Beer Distributors’ Business Model Makes No Sense Without Nutty Cartel System

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There’s lots to debate around the technicalities of alcohol market regulations, but one category of argument that has no business getting taken seriously is the idea that certain kinds of business models don’t deserve to fail because we like the kind of people who run them:

Beer distributors are not fans of the plan. They worry supermarkets, convenience stores and big retailers would chip away at their business.

“If you add the Walmarts and the Costcos and Sam’s Clubs of the world, you will put those 1,200 beer distributors out of business,” said Jeff Barber, a partner in Allentown’s Wise Guys’ Beer Depot.

Many beer distributors are family-owned businesses unable to raise the capital to compete at auction for wine and liquor licenses, Barber said.

The beer distributor business model only makes sense under the strange cartel system we have now. In the booze market everybody wants, their business model makes no sense, and most will be overtaken by supermarkets and large retailers. And that’s perfectly ok! You can be sad for the nice people who go out of business and still support reorganizing this market.

This entry was posted in Miscellany.

10 Responses to Beer Distributors’ Business Model Makes No Sense Without Nutty Cartel System

  1. GDub says:

    It doesn’t need to put them all under. I can think of places like Shangy’s in Emmaus that stock beers that you’ll never find in a supermarket. They can also use bulk to compete on price, unlike a supermarket. The room is there for the niche market, just that some of the distributors are going to have to figure out how to change their approach.

    • Jon says:

      Agreed. Supermarkets will never carry cases of some of the more niche brands. But not every beer distributor has that great a selection of craft beer, and in some areas the grocery store selection will be sufficient to accommodate local tastes.

  2. Karel Minor says:

    Definately- allowing them to sell mixed cases (which they can’t do now) at case prices would help and it will still be the only place to get kegs. Plus, if we find legal ways to promote a favoratism for PA brewers and wineries we will be trading one preferred group for another- only brewers and wineries have the potential to bring revenue TO Pennsylvania through export income as opposed to sending it out of state.

    • Jon says:

      Cringing at the idea of favoritism for PA brewers and wineries. There are a lot of great breweries in PA. They can compete on the merits, without special protections from the state.

      • Karel Minor says:

        They love handing out tax incentives in Harrisburg, give them out for employement expansion at breweries. Offer special limited pub licenses for small restaurants provided they sell PA made beer and wine. There are leg up “incentive” opportunities without going protectionist.

  3. Karel Minor says:

    Or just allow them to sell directly to restaurants and bars and cut out the distributor middleman- that would put lots more money right into brewer hands.

  4. I have no opinion or preference, one way or another, about this issue. I really don’t care, and I think there’s a lot more important pressing matters.

    But yeah, totally, why would protectionism of a narrow & peculiar type of business be at all relevant in the issue of whether to change things? It’s not like they’re some public service freely contributing to the betterment of society!

  5. Karel Minor says:

    I don’t know- personally I’m a much better citizen with access to lots of good beer. It’s the only thing that keeps me off Daylin’s devil weed and smack.

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