It’s not invariably easy to see how the inner workings of an industry operate when you are on the outside looking in, but when you love beer as much as we do, seeing behind the curtain and all the red tape can honestly be quite satisfying.
In this piece, we strive to give you a deeper sense of how beer gets from the brew tank to the bottle (or keg, or can). We’ll talk about the three-tiered distribution model, dive into current craft beer data, and look at how it all comes back around to make craft beer as alive and engaging as it always was, one ice cold pint at a time.
Come walk with us through a day in the world of beer delivery and distribution in NYC.
From the Brew Tank to Your Favorite Glass
The prohibition era has shaped the way America does beer business. Post prohibition, the United States created something called the three-tiered system for alcohol distribution. When creating a system that works for brewers, distributors, and consumers alike, safety and transparency are the cornerstones of the game.
In short, the tiers of this system are:
- Importers and Producers (Brewers)
This is how it works:
TIER ONE: The Brewer/Importer
A brewer does the obvious thing…he makes beer. Tirelessly. Passionately. Painstakingly. He crafts his brew and harnesses its joy-giving powers by canning, bottling, or kegging it on-site. However, in a competitive market, making beer simply isn’t enough. Even if a brewery has THE BEST DAMN BEER OUT THERE, they have to figure out how to get it to the public. For most, selling out of a taproom isn’t enough to pay the bills - or to get enough exposure for who they are.
The next step in the process requires a lot of knowledge and solid connections. This is not only something that a brewer may be lacking, but likely also doesn’t have time for.
So, in comes the distributor!
A brewer can contract with a beer distribution company (such as ourselves at Triboro Beverage) to handle all of that for them! A true beer delivery expert in NYC will make their service an invaluable resource to the brewer, and that’s how it should be.
Beer importers are entities that import beer from other countries and connect with distributors, much like a brewer does, to get their product out to market.
TIER TWO: The Beer Distributor
Beer distributors are federally and state licensed entities. Distributors take beer from either a brewer directly, or from an importer. Next, the beer needs to be safely transported, stored, and of course, delivered. All those things require a significant amount of planning and space.
The distributor often does the “leg work” to find retailers that are interested in selling a brewery’s beers. That’s not all they do, however! Distributors oftentimes offer other services such as ice delivery, keg accessories, nitrogen and Co2 on-demand, etc.
In order to operate a successful delivery route, a beer delivery service in NYC will need to have ample connections in the community. But, it’s not all about big numbers like it may initially seem. What good does having 300 accounts do, if only 40 of them order from you on a regular basis?
Building strong, individual connections in the community is a more sustainable way to do business, and it just makes more sense.
Now, at Triboro Beverage, all of this is our sweet spot, of course. We pride ourselves on being the best when it comes to distribution and beer delivery in NYC! Having been in the community for over 80 years, we have build lifelong connections with some of the best local businesses in town. For us, that makes all the difference.
TIER THREE: The Retailer
The retailer is the entity which we as consumers are most used to dealing with. These are the grocery stores, the bottle shops, and the restaurants that serve us our favorite craft brews. In many cases, working with a distributor opens up infinite new avenues for retailers such as growing sales and exposure, whereas this might have been an entirely different and much more lengthy process before.
As a retailer, this kind off access is vital for many reasons. First, businesses want to have access to a rotating and seasonal variety of the beers their customers want. In the same way that it’s not always efficient for a brewery to distribute their own beer, it’s not usually efficient (or legal) for a retailer to get their beer directly form all the different breweries they want to do business with.
On average, a restaurant or bottle shop will not only have local and regional beers, but oftentimes will source out craft from all over the world. Definitely not an easy task when you’re already running a business of your own!
So, keeping in line with the three-tiered system, retailers are able to hold accounts with beverage distributors and order alcohol to be delivered directly to their establishments.
Beer by the Numbers
Since beer still remains the preferred beverage of choice, edging out its counterparts wine and spirits by over 10%, it’s really awesome to see firsthand data that showcases the incredible growth the beer delivery market in NYC has been seeing.
Craft has shown consistent double digit increases over a long period of time, and it’s definitely evident no matter where in the city you look. Based on data from just a few years ago, beer delivery and distribution has:
Generated nearly $1 billion in local, federal, and state taxes. Paid $8.6 million in economic impacts via city development, community events, and New York-based charity functions. Resulted in 7,823 direct jobs. Generated an excess of $730 million in wages and salaries from those jobs. Opened over 375 distribution facilities throughout the state.
With the market in a continual upswing, those numbers are certainly holding steady as current reports are being published.
Besides other fun notions like how cans are now edging out glass bottles in production, there is a whole lot more happening with craft beer in our beloved Empire State:
In 2012 there were 95 breweries across New York. Not bad, right? Well as of 2018 there are now 415 breweries!
Ironically, the last record for number of breweries was 393. Not a bad number but get this - it was in 1876! Whatever was going on back then, must have been pretty dang fun!
Data from 2011 shows that craft breweries in New York state produced 557,436 barrels of beer that year. Once the numbers rolled in for 2018? NY jumped a blissful 34% to 1,211,494 barrels!
Throughout 2018, New York was the 6th largest beer producing state in the country.
What you can pretty much assume from all of these numbers, is that New York drinks a lot of beer, and we love it!
Can David Slay Goliath?
With the skyrocketing demand for micro-brewed beer over the last several decades, small craft brewers began to see a rising share of the alcohol delivery market via working with beverage distributors to get their products on the shelves and in restaurants next to big names like Budweiser, Guinness, and Miller Lite. We already saw evidence of this in the previous section on Beer by the Numbers.
Not only is the growth of small craft breweries indicated by consumer demand, but the three-tiered system of alcohol distribution discussed earlier has also played a significant role in preventing Big Beer from monopolizing the industry. This allows room for integration not just for the hundreds of local NYC brewers, but for the 5,000+ microbreweries across the United States.
NBWA Chief Executive Officer Craig Purser further attributes the success of small brewers in part to distributors embracing the swing in popular markets towards favoring small breweries. This has been an instrumental move in the fostering of a fair market.
This is not to say Big Beer doesn’t still dominate, because it still holds more than half of the market. However, the changing of the tides may not be as far off as it once would have seemed.
Over the last couple of years, more than 9% of the market volume for beer delivery in NYC has shifted from large breweries and big importers to small craft beer. At this rate, the numbers may very well be heading more and more in the favor of craft.
Looking Ahead…But Not Too Far Ahead
One thing we’ve learned through our time in this business is that looking too far ahead will just catapult a person into paralysis by analysis. It’s crucial to stay on top of a moving industry, but making too many predictions about the direction things are going does more harm than good. If the numbers of the last decade are any indicator, the ever-evolving distribution market is highly likely to continue on this new shift in marketshare. However, the fantastically unpredictable market of beer delivery is never afraid to surprise, so we are all watching intently to see what happens next, cold beer in hand.