January 23, 2012
Distributor Profile: P.A. Short Distributing and Southwest Virginia
Dear Client:
Die-hard, brand-specific craft loyalty exists in Southwest Virginia, a market that probably has roughly half the national craft share. People go crazy for Dogfish Head 60 Minute, according to P.A. Short Distributing’s Craft Brand Manager Aden Short. It’s not his brand, but it’s particularly noteworthy in its divergence from the national norm. The brand is so hot, in fact, that Aden says it’s hard getting those drinkers to try a different IPA, let alone another brewery or style. “They seem kinda stuck on that one,” says Aden. “I’ve even seen where a couple of bars will get a keg of 90 or even 75, and people just want to stick to the 60.”
Consumers see DFH 60 as a badge beverage, its relative exclusivity a confirmation of status. “Only a few places in town have it. Even finding the 6 packs can be fairly difficult,” says Aden. “It’s almost like the Heineken or Coronoa drinker back in the ‘7os.” He thinks the loyalty is, ironically, the symptom of a young market.
But it’s a market that’s opening, partially thanks to New Belgium’s recent entry (interestingly: “People look forward to Fat Tire, not necessarily New Belgium”). But even before the brewery broke ground here, he saw the stirrings of craft consumption. Even on the West Virginia border, in a rural setting, people are seeking the liquid. “This year will be huge for our market,” Aden predicts.
More on the dynamics of the developing market from Aden himself, who seems to fit the description of that next-generation A-B distributor who is personally interested in craft.
CRAFT PROFITABILITY. “Only about 2.5% of our overall business is craft; it’s a fairly blue collar market, where Bud Light is still king. But … unless I really screw things up I’ll eventually be running this whole place, and it’s a huge investment for us, and a huge investment of our time. [It promises] great profitability for our company as we grow with it, get more brands, and help guide our consumers, push them toward something they may not have had. A-B or Miller are not going away, but they are losing share … who knows what the future may bring? In 10 years, cider volumes could outpace craft volumes. As a company, we want to ensure that we can meet the demands of our market, no matter what our consumers are looking for.”
HOT BRANDS. “We introduced Victory last year, that’s probably the fastest seller at this point, because it’s new, and growing on a small base. Our bestseller is Starr Hill, which is local. With our craft brands, which are almost entirely regional, Starr Hill makes up about 1/3 of our total craft sales. This is frankly not a bad position for Starr Hill given our ever-expanding portfolio. We sold roughly 4,400 case equivalents of it last year, which is not a huge number, but we continue to have great double-digit growth of their brands.
“We’re also introducing Devils Backbone in two weeks. They’ve just built this $5.5 million production brewery outside Lexington, Virginia, so everyone’s really excited about it in our area. They’re only opening a few markets; really only opening 4 distributors, 6 different markets.”
BRANDS (SWEETWATER) THAT WILL HELP OPEN THE MARKET. “Being so close to North Carolina, there are lots of brands down there we’re eager to look into: Natty Greene’s, Mother Earth. The big one for any Virginian distributor is Sweetwater, now that New Belgium is in the market.
“It’s kinda fun; they’re an honest-to-God Southern craft brewery. And we’ve got a lot of good Southern boys here. Their tap handles with fish jumping out of the water are intriguing, and reminiscent of [the water imagery of] Busch or Busch Light. Those handles will hopefully attract our more outdoor-focused consumers [as will] their commitment to water preservation, keeping wildlife safe. And being Southern will appeal to a large part of our market. Not to mention the liquid is amazing.”
ON TAP ROULETTE. “Frankly, taking one craft tap off for another really helps nobody out. You lose those loyal drinkers at that one bar, and may alienate them by putting on something they don’t like. We still have a ton of domestic taps out there that make good money for all parties. But people are used to drinking Bud products out of bottles. Tap space is the craft battleground as we see it. I don’t think we’re going to lose overall sales if we switch taps to craft … we can help [our restaurants and bars attract] a different customer base.”
BEST OCCASSIONS. “Upscale grocery store chains are still our best off-premise craft avenue. Our convenience stores have a few packages here and there in the more ritzy neighborhoods in town, but the pull through isn’t fantastic. We have a large rural territory with counties that touch the West Virginia line. Our light domestics do well in these pockets, but Bud and Busch are still king. Those pockets help keep our domestic brands strong from the nation-wide sales slump of the premium category. But even in rural territories, we do see some craft interest.”
2012 CHALLENGES. “We have a lot of great brands with statewide houses. One is three, another four hours away driving distance from our territory. This makes for a lot of really good beer brands out there that are underindexed in our area. With Virginia’s laws built to protect distributors, that can hinder brewers from getting in other areas of state. … Brands like Oskar Blues, Dogfish are good examples, even Abita; these truly established brands don’t get as much focus in our area, and sadly it’s the consumer that loses. We could use some of those brands to [help] craft beer movement in the area. They’re not mine, but I believe a rising tide raises all ships. For example, since New Belgium came in, our sales have taken a boost because craft as a whole has gotten more attention.”
More tomorrow.
BEER BRIEFS:
MORE GOVERNMENT PROPS FOR CRAFT. State officials everywhere seem increasingly interested in the space, and not just the likes of Colorado’s John Hickenlooper. Last week, Missouri State Senator Maria Chapelle-Nadal introduced Senate Bill No. 663, which seeks to establish Kansas City’s Boulevard and St. Louis’ Schlafly as the state’s official breweries. Earlier in the month, New York mayor Michael Bloomberg’s State of the City address included kudos for new Bronx Brewery – delivered at Morris High School, no less.
San Diego Mayor Jerry Sanders also mentioned craft’s contribution to the local economy at his recent State of the City address, and featured five San Diego breweries at the ensuing reception. “Mayor Sanders staff and the Economic Development Department in San Diego were instrumental in guiding us through our current production facility project,” Coronado Brewing’s Rich Chapman told CBD.
THE ATLANTIC’S INTERESTING PIECE ON POCKETS OF BINGE DRINKING ACROSS AMERICA included mention of a “binge belt” running westward from New England, ” Pennsylvania and Ohio to Illinois, Wisconsin, Iowa, Minnesota, Nebraska, North Dakota and Montana.” Other correlational factors: Binge drinking is more common in liberal states, and those more affluent. The smoking gun for our segment: “… binge drinking is more prevalent in states whose socio-economic profiles would seem more in line with latte sipping than brewski chugging.”
STARBUCKS has just announced extension of its wine, beer and premium food offering concept to “a handful of locations in Atlanta and Southern California by the end of this year.” These stores, along with several others recently announced for the Chicago area, will be the first extensions of the evening day-part concept outside of the Pacific Northwest.
GREEN FLASH HAS JUST INKED with J. Paul Pepin in Tampa and Birmingham Bud in Alabama.
BREWPIC: Mayor Jerry Sanders at last November’s San Diego Brewer’s Guild fest.
Until tomorrow, Jenn
“The only people for me are the mad ones.” – Jack Kerouac
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