become a key part of their offering.
“The range we have got is second to none and the fact we have got that nationwide coverage means that, for any size of pubco, we could easily work with them to deliver and get them better beer.”
On the topic of whether online beer retailers were harming the UK pub trade, Eebria’s business development manager Peter Kennelly added: “I don't think retailers like us are going to harm the pub industry because the more craft beer that is being drunk, the better it is for the industry as a whole.
"A lot of distributors have the same craft breweries so we are giving the pub owners the chance to get ahead and get the next big thing in.”
“For me, the takeaway is that there is a lot less industrial macro lager being consumed – and five or six years ago companies like us, Honest Brew and Beer Hawk, didn't exist because the market wasn't really there.”
20 November, 2017
