craft beer’s O ROCKY ROAD TO MARKET

By Adrienne Robbins

Ohio is home to 430+ independent craft breweries, producing a diverse array of beverages consumers can purchase anywhere from a local grocery store to a restaurant or tavern. But even craft beer enthusiasts don’t always understand how their favorite beverages get there.

For craft brewers, the ability to grow their small businesses relies heavily on the distribution process. Once a brewer is ready to introduce their brand to a broader audience, there are two routes available: selling directly to a retailer or signing a contract with a wholesaler who will sell and deliver the product to retailers.

Self-distribution allows Ohio craft breweries to grow their businesses organically by selling directly to retailers in their communities. But this process comes with potential obstacles and challenges, including managing complicated delivery logistics and getting a foot in the door with larger retailers who have entrenched relationships with wholesale distributors for all their beverage needs.

These challenges may lead growing breweries to enter into the three-tier system: brewers sell beer to wholesalers, who in turn sell to retailers, who then sell to consumers.

This system was designed to maintain a level playing field throughout the industry and protect small, independent businesses that have signed a distribution agreement. Once a brewery signs with wholesaler, it relies on that partnership to reach new customers and grow its brand.

Scan to contact your lawmakers and support local breweries.

Unfortunately, the decision to sign with a wholesaler can also haunt brewers. Contracts between breweries and wholesalers are governed by Ohio’s nearly 50-year-old alcoholic beverage franchise law. Under this law, it is virtually impossible for a brewery to switch wholesalers or terminate contract, even if their business needs not being met. This gives wholesalers significant power over breweries, which can lead to unfair practices.

Often this imbalance allows wholesalers, not consumers, to pick winners in the brewing industry. Under the influence of large brewing companies, wholesalers can give preferential placement of their products on shelves and unethically exclude smaller breweries. Similarly, limited tap handles at bars, restaurants and event venues often go to the highest bidder, cutting out even the small breweries whose products they are contracted to sell.

This manipulation of the market not only hurts small breweries, but also diminishes the importance of consumer demand. Despite this sometimes-broken system, craft brewers are growing and innovating to serve loyal customers and enhance their local communities. Common sense reform and modernization of the laws governing beer distribution will ultimately benefit everyone: brewers, wholesalers, retailers and consumers. Ohio’s craft breweries should be exempted from franchise law. You can help by contacting your legislators on behalf of your local breweries at ohiocraftbeer.org/freedom.