3-Tier System: Breweries

This is my follow-up to the 3-Tier system introduction. I started off with an overview of the 3-tiers, but now we’re going to dig into the top, and most exciting, tier. Breweries are where all the magic happens!

  1. Introduction and history
  2. Breweries (you are here)
  3. Distributors
  4. Retailers
  5. My Conclusions

Besides being where the magic happens breweries are also the easiest tier to discuss because all they need to do is make beer. OK, so making beer is difficult but that’s far beyond the scope of the 3-tier system. For their role in the 3-tier system, it really is just a matter of producing a product and making money from it. Depending on the local state laws, there are a couple of ways that they can make that money. Some states allow breweries to sell their beer themselves out of the brewery, like Ohio’s tap rooms. Other states allow them to sell it themselves around their state, aka self-distribute. Both of these are less common routes for breweries to make money. Most brewers depend on a third-party to buy their product then sell it to everyone else, to distribute the beer.

7-17-2013 11-21-04 AM

The Role of the Distributor

The upsides to signing with a distributor are that brewers get to focus on making the best beer they can. They make the beer and sell it to their distributor who takes it from there. Without a distributor, brewers would need to find their own way into meeting bar or store owners and convincing them to carry their product. That also means that every bar would have one more account to deal with and keep track of. In talking with store owners they prefer dealing with one company selling many products. Distributors simplify the process of well, distribution.

Of course, that’s a bit of an oversimplification as the breweries have to manage the relationship with the distributor and do plenty of marketing themselves. Also, many distributors provide far more services than just selling beer. Like providing signage or having a representative pour at beer fests and storing  all those kegs/cans till the retailers are ready for them

3-tiers let this become the distributors problem instead of the breweries

Brewery Self-Distribution

The alternative to that is self-distribution. Ohio, Indiana, and about 30 others states allow self-distribution. I recently discussed self-distribution recently with Cellar Dweller and Listermann. I also covered this topic with Scott LaFollette from Blank Slate Brewing Company who self-distributed for the first six months.

What everyone made clear was that self-distribution had some distinct advantages in a better overall view of the business, a better relationship with customers and slightly higher margins. However, all of that results in less time for them to focus on making beer or having to hire delivery people and buy trucks for them to drive.

Franchise Law

Lastly, all brewers I talked to had strong feelings about franchise law. In a vast oversimplification franchise law means that the brewery gets stuck with the distributor forever. If I can stick to my plan then this fall there will be a post on Learning About Beer: Franchise Law where I will break down this controversial subject. Also planned for late September or August will be the next tier, Distribution!

Many thanks to all the brewers who were interviewed about this.

Tonic Tours – Cincinnati Brewery Tours

When I went to San Diego for a bachelor party earlier this year we were able to sign up for a local brewery tour which provided a bus, a driver, some water, and tours at each of 3 breweries of our choice (we picked Stone, Green Flash, and Lost Abbey). As soon as we were done with that tour my friends and I began debating and plotting away to do that same thing in Cincinnati.

Luckily someone else has already done that for us making Tonic Tours are the first local tour of breweries that I’m aware of. I’ll let you read Tonic Tours description of the event before we dive into my thoughts:

Tonic Tours is launching public microbrewery tours in Cincinnati. We start at Everything’s d’Vine for an introduction to beer tasting before we drive the van to Rivertown Brewing, Fifty West, and Mad Tree before ending back up downtown at Everything’s d’Vine. Food will be available at Fifty West and water and snacks will be provided along the way. You will learn a little about the past, present, and future of making beer in Cincinnati as well as getting to try some amazing local beer at each stop.

For $90 you get a van ride from Everything D’Vine to Rivertown to 50 West to Madtree and back to Everything D’Vine, a tour and tasting at each brewery, water and snacks in the van, a commemorative glass, and some light food at Fifty West as well. If you want dinner at 50 West (I suggest the C.A.B. sandwich) or more beer at any of the stops then that is extra. Just getting tasting and a tour at Rivertown, 50 West, and MadTree is pretty sweet in itself. If you’ve already been to those then hang tight as the schedule will rotate up every few months.

If you’ve lived here your entire live or are only in town for the weekend this is a great way to discover, or re-discover, Cincinnati’s local breweries! These tours will be running the 2nd and 4th Saturday of the month for $90 a head, you can book your spot over on www.TonicTours.com.

Full Disclosure: I was invited on this tour by Ginny Tonic who comped the tour and all beer, I still paid for my own food. Ginny Tonic is a writer for this blog and I gave her some advice and suggestions to help plan this tour. I will not say that this has in no way impacted my review of the tour since it very well may have. However, I have done my best to be objective and non-biased in the above review. If anyone wants to provide me with things to review I only promise that I will review them and I will write a blog post about them. I do not, under any circumstance, promise a positive review.

Book Review: Over The Barrel by Timothy Holian

After reading Mike Morgan’s Over-The-Rhine: When Beer was King (here is my review) I became really interested in what other Cincinnati related beer history books were out there. I was honestly surprised to find that there were anymore at all, but after reading Timothy Holian’s Over The Barrel books I’m surprised there aren’t more. Cincinnati has a nearly 200 year old brewing history which at one time was the 4th largest brewing center in the country.

Holian had so much material he ended up writing 2 volume::

    • Over The Barrel: The brewing history and beer culture of Cincinnati
      • Volume One: 1800 -> Prohibition
      • Volume Two – Prohibition -> 2001

The first book is much more enjoyable to me because it’s a crazy non-stop success story with a few failures here and there. The second book however tells the story of the slow painful death of Cincinnati’s breweries. It’s not that the second book is a bad book, just a bit depressing to read about how the big breweries crushed and squeezed the life out of the smaller regional breweries. Both books though are slightly painful to read. They are overflowing with various stats which often becomes tedious to read through and at least for me all the numbers begin to get mixed up. Holian also repeats things, summarizes, and then re-summarizes a great deal. If that all were cut out there might only be 1 book. On one hand this is nice because it reinforces a lot of the ideas… but it makes it even more work to read.

I don’t want to compare this to Mike Morgan’s book too much, but there aren’t many books on Cincinnati brewing history so I have little to compare to. I’ll just say that were Morgan focused on OTR and only OTR, Holian focuses on the entire Greater Cincinnati Area. I honestly had no idea at all of Covington’s brewing history and the fact that the empty building on the side of 75 which used to be Jillian’s was originally the Bavarian Brewing Company nearly 140 years ago! Another big difference between the two is that Mike Morgan excels at telling a great story in his book. Over The Barrel reads much more like a text book with all the facts and figures that it presents. I don’t want people to view this as a bad thing, just be prepared for the difference.

One comment about what is possibly my favorite fact from this book. I remember a few years back there was a bit of a kerfluffle, and even a New York Times article, about Who Dey vs Who Dat. Now hopefully Bengals fans are already well familiar with the Who Dey chant, if you’re not a Bengals fan it goes “Who Dey! Who Dey! Who dey think gonna beat dem Bengals!” The answer, unfortunately, is almost everyone…. but we’re in a rebuilding year! The New Orleans Saints have a similar chant, “Who Dat! Who Dat! Who dat say gonna beat dem Saints!” As you can see they’re very similar and they both started in the early 80s. The exact beginnings are lost to the sands of time and the dust up is over who started using theirs first. Luckily Holian brings a small fact to light. In December 1982 the Bengals got into the playoffs and Hudepohl created a specially designed can to commemorate the event with “Hu-dey” written on it in big letters. Suck that New Orleans!

A small note on availability: These books do not seem to be available to buy new in any stores and used copies sell on Amazon and Ebay for around $50 per volume. Luckily Cincinnati has one of the greatest, and busiest, library systems in the country. They also seem to have 1 to 2 copies of both volumes at almost every library branch! So if you feel inclined to read this I would suggest a trip down to your local library. Or do like I did and pick them up at the main branch then walk down the street to Arnold’s for a beer while you start reading them!