How to Expand Your Brewery’s Footprint: Craft Beer Distribution Laws and Market Conditions

It’s no secret that the craft beer scene has exploded over the past two decades in the United States. The total volume of beer produced by microbreweries has jumped from around 700,000 barrels in 2004 to nearly 6 million as of 2017, according to our friends over at the Brewers Association. Likewise, the total number of American breweries has skyrocketed from just over 1,500 at the turn of the century to well over 6,000.

This is great news for beer enthusiasts – both makers and drinkers – across the country, and indeed around the world. The market has seen continuous growth over the past several years; despite beer sales dropping in general, craft beer was up 5 percent in 2017 according to the same Brewers Association report.

While breweries are taking advantage of this pathway to increased sales and expansion, they are also faced with growing pains – and that’s perfectly natural for a business in any industry, let alone one as heavily regulated as alcohol production.

In addition to logistical issues most growing organizations face like analyzing the market, licensing, and managing distribution, brewers also have to cope with a bevy of federal, state, and local regulations. To help beer producers with their expansion efforts – in terms of both new products and geographical reach – we’ve compiled a guide, 10 Key Steps to Expanding Your Brewery’s Footprint.

This is the first in a short series of blogs detailing some of the issues breweries face when expanding. Stay tuned for the ensuing editions by subscribing to the ShipCompliant blog.

 

Understand your own ability to comply with craft beer distribution laws

Each state – and many local jurisdictions – has its own registration process, compliance obligations, and tax rates. This complicates expansion and distribution into new areas. Before you launch a new product or start selling into a new area, you should assess your internal resources. You’ll need to factor in the size of your team, the depth – or lack – of knowledge you have about multiregional compliance, and the finances you have allocated to address it.

Remember, registering products in new jurisdictions can be expensive and time consuming. If you spend too much time or money putting out a series of fires during registration because you weren’t fully prepared to handle it, you may end up hindering your own growth. It’s important to have a fully fledged plan in place and a complete understanding of requirements in each new area you intend to sell into before you actually attempt to expand.

 

Research the markets(s) where you intend to distribute beer

Compliance is a big component to expansion, but it’s also imperative to understand the state of the market itself. Different regions may have different trends in both beer production – for example, New England is known for its IPAs, Colorado for its darker beers, etc. – and consumption alike. Heavier winter beers probably aren’t going to sell as well regardless of the season in, say, Florida as they might in the midst of a chilly Minnesota November.

In addition to following trends, you should think of the ways you can diversify your products from those that are already selling well. What about your beer stands out from the local offerings, or from popular nationally distributed craft brews?

We’ll have more on how your branding can impact your beer’s identity – and, thus, how it resonates with consumers – in the next edition of this series. Until then, cheers, and happy brewing. 

 

 

Find out how ShipCompliant by Sovos can help your brewery stay on top of compliance by signing up for a free demo.

 

 

 

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