There’s a lot of specialty beer, wine and related spirits floating out of the beverage industry these days. In 2017, for example, specialty beer brewers served up 24.9 million barrels, which in turn generated $26.0 billion in total beer sales. That sales figure represents about 12.9% of the approximately $111.4 billion in total beer sales in the United States last year, the Brewers Association in Boulder, Colo., says.
But if more specialty beers are flowing, especially from more than 6,027 primarily small and medium-sized breweries nationwide, there appears to be a major log jam in how quickly and efficiently those smaller brew shops are connecting and selling to bars, restaurants and retailers. To break up that jam and get more sales flowing for specialty brewers, distillers and wine makers, a new company is giving B2B e-commerce and an online marketplace a try.
Ninkasi Technologies, a developer of B2B e-commerce and marketplace services based in Northhampton, Mass., has launched AmericanCraftBrands.com as a marketplace for the specialty beer, wine and spirits market. Specifically, AmericanCraftBrands.com is aimed at giving specialty brewers and others new ways to connect online with bars, restaurants and retailers to buy and sell more beverage products, says Ninkasi Technologies founder and CEO Jeff Slater. “AmericanCraftBrands.com is a roadmap for a permissioned, end-to-end platform to manage the complexities of the U.S. alcohol industry to improve sales and execution and help smaller players survive and thrive,” Slater says.
Americans are drinking lots of beer, but especially more specialty beers. Last year, while total beer sales declined by about 1% to $111.4 billion, the specialty beer market grew by 5%, to $26.0 billion, the Brewers Association says. But the U.S. alcohol industry is a heavily regulated market where, in the beer market, about 5,000 distributors take orders and buy kegs and cases from brewers, then sell the beverages to their various retail, bar and restaurant customers.
But that’s a distribution model that favors big international brewers like Anheuser-Busch Inc. and MillerCoors LLC. Such major brewery companies control about 90% of the U.S. beer market, according to the National Beer Wholesalers Association.
How alcohol is controlled varies widely from state to state. Small brewers that want to sell in multiple states may have a hard time keeping up with and complying with different laws. How beer is sold through distributors hasn’t changed radically since Prohibition ended in 1933 and states regulate how liquor sales must flow through distributors as middlemen between brewers, retailers, bar owners, restaurants and other end buyers.
But as the beer market has consolidated, specialty brewers operate with buying patterns, inventory needs and purchasing requirements different from those of big national brewers.
Specialty brewers typically work on relatively small orders, and demand for those orders may change frequently. For example, a specialty brewer may make and sell a particular craft beer only for the summer or brew some beers in a limited quantity.
With the boom in specialty beer, wine and liquor sales, many states are now changing some liquor distribution laws and allowing more ways for specialty brewers to sell beverages. Ninkasi formed AmericanCraftBrands.com as an online marketplace for smaller brewers, wine makers and distillers “to break down barriers to make it easier and cheaper to enter, stay and grow in the alcohol industry,” Slater says.
AmericanCraftBrands.com will enable beverage makers to connect via the marketplace to buyers and has tools that give users the ability to place and take orders, do electronic invoicing and record-keeping in line with specific state laws, track inventory, manage keg deposits and use a range of shipping and delivery options. “We are leveraging e-commerce,” Slater says.
Slater, who has been in the beverage industry as a consultant and executive with big food and beverage brands such as The Pillsbury Co., PepsiCo, Dunkin Brands and Royal Ahold, took about four years to research and build the e-commerce technology for AmericanCraftBrands.com. Now AmericanCraftBrands.com is open for business in California and New York and will add other states as volume builds, Slater says.
Ninkasi Technologies is beginning to sign up customers, whose names the company hasn’t released. Nikasi and AmericanCraftBrands.com are running three pilot projects, including an unnamed retailer in Colorado with 20 locations that is using the marketplace to order specialty beers for the summer.
The exchange is open to a range of trading partners including beverage makers, distributors, retailers, bar and restaurant owners. The AmericanCraftBrands.com platform is a free service for buyers such as retailers, but they do need to pay for a pair of seat licenses at $7.95 per month. Sellers are charged a monthly seat licensing fee of $7.95 and a half-cent per ounce as a listing fee and based on the beverage volumes being offered for sale.
As a marketplace, AmericanCraftBrands.com is unusual because it focuses on the needs of smaller alcohol beverage makers and gives them better ways to deal with licensing, regulations, invoicing compliant with local and state requirements, distributor territory agreements and marketing. “This will be disruptive for some, but it will certainly be a boon for craft makers, not to mention those forward-looking distributors and retailers who understand the looming disruption and the tremendous opportunity this offers them,” Slater says.
One trade association looking into using the marketplace is the Global Brewer’s Guild, a New York association that represents such small specialty brewers and brands as Craft Breweries: 21st Amendment, Abita, Allagash, Brooklyn, Elysian, Flying Dog, Founder’s, Great Divide, New Planet, North Coast, Rogue, Smuttynose, Uinta and Victory. “AmericanCraftBrands.com is streamlining a notoriously complex system and opening the marketplace in ways that benefit makers, retailers and consumers who want choice, says Dean Palmer, president of Global Brewer’s Guild.
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