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Apr 26

I demand this beer. You should supply it.

Most of us know the basics of supply-and-demand. If you’re not familiar or have forgotten what you learned in Economics 101, here’s a quick recap:

“…Demand refers to how much (the quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.”
source: Investopedia

If the beer industry followed this basic understanding, price would simply fluctuate and the regions that could support those increasing and fluctuating prices would be the ones that received sought-after craft beer.

However, it’s not that simple.

While each of our United States is governed by an over-arching “three-tier system of alcohol distribution,” the laws definining how aspects of that three tier system works differ from state to state.

Beer Wars: The Movie did a good job giving an overview of this complex topic of the three-tier system, but really just had the time to show the tip of the iceberg. That tip included the lack of distributors for craft beer in certain states.

Lack of distributor?

In Washington state, no distributor isn’t necessarily the reason for lack of a specific craft beer. Here, US craft breweries can apply for a license to self-distribute, we have small beer distributors popping up, several wine distributors are including craft beer in their portfolios, and some of the larger distribution houses that primarily focus on mainstream Anheuseur-Busch/InBev and Miller/Coors brands are also developing and increasing their craft beer portfolios.

In contrast, other states have ‘no self distribute’ laws in combination with great control by mainstream brand distributors. These states are dealing with growing pains during this craft beer revolution.

The Craft Beer Association offers a single-source of state-by-state information on self-distribution laws, as well as a lot of other heady info about laws & issues. If you’re interested in learning more, I highly suggest you check it out.

Or inability to meet demand?

Beer retailers are asked for a lot of beer that’s not accessible. And the majority of craft beer requested are by breweries that simply don’t have enough production to expand into new markets; the brewery cannot produce or send enough for all consumers without cutting back elsewhere. If I had a dollar for every time I was asked for Bells, Brooklyn, Founders, New Glarus, Odells, Three Floyds, Yuengling,… I’d be so rich.

The inability to meet demand is shown by the current trend — craft breweries pulling out of markets. This is a result of the surge in popularity of handcraft beer, and it’s a rough decision for craft breweries: Do I short existing markets? Do I pull out of some markets to maintain and/or grow others? Breweries agonize over leaving their fans.

Allagash Brewing CompanyAs craft beer becomes more sought-after, breweries just can’t keep up with the demand. Allagash, Avery, Dogfish Head, Great Divide, Left Hand and Oskar Blues have all pulled out of markets over the past year. We’re lucky here in Washington in that only one of those breweries is leaving us. (Though I will miss Curieux, Triple, White,…)

So, beer-loving friends, when shopping at your local beer provider bear in mind that it’s not as simple as, “I want this beer, you need to get it for me.” And if a craft beer has to leave your market, it’s not personal, so don’t get so inflamed. Treasure the beer you have, while you have it.

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