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Spirits And Wine Distributors Move Into Craft Beer

February 12, 2013

With craft beer now among the nation’s hottest beverage alcohol segments, major beer wholesalers have been seeking to bolster their craft portfolios. But now they’re getting fresh competition from their counterparts in spirits and wine.

In recent months, several high-profile craft brewers have appointed spirits and wine distributors instead of local beer wholesalers. In January, Wirtz Beverage began handling the Deschutes Brewery portfolio statewide in Illinois. And late last year, Young’s Market was awarded rights to the Boulevard Brewing portfolio statewide in California. While spirits and wine wholesalers often handle a few craft beers, those moves were surprising because neither Wirtz nor Young’s had craft beer operations in those markets.

Young’s senior vice president of spirits and selected beverages Carl Carlson noted that Young’s had been involved with craft beer about two decades ago but exited the business when wine and spirits trends picked up. Recent trends have encouraged the distributor to reconsider, and winning the Boulevard portfolio was “a huge coup,” Carlson added.

Deschutes COO Michael LaLonde has received much feedback from craft brewers as well as distributors after selecting Wirtz in Illinois—particularly as Wirtz had little experience in beer. But one month into the partnership, LaLonde describes Wirtz’s performance as “exceptional” and one of the most successful state launches in the company’s history.

In February, Wirtz added statewide rights to Michigan-based Greenbush Brewing, and Wirtz’s craft beer activity is expected to expand further. Senior vice president Danny Wirtz told Shanken News Daily that a number of craft brewers are now interested in partnering with Wirtz in Illinois (see story below).

One big attraction of spirits and wine distributors is their ability to offer statewide distribution—something most beer wholesalers can’t match. “It’s a lot easier to sign with one statewide distributor than a network of 15 or 18,” says LaLonde of Deschutes. Carlson says that Young’s statewide presence attracted Boulevard. “There’s a single point of contact and statewide pricing integrity,” he adds.

The increased craft activity by spirits and wine distributors isn’t without its challenges. Investment in a beer division is a big undertaking. “We’ve elected to build this capability rather than buy other distributors,” says Wirtz, who calls his company’s investment “long term and significant.” Investments include modifications to facilities, new transportation, new draft equipment and beer-server training for about 100 sales consultants.

Given craft beer’s impressive trends and profit margins, it might not be long before other spirits and wine distributors make their own moves into the category.

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